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“Third-party posts from Ed Slott’s IRA Blog:”

IRA BLOG

“UPDATE NEEDED” – TOP 5 IRA ITEMS TO CONSIDER

By Andy Ives, CFP®, AIF® IRA Analyst Follow Us on Twitter: @theslottreport We are constantly bombarded with requests to update our information. “Password needs updating.” “Software update for your mobile device.” “Please update your email so our marketing team can...

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IRS REGULATIONS AND QCDS: TODAY’S SLOTT REPORT MAILBAG

By Sarah Brenner, JD Director of Retirement Education Follow Us on Twitter: @theslottreport Question: When will the IRS release final regulations for RMDs on beneficiary IRAs? Kim Answer: Hi Kim, That is a great question. We have been fielding many inquiries about...

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HOW ARE ROTH 401(K) DISTRIBUTIONS TAXED?

By Ian Berger, JD IRA Analyst Follow Us on Twitter: @theslottreport More and more 401(k) plans now offer Roth contributions. At the same time, Americans are changing jobs and receiving 401(k) distributions in record numbers. So, it’s a good time to review the tax...

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QCDS AND THE ABSOLUTE NECESSITY FOR A CWA

By Andy Ives, CFP®, AIF® IRA Analyst Follow Us on Twitter: @theslottreport Qualified Charitable Distributions (QCDs) are a common transaction these days, but all guidelines must be followed to ensure the QCD is valid. Recent court cases have exposed the absolute...

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3 IRA RULES TO KNOW BEFORE YOU WALK DOWN THE AISLE

By Sarah Brenner, JD Director of Retirement Education Follow Us on Twitter: @theslottreport According to many recent surveys, the fall months of September and October are overtaking June as the most popular time of year to tie the knot. If your wedding is approaching...

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THE LIMITS OF ERISA SPOUSAL PROTECTION

By Ian Berger, JD IRA Analyst Follow Us on Twitter: @theslottreport A recent federal court case from West Virginia illustrates that the spouse of a 401(k) participant usually has no right to prevent the plan from paying the participant a lump sum distribution....

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ROTH IRA DISTRIBUTION ORDERING RULES

By Andy Ives, CFP®, AIF® IRA Analyst Follow Us on Twitter: @theslottreport This may seem like a rudimentary topic, but it is the basics that are often so confusing. A fundamental understanding of Roth IRA distributions is essential for Roth IRA owners. In a blog post...

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YOUR AGE AND YOUR ROTH IRA CONVERSION

By Sarah Brenner, JD IRA Analyst Follow Us on Twitter: @theslottreport Questions on how age affects the decision to convert to a Roth IRA are common. What age is too old to convert? There is no easy answer to this question because there is no magic age when conversion...

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ROTH CONVERSION – OOPS!

By Andy Ives, CFP®, AIF® IRA Analyst Follow Us on Twitter: @theslottreport An advisor called to discuss Roth IRA conversions. His new client made some decisions before speaking with him, and he was trying to untangle her self-inflicted knot. She was 69 years old, a...

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HOW AN ESA CAN HELP WITH BACK-TO-SCHOOL EXPENSES

By Sarah Brenner, JD Director of Retirement Education Follow Us on Twitter: @theslottreport August is winding down and September is just around the corner. That means that it is back to school time! Education can be expensive. This year, with inflation raging, that...

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A RETIREMENT ACCOUNT SCORECARD

By Ian Berger, JD IRA Analyst Follow Us on Twitter: @theslottreport Here’s a line from one of the manuals we use in our education seminars for advisors: “Missed stretch IRA RMD by an EDB, when the IRA owner dies before the RBD.” An old baseball expression says: “You...

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YEAR-OF-DEATH RMD

By Andy Ives, CFP®, AIF® IRA Analyst Follow Us on Twitter: @theslottreport Lifetime required minimum distributions (RMDs) start in the year when an IRA owner turns 72. (Technically, the “required beginning date” for RMDs is April 1 of the year after a person turns...

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WHAT YOU NEED TO KNOW ABOUT THE STILL-WORKING EXCEPTION

By Sarah Brenner, JD Director of Retirement Education Follow Us on Twitter: @theslottreport Are you nearing retirement age and not looking forward to taking unwanted required minimum distributions (RMDs) from your retirement account? You may be looking for a strategy...

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THE UNPLEASANT SURPRISE OF THE ACCURACY-RELATED PENALTY

By Ian Berger, JD IRA Analyst Follow Us on Twitter: @theslottreport If a retirement account transaction becomes a taxable distribution, you probably know you will owe taxes and possibly the 10% early distribution penalty (if under age 59 ½) on the distribution. But...

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RMDS & ROTH CONVERSIONS: TODAY’S SLOTT REPORT MAILBAG

By Andy Ives, CFP®, AIF® IRA Analyst Follow Us on Twitter: @theslottreport Question: My husband is the sole beneficiary of a Traditional IRA owned by his cousin, who recently  passed away. From my research, I believe my husband fits the exception criteria of "eligible...

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INHERITED IRA Q&AS

By Andy Ives, CFP®, AIF® IRA Analyst Follow Us on Twitter: @theslottreport Each week the Ed Slott team answers questions from financial advisors across the country. Sometimes we see a pattern in repeating questions, sometimes the questions are relatively basic, and...

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FOUR THINGS TO KNOW ABOUT YOUR PLAN ROLLOVER AND YOUR RMD

By Sarah Brenner, JD Director of Retirement Education Follow Us on Twitter: @theslottreport Many Americans are still working long beyond what has traditionally been retirement age. This may be a choice or a necessity. If this is your situation, you may be keeping...

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DIRECT TRANSFERS, DIRECT ROLLOVERS, AND 60-DAY ROLLOVERS

By Andy Ives, CFP®, AIF® IRA Analyst When moving retirement money from IRA to IRA, or from a workplace retirement plan like a 401(k) to an IRA, there are essentially three methods to relocate those dollars. Two of them are similar, and the third opens all kinds of...

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REPAYING A CRD

By Sarah Brenner, JD Director of Retirement Education Back in 2020 when COVID first became our new reality, Congress enacted the CARES Act. The CARES Act allowed qualified individuals who were affected by COVID to take penalty-free distributions from their retirement...

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SIDESTEPPING THE NEW IRS PRIVATE LETTER RULING FEES

By Ian Berger, JD IRA Analyst Like most everything else these days, the price for receiving an IRS private letter ruling (PLR) has recently gone up. A person will request a PLR to receive the IRS’s blessing that a specific tax transaction won’t violate the tax code or...

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CONDUIT IRA – IS IT REALLY NECESSARY?

By Andy Ives, CFP®, AIF® IRA Analyst Conduit IRAs, sometimes called “rollover IRAs,” typically contained only money rolled over from a company plan - and subsequent earnings on those dollars. But a 2001 tax law (Economic Growth and Tax Relief Reconciliation Act of...

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4 QCD RULES THAT MAY SURPRISE YOU

By Sarah Brenner, JD Director of Retirement Education A Qualified Charitable Distribution (QCD) is a way for you to move funds out of your IRA to a qualifying charity income-tax free. If you are thinking this might be a good strategy for you, here are 4 QCD rules that...

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SENATE COMMITTEES TAKE UP RETIREMENT SAVINGS PROPOSALS

By Ian Berger, JD IRA Analyst Proposals to boost IRA and workplace plan savings are advancing, but they are not law yet. Several actions must occur before the proposals become law. On March 29, the House passed the “Securing a Strong Retirement Act of 2022.” Now, two...

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INHERITED IRAS AND RMDS: TODAY’S SLOTT REPORT MAILBAG

By Sarah Brenner, JD Director of Retirement Education Question: Dear Sirs: I inherited a regular IRA upon my mother's death in 2015. I am now 75 years old and have been taking required distributions since then. She was taking distributions herself when she died. My...

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SHOULD I ACCEPT A LUMP SUM BUYOUT OFFER?

By Ian Berger, JD Director of Retirement Education Should I Accept a Lump Sum Buyout Offer? With economic uncertainty increasing, more companies with defined benefit (DB) pension plans will likely attempt to improve their bottom line by offering lump sum buyouts. A...

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DEATH OF A SPOUSE, DEATH OF DAD

By Andy Ives, CFP®, AIF® IRA Analyst Over the past couple of months I have been tasked with the unfortunate responsibility of helping my mother sort through her financial affairs after the death of her spouse. My dad passed in March, and it has been a steady stream of...

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TOO OLD TO CONVERT? THINK AGAIN

By Sarah Brenner Director of Retirement Education You may have heard how converting to a Roth IRA is a great move for younger people. This is no surprise. A younger person who converts has two big factors working in her favor. She may pay taxes on a smaller IRA...

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72(T) DON’TS

By Andy Ives, CFP®, AIF® IRA Analyst The 72(t) rules (”series of substantially equal periodic payments”) allow a person to tap retirement dollars before 59½ without a 10% early distribution penalty. However, to gain this early access, you must commit to a plan of...

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WHEN THE FIVE-YEAR RULE APPLIES

By Sarah Brenner Director of Retirement Education If you inherit an IRA, especially if it is a larger one, you may be afraid of being stuck with the five-year distribution rule. If this rule applies, your IRA must be entirely emptied in five years, which can be a...

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ONE ROTH IRA BUCKET

By Andy Ives, CFP®, AIF® IRA Analyst SCENARIO: John owns multiple Roth IRAs. He believes it is necessary to maintain all these accounts to keep things properly organized and to track his 5-year conversion clocks. He has contributed to Roth IRA #1 for over a decade. He...

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5 WAYS AN EXCESS IRA CONTRIBUTION CAN HAPPEN

By Sarah Brenner, JD Director of Retirement Education You can have too much of a good thing. While saving for retirement with an IRA is a good strategy, there are limits.  When a contribution is not permitted in an IRA, it is an excess contribution and needs to be...

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WHEN A “REVERSE ROLLOVER” MAKES SENSE

By Ian Berger, JD IRA Analyst Usually, rollovers involving 401(k) accounts and IRAs involve moving dollars from a plan to an IRA. But sometimes it makes sense to instead do a “reverse rollover” – from an IRA to a 401(k). Let’s get some bad news out of the way:...

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WATCH OUT FOR THE ONCE-PER-YEAR ROLLOVER RULE

By Sarah Brenner, JD Director of Retirement Education Why is it so important to know how the once-per-year rollover rule works? Well, that is because trouble with the once-per year rule is the kind of trouble no one wants! An IRA owner who violates this rule is...

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HOW THE VESTING RULES WORK FOR COMPANY RETIREMENT PLANS

By Ian Berger, JD IRA Analyst Employees leaving their jobs are often surprised to discover they aren’t entitled to the full balance of their company plan account. The reason is that some plans impose a vesting rule on certain types of contributions. What do the...

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HOW YOUR IRA CAN HELP IF YOU ARE A FIRST-TIME HOME BUYER

By Sarah Brenner, JD Director of Retirement Education The real estate market is red hot right now. This can be especially challenging for first time home buyers. IRA savings are intended to be used for your retirement. However, if you are like many others, your IRA...

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A DOZEN QCD FACTS

By Andy Ives, CFP®, AIF® IRA Analyst Qualified charitable distributions (QCDs) continue to gain popularity, and with that popularity comes more questions. Here are a dozen QCD facts that will keep you on the straight-and-narrow with your QCD transactions: 1. QCDs are...

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INVESTING YOUR IRA IN CRYPTO

By Sarah Brenner, JD Director of Retirement Education Recently, Fidelity investments made headlines by announcing that it would allow retirement savers to put Bitcoin in their 401(k)s. Cryptocurrency has been all over the news, and you may be wondering if it would be...

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401(K), 403(B), 457(B): DOES IT REALLY MATTER?

By Ian Berger, JD IRA Analyst There are three types of company savings plans: 401(k) plans if you work for a for-profit company; 403(b) plans if you work for a tax-exempt employer, a public school or a church; and 457(b) plans if you work for a state or local...

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FIRST DOLLARS OUT RULE AND THE STILL-WORKING EXCEPTION

By Andy Ives, CFP®, AIF® IRA Analyst For those who have 401(k)s or other employee retirement plans (but not SEP or SIMPLE plans), the required beginning date (RBD) for when required minimum distributions (RMDs) are to begin is the same as for IRA owners – April 1 of...

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UNDERSTANDING THE SAME PROPERTY RULE

By Sarah Brenner, JD Director of Retirement Education For IRA-to-IRA or Roth-to-Roth 60-day rollovers, the same property received is the property that must be rolled over. These rules also apply to SIMPLE and SEP IRAs. You cannot receive a distribution of cash and...

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TAKE ADVANTAGE OF CATCH-UP CONTRIBUTIONS!

By Ian Berger, JD IRA Analyst Tax Day 2022 seems like an appropriate time to review a sometimes-overlooked way to get extra dollars into your IRA or company savings plan. Folks age 50 or older are allowed to make “catch-up” contributions with no strings attached....

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LAST-MINUTE IRA TAX DEADLINES & RULES

By Andy Ives, CFP®, AIF® IRA Analyst The deadline for filing your 2021 tax return is this Monday, April 18. It is extended through the weekend because IRS offices in Washington DC are closed on Friday, April 15, in observance of the locally recognized Emancipation...

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5 TAKEAWAYS FROM THE NEW SECURE ACT REGULATIONS

By Sarah Brenner, JD Director of Retirement Education The SECURE Act was signed into law in late December of 2019. This new law upended the rules for retirement accounts. With it came many questions, and IRS guidance was eagerly anticipated. Finally, on February 23,...

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INHERITED IRAS AND SEP ACCOUNTS: TODAY’S SLOTT REPORT MAILBAG

By Andy Ives, CFP®, AIF® IRA Analyst Question: I have a non-spousal inherited IRA account.  Once I take out my RMD for the year, am I able to take out excess funds and roll those into a Roth account? Thank you. Answer: Inherited IRA accounts do not follow all the same...

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HOUSE PASSES SECURE 2.0 BILL, BUT IT’S NOT LAW YET

By Ian Berger, JD IRA Analyst A bill designed to increase savings in IRAs and company plans has passed the House of Representatives, but it’s not yet law. The bill is officially called the “Securing a Strong Retirement Act of 2022,” but many are calling it “SECURE...

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THE 3 EXCEPTIONS TO THE PRO-RATA RULE THAT YOU NEED TO KNOW

By Sarah Brenner, JD Director of Retirement Education Most IRA distributions will be taxable. However, if you have ever made nondeductible contributions to your IRA or rolled over after-tax funds from your company plan to your IRA, then the rules can get a little bit...

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$1,512,350 IS THE NEW $1,362,800

By Ian Berger, JD IRA Analyst When you file for bankruptcy, one thing you usually don’t have to worry about is protecting your IRA funds from creditors. That’s because, in just about every case, all of your IRA (and Roth IRA) monies are off limits. Under the federal...

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NOW IS THE TIME TO MAKE YOUR 2021 IRA CONTRIBUTION

By Sarah Brenner, JD Director of Retirement Education It may be hard to believe it but the countdown to the 2021 tax filing deadline is on. The deadline is April 18, 2022, for most filers. That is really only a few weeks away. Time is running out. Is your IRA ready?...

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DECIPHERING YOUR 401(K) STATEMENT

By Ian Berger, JD IRA Analyst With many 401(k) (and 403(b) and 457(b) plans) offering multiple participant accounts, your plan statement is probably more complicated than ever. Here’s a brief primer to help you understand what each account represents: Pre-tax deferral...

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“MONITORING CONCURRENT LIFE EXPECTANCIES?” – SMH

By Andy Ives, CFP®, AIF® IRA Analyst I am usually patient with the IRS. I understand the massive workload they have, and there are tax cheats lurking around every corner. The IRS does its best to ensure no loopholes exist for bad actors to circumvent tax laws to avoid...

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SECURE ACT REGS BRING NEW ROTH IRA ADVANTAGE

By Sarah Brenner, JD Director of Retirement Education Roth IRAs have always been a great retirement savings tool. While pre-tax retirement accounts allow tax deferred savings, a Roth IRA promises tax-free benefits. They allow you to receive years of earnings in...

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THE MOST CONTROVERSIAL PART OF THE NEW IRS REGULATIONS

By Ian Berger, JD IRA Analyst The part of the new IRS SECURE Act regulations causing the most reaction is the one requiring annual required minimum distributions (RMDs) for some IRA or workplace plan beneficiaries subject to the 10-year payment rule. Under the SECURE...

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AGE OF MAJORITY AND THE NEW SECURE ACT REGULATIONS

By Andy Ives, CFP®, AIF® IRA Analyst The 275 pages of proposed SECURE Act regulations, released by the IRS on February 23, are chock full of little details. Each of these tidbits will have some impact on particular IRA owners and retirement account participants. One...

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SECURE ACT REGULATIONS ARE HERE

By Sarah Brenner, JD Director of Retirement Education On February 23, 2022, the IRS released the long-awaited proposed SECURE Act regulations. The new regulations clock in at 275 pages and offer guidance on many SECURE Act rules. They also include a few surprises....

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ACT NOW TO CLEAN UP 2021 EXCESS 401(K) DEFERRALS

By Ian Berger, JD IRA Analyst The amount of annual pre-tax deferrals and Roth contributions you can make to a 401(k) plan is limited by the tax code. If you exceeded that limit in 2021, time is of the essence to correct the error. If you don’t act quickly, the tax...

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WHAT PROTECTION DO SPOUSES GET IN COMPANY PLANS?

By Ian Berger, JD IRA Analyst The federal ERISA law gives spouses of plan participants in ERISA-covered plans certain rights to the participant’s account. There are two types of ERISA financial protection for spouses. Spouses of IRA owners usually don’t have similar...

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MAKING A SPOUSAL IRA CONTRIBUTION

By Sarah Brenner, JD Director of Retirement Education The pandemic has upended the workforce. Many workers lost jobs. Some workers resigned by choice. Others were forced to leave jobs due to childcare issues. If you are not working outside the home, you may believe...

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HOW DOES THE IRS COMPENSATION LIMIT WORK?

By Ian Berger, JD IRA Analyst Towards the end of each year, the IRS announces cost-of-living increases for several retirement-related dollar limits that will become effective for the next year. For example, last November, the IRS said that the limit on employee...

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ROTH CONVERSIONS & RMDS: TODAY’S SLOTT REPORT MAILBAG

By Sarah Brenner, JD Director of Retirement Education Question: I turn 72 this year. I am getting notices from my many IRA custodians that they want a waiver on file if I am NOT using my account for the RMD (i.e., I am taking it somewhere else). They make it sound...

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10% PENALTY EXCEPTIONS

By Andy Ives, CFP®, AIF® IRA Analyst For IRA owners and retirement plan participants who are under age 59 ½, taking a distribution from a retirement account is typically off limits. The distribution will most likely be taxable, and there is a good chance that a 10%...

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WATCH OUT FOR THE FIVE-YEAR RULE ON CONVERTED ROTH FUNDS

By Sarah Brenner, JD Director of Retirement Education If you are under age 59 ½ and you converted your traditional IRA to a Roth IRA, you will need to watch out for the five-year rule for penalty-free distributions of converted funds. Not understanding how the rule...

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ROLLOVER TRIVIA: 5 Q&AS

By Andy Ives, CFP®, AIF® IRA Analyst The “Martin Scenario”: Martin, age 40, has never done an IRA rollover before. He took a distribution from his traditional IRA in December 2021 for $10,000 and deposited it into his checking account. Martin took another distribution...

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ROLLING OVER LAST YEAR’S IRA DISTRIBUTION

By Sarah Brenner, JD Director of Retirement Education The rollover rules can be especially challenging at the end of the calendar year. If you took a distribution from your IRA at end of 2021 and are considering a rollover in 2022, here is what you need to know....

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GREAT NEWS FOR 72(T) PAYMENTS!

By Ian Berger, JD IRA Analyst 72(t) payments have suddenly become a better deal for IRA owners and company plan participants. Also known as “substantially equal periodic payments,” 72(t) payments are advantageous because they are exempt from the 10% early distribution...

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ONE IRA ROLLOVER PER YEAR – BASED ON DISTRIBUTIONS

By Andy Ives, CFP®, AIF® IRA Analyst A person is allowed only one IRA-to-IRA or Roth-IRA-to-Roth-IRA 60-day rollover per year. This 12-month period is a full 12 months – it is not a calendar year. Accordingly, we refer to this as the “once-per-year rule.” For example,...

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WHAT TO DO IF YOU MISSED YOUR 2021 RMD

By Sarah Brenner, JD Director of Retirement Education Did you take your RMD from your IRA for 2021? Hopefully, the answer is yes because for most IRA owners and beneficiaries the deadline for taking a 2021 RMD was December 31, 2021. There is an exception. If you...

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YOUR FIRST RMD AND SEP IRAS: TODAY’S SLOTT REPORT MAILBAG

By Andy Ives, CFP®, AIF® IRA Analyst Question: Hi, I turn 72 this year and have to take my first required minimum distribution (RMD). I am also in the process of converting most of my IRA into a Roth IRA. I know I have to take my RMD first before the conversion. Since...

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QCD REMINDERS AND PITFALLS

By Andy Ives, CFP®, AIF® IRA Analyst Less than two weeks into the new year seems like a good time to provide a few reminders and warnings when it comes to Qualified Charitable Distributions (QCDs). As a quick refresher, remember these QCD facts: Only available to IRA...

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NEW 2022 IRS LIFE EXPECTANCY TABLES AVAILABLE HERE

By Sarah Brenner, JD Director of Retirement Education The IRS has released new life expectancy tables for calculating required minimum distributions (RMDs) for 2022. The most commonly used tables are the Uniform Lifetime and the Single Life Expectancy Tables.  The...

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HITTING THE RESET BUTTON FOR 2022 RMDS

By Ian Berger, JD IRA Analyst Welcome to 2022! One of the big changes in the retirement account world this year will be the calculation of required minimum distributions (RMDs). RMDs for IRA owners and plan participants are calculated using life expectancies from IRS...

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HAPPY NEW YEAR!

By Andy Ives, CFP®, AIF® IRA Analyst In 2021, the Slott Report produced roughly 100 diverse retirement-related articles and answered approximately 100 reader questions in our weekly Mailbag. We do our best to present topical IRA and retirement plan issues in the most...

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WHAT 2022 MAY MEAN FOR YOUR RETIREMENT ACCOUNTS

By Sarah Brenner, JD Director of Retirement Education Pop the champagne! It is almost time to turn the page on the calendar to a new year. What will 2022 mean for your retirement accounts? All signs point to a very busy year ahead. Here is what we may expect for...

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5 IRA RULES FOR WHICH WE ARE THANKFUL IN 2021

By Sarah Brenner, JD Director of Retirement Education Thanksgiving 2021 is upon us. This is the time of the year when we gather together and express our gratitude. When it comes to our retirement accounts, we often complain about the negatives. There are restrictions...

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A LOOK BACK AT A “NORMAL” 2021

By Ian Berger, JD IRA Analyst As 2021 draws to a close, many of us will naturally look back and try to make some sense of the past year. On the whole, it would be hard to classify 2021 as an “uneventful” year. But in the world of IRAs and workplace plans, it actually...

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YEAR-END ESTIMATED TAX “LIFE HACK”

By Andy Ives, CFP®, AIF® IRA Analyst A “life hack” is any trick, shortcut or simple and clever technique for accomplishing a familiar task more easily and efficiently, in all walks of life. For example, tie a colorful ribbon to your luggage to make it more easily...

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ILLIQUID ASSETS AND RMDS

By Sarah Brenner, JD Director of Retirement Education Tis the season. Yes, it is the holiday season, and it is also the season to take RMDs. RMDs are back for 2021 after being waived by the CARES Act for 2020. With the return of RMDs come questions. One question we...

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EXCEPTIONS TO THE PRO-RATA RULE – WAYS TO “ISOLATE BASIS”

By Andy Ives, CFP®, AIF® IRA Analyst My November 29 Slott Report entry was titled “The Pro-Rata Rule Explained – You are Not Getting Taxed Twice.” I closed that article by stating there are exceptions to the pro-rata rule and ways to clean up an IRA that contains a...

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PROCEED WITH CAUTION WHEN INVESTING YOUR IRA IN GOLD

By Sarah Brenner, JD Director of Retirement Education In volatile times like these, when inflation is looming, retirement savers may look to invest their IRAs in gold. Advertisements on the internet and cable tv make it look easy, but that is not the full story. The...

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12/31/21 DEADLINE MAY LOOM FOR STARTING NEW SOLO 401(K) PLAN

By Ian Berger, JD IRA Analyst Are you considering opening up a new solo 401(k) and looking to maximize your 2021 contribution? If so, you may need to act quickly. There is a December 31, 2021 deadline for establishing a new plan if you want to make 2021 elective...

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RMD RULES AND ROTH CONVERSIONS: TODAY’S SLOTT REPORT MAILBAG

By Sarah Brenner, JD Director of Retirement Education Question: Can someone take an in-service withdrawal from their 401(k) and directly transfer it to their IRA, then take a QCD from the IRA to satisfy the RMD amount attributed to the 401(k)? I am 72 years old and I...

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RESTORATIVE PAYMENTS

By Andy Ives, CFP®, AIF® IRA Analyst As we careen into the holiday season, there remains a deceitful underbelly of dirtbags operating their typical scams. Giant inflatable Christmas decorations in front of your home or a menorah in the window will not dissuade...

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BIGGER 401(K) CONTRIBUTIONS COMING IN 2022

By Sarah Brenner, JD Director of Retirement Education The IRS has released the cost-of-living adjustments (COLAs) for retirement accounts for 2022. As expected, due to inflation in the economy, many of the dollar limit restrictions on retirement accounts will increase...

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THE 401(K) HARDSHIP WITHDRAWAL RULES IN A NUTSHELL

By Ian Berger, JD IRA Analyst The September 29, 2021 Slott Report summarized the rules for taking non-hardship withdrawals from 401(k) plans. This article will focus on the hardship withdrawal rules. Most company savings plans allow you to pull out your funds to take...

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CLARIFYING SOME ROTH CONVERSION MISCONCEPTIONS

By Andy Ives, CFP®, AIF® IRA Analyst As Roth IRA conversions become more popular, questions and misconceptions abound. In no particular order, here are a dozen Roth IRA conversion facts to be aware of: 1. Anyone with an IRA can do a Roth conversion. There are no...

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ANOTHER GOOD REASON TO DO A SPOUSAL ROLLOVER

By Ian Berger, JD IRA Analyst As discussed in the October 18 Slott Report, spousal beneficiaries of IRAs can take advantage of certain payout rules that aren’t available to non-spouse beneficiaries. For example, a surviving spouse who remains a beneficiary can defer...

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PERSEVERE, CHARLIE BROWN!

By Andy Ives, CFP®, AIF® IRA Analyst Charlie Brown, wearing a ghost costume full of too many eye holes cut in all the wrong spots, famously peered into his trick-or-treat bag and said, “I got a rock.” One of the best parts of Halloween remains. It is the moment at the...

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RETIREMENT PLANNING FOR THE SELF EMPLOYED

By Sarah Brenner, JD Director of Retirement Education Not everyone has a boss. In an economy upended by COVID, individuals, sometimes by choice and sometimes not, are striking out on their own and starting new businesses or becoming part of the gig economy. A critical...

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ARE YOUR RETIREMENT ACCOUNTS PROTECTED FROM CREDITORS?

By Ian Berger, JD IRA Analyst One question that continues to come up is whether company retirement plan dollars are protected from creditors. This becomes an issue if you are forced to declare bankruptcy or you owe money after a legal action is brought against you. If...

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SPOUSE AS IRA BENEFICIARY

By Andy Ives, CFP®, AIF® IRA Analyst When a married IRA owner dies, the surviving spouse is oftentimes the beneficiary. Of course, there are instances where a trust might be named as IRA beneficiary, or the children or a charity or someone else is listed. Regardless,...

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TIME TO SIMPLIFY YOUR RETIREMENT

By Sarah Brenner, JD Director of Retirement Education As you approach your golden years, you may be looking to simplify your life to wring the most out of retirement. It may be time to right size and move from a larger house with an abundance of maintenance to a...

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A POSSIBLE SOLUTION TO THE “MEGA IRA” RESTRICTIONS

By Ian Berger, JD IRA Analyst The Build Back Better Act of 2021, recently passed by the House Ways and Means Committee, includes a number of retirement plan provisions.  They were summarized in the September 22, 2021 Slott Report. Two of those provisions are targeted...

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EARNINGS ARE EARNINGS WITHIN A TRADITIONAL IRA

By Andy Ives, CFP®, AIF® IRA Analyst When it comes to taxes and the 10% early distribution penalty, do not allow the underlying investments within a Traditional IRA to confuse what is applicable. Earnings within an IRA are just earnings. It does not matter if those...

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WHAT THE NEW TAX PROPOSALS MEAN FOR ROTH CONVERSIONS

By Sarah Brenner, JD Director of Retirement Education It’s hard to keep up with the news out of Washington these days! We have been getting a ton of questions on how the new tax proposals recently passed by the House Ways and Means Committee would impact Roth...

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INHERITED IRAS AND 2021 RMDS: TODAY’S SLOTT REPORT MAILBAG

By Andy Ives, CFP®, AIF® IRA Analyst Question: Good morning, I have an inherited IRA. I took a manual withdrawal from it in late August. I thought I had deleted my auto withdrawal on the custodian’s website. I just noticed today that another distribution was taken on...

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RESTRICTIONS ON 401(K) IN-SERVICE WITHDRAWALS

By Ian Berger, JD IRA Analyst Congress designed 401(k) plans as retirement savings vehicles – not as checking accounts. So, there are restrictions on when employees can make “in-service withdrawals” (i.e., withdrawals  while still working). It’s important to remember...

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CONGRESS LOOKS TO ELIMINATE BACK-DOOR ROTH STRATEGIES

By Sarah Brenner, JD Director of Retirement Education The House Ways and Means Committee has released a draft of proposed changes to retirement accounts, including adding income limits for conversions and eliminating the back-door Roth conversion strategy. These...

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FIXING A 60-DAY ROLLOVER ERROR

By Ian Berger, JD IRA Analyst Are you moving assets between IRAs or from a company plan to an IRA (or vice-versa)? You should know that using a direct transfer is a much better idea than doing a 60-day rollover. Direct transfers avoid all of the possible issues which...

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YEAR-OF-DEATH RMDS

By Andy Ives, CFP®, AIF® IRA Analyst When an IRA owner taking required minimum distributions (RMDs) dies before removing his annual RMD, that year-of-death RMD (or whatever portion remains) must still be withdrawn. Upon passing, the year-of-death RMD immediately...

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RETIREMENT ACCOUNT RELIEF FOR DISASTER VICTIMS

By Sarah Brenner, JD Director of Retirement Education President Biden has declared September to be National Preparedness Month. The goal is to encourage Americans to be more prepared for natural disasters. Unfortunately, from flooding on the east coast to fires on the...

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HOW DO REVOCATION-ON-DIVORCE LAWS WORK WITH ERISA PLANS?

By Ian Berger, JD IRA Analyst What if you have an IRA with your spouse as primary beneficiary, get divorced without changing your beneficiary and then die? Who inherits your IRA benefits. If you live in one of the 26 states (as of June 2018) that have...

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REAL ESTATE IN AN IRA – AVOIDING A “NUISANCE PROPERTY”

By Andy Ives, CFP®, AIF® IRA Analyst Yes, you are allowed to own real estate in an IRA. Of course, not every IRA custodian will accommodate such an investment, but that doesn’t mean it is forbidden. If you want to own a beach house in your IRA, or a commercial...

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STRATEGIES WHEN YOUR IRA CONTRIBUTION CANNOT BE DEDUCTED

By Sarah Brenner, JD Director of Retirement Education The other day an advisor called us with an issue that comes up frequently, especially in these tumultuous times. His client had made an IRA contribution for 2021 and was planning on deducting that contribution....

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THE MEGA BACKDOOR ROTH IRA STRATEGY AND SOLO 401(K) PLANS

Ian Berger, JD IRA Analyst In the August 16, 2021 Slott Report, we showed that someone participating in a 401(k) plan through a “regular” job could also establish a solo 401(k) plan through a side job and potentially contribute up to $58,000 this year in after-tax...

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AGGREGATING RMDS – WHAT IS (AND WHAT IS NOT) ALLOWED

By Andy Ives, CFP®, AIF® IRA Analyst Recently, I had a conversation with an advisor who wanted a second opinion. He disagreed with how a 401(k) custodian was handling his client’s required minimum distribution (RMD). To arm himself with facts, the advisor contacted us...

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10 THINGS TO KNOW ABOUT ESAS

By Sarah Brenner, JD Director of Retirement Education It’s back to school time! Any parent will tell you that education can be expensive. You cannot afford to miss out on any possible option out there that may help you save. One savings tool that you might overlook is...

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MAKING SENSE OF THE 401(K) MULTIPLE PLAN LIMITS

By Ian Berger, JD IRA Analyst We continue to get lots of questions about the company savings plan contribution limits. There are actually two different contribution limits – the “deferral limit” and the “overall limit.” This makes things very confusing, especially if...

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UPDATE YOUR BENEFICIARY FORMS!

By Andy Ives, CFP®, AIF® IRA Analyst Regardless of whether you open an IRA, participate in a 401(k) plan, buy a life insurance policy, or start a college saving plan for a child, there is a critical detail which should never be overlooked: naming a beneficiary....

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YOUR QCD QUESTIONS ANSWERED

Sarah Brenner, JD Director of Retirement Education A Qualified Charitable Distribution (QCD) is a way for you to move funds out of your IRA to a qualifying charity income tax free. This can be a great strategy for those who are charitably inclined and looking to save...

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401(K) PLANS & IRA CUSTODIANS: TODAY’S SLOTT REPORT MAILBAG

By Sarah Brenner, JD Director of Retirement Educations Question: If you are an employee who participates in a 401(k) who retires at age 73, do you have to take an RMD in the year you retire, or can you take your RMD by April 1 of the year following retirement? If you...

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5 HSA BENEFITS THAT MAY SURPRISE YOU

By Sarah Brenner, JD Director of Retirement Educations You may be familiar with Health Savings Accounts (HSAs). These accounts have been around now for a while. They work with high deductible health insurance and are known for their triple tax benefits. Contributions...

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10 NUA Q&AS

By Andy Ives, CFP®, AIF® IRA Analyst 1. What is the NUA (Net Unrealized Appreciation) tax break? It is the opportunity to pay tax at long-term capital gains rates on the appreciation of company stock held within a company plan vs. paying ordinary income rates on that...

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5 TAKEAWAYS FROM ED SLOTT’S INSTANT IRA SUCCESS WORKSHOP

By Sarah Brenner, JD Director of Retirement Education On July 15 and 16, financial advisors from around the country gathered virtually for Ed Slott and Company’s Instant IRA Success workshop. We took a deep dive into the rules governing retirement accounts and engaged...

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HOW DO THE RMD RULES WORK WHEN A PENSION PLAN LUMP SUM IS PAID?

Ian Berger, JD IRA Analyst In the May 17, 2021 Slott Report, we discussed the rules governing required minimum distributions (RMDs) from defined benefit (DB) plans, also known as “pension plans.” We said that DB plan payments usually have no problem satisfying the RMD...

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CAN EDBS SPLIT INHERITED IRAS?

By Andy Ives, CFP®, AIF® IRA Analyst A surviving spouse has a number of options regarding how to deal with IRAs inherited from his or her deceased spouse. The age of both the deceased and surviving spouse will most often dictate the decision as to how to proceed....

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HOW YOU CAN REDUCE YOUR RMD

Sarah Brenner, JD Director of Retirement Education When you contribute to a traditional IRA you make a deal with Uncle Sam. You can get a tax deduction and tax deferral on any earnings in your IRA. However, eventually the government is going to want its share and will...

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5 THINGS YOU MUST KNOW ABOUT THE AGE-55 RULE

Sarah Brenner, JD Director of Retirement Education The pandemic has upended the workplace and caused many people to rethink their career path. For some older workers this may mean considering early retirement. For those workers, access to retirement savings can be...

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CLARIFYING THE ROLLOVER/TRANSFERS RULES WHEN AN RMD IS DUE

Ian Berger, JD IRA Analyst Follow Us on Twitter: @theslottreport In the June 16, 2021 Slott Report, we discussed how an in-service distribution made in the year of separation from service can inadvertently create an excess IRA contribution if that distribution is...

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RMDS, THE STILL-WORKING EXCEPTION, AND THE BEST-LAID PLANS

By Andy Ives, CFP®, AIF® IRA Analyst A required minimum distribution (RMD) from a 401(k) (or other employer plan) must be taken prior to rolling remaining plan dollars to an IRA. An RMD cannot be rolled over, so it must be withdrawn before any rollover is completed....

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IRS RECTIFIES MISTAKEN INTERPRETATION OF 10-YEAR PAYOUT RULE

By Ian Berger, JD IRA Analyst On April 14, we reported that the IRS was apparently interpreting the SECURE Act's 10-year payout rule in a surprising way – to require annual required minimum distributions (RMDs). Now, the IRS has made it clear (without actually saying...

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10-YEAR RULE: BENEFICIARY PLANNING “LOOPHOLE” CLOSED

By Andy Ives, CFP®, AIF® IRA Analyst With the passage of the SECURE Act, once common IRA beneficiary planning strategies have been upended. For example, no longer can just anyone stretch payments on an inherited IRA. You must qualify as an “eligible designated...

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ROTH CONVERSIONS & 401(K) RMDS: TODAY’S SLOTT REPORT MAILBAG

By Ian Berger, JD IRA Analyst Question: Hi! I attended the February 2021 IRA seminar and had a question re: Roth conversions.  The seminar discussed rolling over assets held in a company plan into a Roth IRA. I’m dealing with a client that wants to roll over a lump...

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SECURE ACT REGULATIONS EXPECTED “SOON”

By Sarah Brenner, JD Director of Retirement Education It has been well over a year since the SECURE Act became a reality, transforming the rules for inherited IRAs and doing away with the stretch IRA for most beneficiaries. While the SECURE Act statute gave us...

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HOW THE ONCE-PER-YEAR ROLLOVER RULE IS MISUNDERSTOOD

By Ian Berger, JD IRA Analyst One of the cardinal sins you can commit with an IRA rollover is to run afoul of the IRS “once-per-year” rollover rule. Violating that rule triggers a taxable distribution and the 10% early distribution penalty if you are under age 59 ½....

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EXCESS IRA CONTRIBUTIONS – GAMING THE SYSTEM?

By Andy Ives, CFP®, AIF® IRA Analyst An IRA owner can contribute only so much to a Traditional and/or Roth IRA annually. The IRA owner must also have earned income. The contribution limit for 2021 is $6,000, with a catch-up provision of another $1,000 for those age 50...

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SPECIAL RULES FOR SPOUSE IRA BENEFICIARIES

By Sarah Brenner, JD Director of Retirement Education The SECURE Act may have upended the rules for inherited IRAs, but the rules for spouse beneficiaries remain as advantageous as ever. In fact, naming a spouse as an IRA beneficiary is a better option than ever...

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HOW DO RMDS WORK IN DB PLANS?

By Ian Berger, JD IRA Analyst Rules governing defined benefit (DB) plans are typically more complicated than defined contribution (DC) plan rules. But required minimum distributions (RMDs) are one area where the DB plan requirements are easier to understand. If you’re...

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NO IRA CONTRIBUTIONS AFTER DEATH

By Andy Ives, CFP®, AIF® IRA Analyst As we inch toward the extended 2020 tax deadline of May 17, many filers are still laboring over their returns. Some are completing the final return for a loved one lost in what was a brutal year. As is human nature, most taxpayers...

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ARE YOU READY FOR THE SON OF SECURE?

By Sarah Brenner, JD Director of Retirement Education On May 5, the House Ways and Means Committee unanimously passed the Securing a Strong Retirement Act of 2021. According to lawmakers, the proposal is designed to pick up where the SECURE Act of 2019 left off and...

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THE ROTH CONVERSION CONVERSATION: A MUST-HAVE!

By Andy Ives, CFP®, AIF® IRA Analyst When visiting the doctor, does he or she ask foundational questions to help determine your medical condition? Of course. “How are you feeling?” “Are you a smoker?” “What hurts?” Does the doctor take some basic measurements –...

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2020 IRA CONTRIBUTION DEADLINE EXTENDED TO MAY 17

By Sarah Brenner, JD Director of Retirement Education Good news for retirement savers! There is more time to make your 2020 IRA contribution. On March 17, 2020, the IRS extended the 2020 federal income tax-filing deadline to May 17, 2021. The extension also extends...

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THE IRS MAY BE COMING AFTER YOUR SOLO 401(K) PLAN

By Ian Berger, JD IRA Analyst If you sponsor a solo 401(k) plan, beware! The IRS recently announced that it is targeting several employer plan areas for stepped-up auditing. One of those areas is solo 401(k) plans. The fact that solo plans made the list is a signal...

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ACTIVE PARTICIPATION AND IRA DEDUCTIBILITY

By Andy Ives, CFP®, AIF® IRA Analyst This question (or a derivation of it) has been popular as of late: “I only participated in my 401(k) for a couple of months in 2020 before I was laid off. Does that still make me a ‘covered’ employee, and can I contribute to my...

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MAKING A 2020 ROTH IRA CONTRIBUTION

By Sarah Brenner, JD Director of Retirement Education The IRS has delayed the deadline for filing federal income taxes until May 17, 2021. This also extends the deadline for making a 2020 Roth IRA contribution. A Roth IRA offers the promise of tax-free withdrawals in...

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IRA RUMORS AND CONSPIRACY THEORIES

By Andy Ives, CFP®, AIF® IRA Analyst With all the recent changes to IRAs under the SECURE Act [i.e., required minimum distribution (RMD) age raised to 72, new rules for beneficiaries, etc.], combined with the CARES Act waiver of RMDs last year, it comes as no surprise...

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WHO MUST TAKE THE YEAR-OF-DEATH RMD

By Sarah Brenner, JD Director of Retirement Education Required minimum distributions (RMDs) were waived for 2020 but they are back now for 2021. This includes the RMD for the year of death of the IRA owner. The rules for this RMD can be tricky. One question that comes...

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5 QUESTIONS WITH GEORGE NICHOLS OF THE AMERICAN COLLEGE

George Nichols III is the 10th President and Chief Executive Officer in The American College of Financial Services’ storied history. He continues to take motivation from founder Solomon Huebner’s pioneering vision in 1927, while empowering The College to usher in the...

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EIGHT DIFFERENCES BETWEEN DC AND DB PLANS

By Ian Berger, JD IRA Analyst Fewer and fewer workers are participating in defined benefit pension (DB) plans these days. The high cost of maintaining those plans has led many employers to terminate existing plans and dissuaded many others from setting up new plans in...

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HOW TO CALCULATE YOUR 2021 RMD

By Sarah Brenner, JD Director of Retirement Education The CARES Act waived required minimum distributions (RMDs) for 2020, but they are back for 2021. The return of RMDs for this year has raised questions about how these distributions should be calculated. Here is...

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CAN I STILL OPEN UP A NEW SOLO 401(K) FOR 2020?

By Ian Berger, JD IRA Analyst We’ve been getting a number of questions lately about whether it’s too late to set up a new solo 401(k) plan for 2020. The answer is “sort of.” Business owners with no employees (other than a spouse) can contribute to a solo 401(k) plan....

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HOUSE RULES

By Andy Ives, CFP®, AIF® IRA Analyst Follow Us on Twitter: @theslottreport Casinos have house rules. These rules dictate what patrons can and cannot do. They are often written down, posted, and there is no debating the validity of said guidelines. House rules govern...

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DON’T MISS OUT ON THIS RETIREMENT SAVINGS TAX BREAK

By Sarah Brenner, JD Director of Retirement Education Follow Us on Twitter: @theslottreport For those just starting out, saving for retirement can be challenging. For young workers, paying the rent and buying the week’s groceries may take priority and there is only so...

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RETIREMENT ACCOUNT ALPHABET SOUP

By Ian Berger, JD IRA Analyst For an area as highly regulated as IRAs and company plans, it’s not surprising that there’s a ton of abbreviated terms to keep track of. Here’s 18 common ones that you should know: CARES Act. The Coronavirus Aid, Relief, and Economic...

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ROTH IRA CONTRIBUTIONS AND YOUR TAX RETURN

By Sarah Brenner, JD Director of Retirement Education Have you contributed to a Roth IRA for 2020? If you have not, you still have some time. The deadline for making a prior year contribution is the tax-filing deadline, not including any extensions you might have. For...

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WHEN A “REVERSE ROLLOVER” MAKES SENSE

By Ian Berger, JD IRA Analyst When we think of rollovers, we normally think of moving funds from a 401(k) (or other company plan) to an IRA. But it sometimes makes sense to consider a “reverse rollover” – from an IRA to a 401(k). Unfortunately, although 401(k) plans...

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THE GOVERNMENT IS NOT PLANNING TO CONFISCATE YOUR IRA

By Sarah Brenner, JD Director of Retirement Education Whenever there is a new administration there is a lot of uncertainty about what the change will mean for retirement accounts. In 2021, this change is happening in the middle of a pandemic that has upended the lives...

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RMDS AND ROLLOVERS – A DANGEROUS BLEND

By Andy Ives, CFP®, AIF® IRA Analyst It is early 2021 and two ingredients mix again: retirement money in motion, and required minimum distributions (RMDs). This may not appear to be a dangerous concoction, but when improperly combined, the results can be a bitter...

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3 TIPS TO AVOID TAX PROBLEMS WITH YOUR SEP

By Sarah Brenner, JD Director of Retirement Education A Simplified Employee Pension (SEP) is a popular choice for many small employers. Although these plans are in fact designed to be less complex than other types of retirement plans, there are many ways to go wrong...

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FOUR UNEXPLAINED TAX CODE MYSTERIES

By Ian Berger, JD IRA Analyst The Internal Revenue Code is over 4,000 pages of often unintelligible tax jargon. So, it shouldn’t surprise anyone that the law contains more than its share of baffling and inconsistent provisions. Here are four examples pertaining to...

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“COMPENSATION” FOR IRA ELIGIBILITY

By Andy Ives, CFP®, AIF® IRA Analyst Here we go again…barreling headlong into another tax season. This year will be like no other. With all the crazy that was 2020, many tax filers will discover some new and interesting items on their tax returns. For example – did...

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ROLLING OVER A 2020 DISTRIBUTION IN 2021

By Sarah Brenner, JD Director of Retirement Education The rules for rolling over IRA distributions can be complicated at any time of the year. They are especially challenging at the end of the calendar year. Surprisingly, sometimes IRA owners have doubts as to whether...

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AFTER CORONAVIRUS-RELATED DISTRIBUTIONS – NOW WHAT?

By Ian Berger, JD IRA Analyst Coronavirus-related distributions (CRDs) are no more. Millions of Americans took advantage of the opportunity to make penalty-free withdrawals from their IRAs and 401(k) plans in 2020. But unless Congress resurrects them, CRDs are no...

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RECHARACTERIZING AN IRA CONTRIBUTION – STILL IN THE TOOLBOX!

By Andy Ives, CFP®, AIF® IRA Analyst As we enter tax season and consider last year’s transactions, it bears repeating: Roth IRA contributions can be recharacterized, Roth conversions cannot. A Roth IRA contribution can be recharacterized (changed) to a Traditional IRA...

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THE “LOOK BACK” – CONSIDERING A TAX YEAR IN ITS ENTIRETY

By Andy Ives, CFP®, AIF® IRA Analyst We are just a few days into the new year, and many people are anxious to get their full IRA contributions in for 2021. However, a common question is, “It’s only the first week of the year and I haven’t received a paycheck yet. Can...

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2021 NEW YEAR’S RESOLUTIONS FOR YOUR IRA

By Sarah Brenner, JD Director of Retirement Education A new year brings a fresh start, and after 2020, we need that more than ever. You probably have a few resolutions for 2021. When making your list of goals for the new year, don’t overlook your IRA. Here are a few...

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ROTH IRAS AND THE 10-YEAR RULE: TODAY’S SLOTT REPORT MAILBAG

By Sarah Brenner, JD Director of Retirement Education Question: Can a retired person not working contribute to a Roth IRA? Answer: There are no age limits for Roth IRA contributions. This allows older people to contribute. However, the rules do require earned income....

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HAPPY NEW YEAR!

By Ian Berger, JD IRA Analyst From The Slott Report, December 30, 2019: “2020 promises to be an exciting year in the IRA and savings plan worlds, as the full ramifications of the new SECURE Act begin to take shape. Beyond that, the IRS will likely finalize the new...

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BUSY, BUSY, BUSY!

By Andy Ives, CFP®, AIF® IRA Analyst Ah, the end of the year. Snow is drifting, music plays quietly in the background. Ma in her kerchief, Papa in his cap, just settling down for a long winter’s nap… Nope. No time for that. ‘Tis the season of BUSY, BUSY, BUSY! Did you...

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HOLIDAY GREETINGS FROM THE SLOTT REPORT

By Sarah Brenner, JD Director of Retirement Education We at the Slott Report would like to wish all our readers a happy and safe holiday season. 2020 has been a year like no other. Thank you for taking your valuable time to read the Slott Report during this...

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HAPPY BIRTHDAY TO THE SECURE ACT!

By Ian Berger, JD IRA Analyst One year ago from yesterday (December 20, 2019), President Trump signed into law the SECURE Act. At that time, virtually no one had heard of the coronavirus and certainly very few (if any) could have foreseen the global pandemic that’s...

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AFTER-TAX ROTH CONVERSION: TRICK QUESTION?

By Andy Ives, CFP®, AIF® IRA Analyst Bob is 40 years old. He is a single tax filer, participates in a 401(k) at work, and makes a healthy annual salary of $160,000. Bob has consistently contributed $5,000 each year to his Traditional IRA for 5 years ($25,000 total)....

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2020 YEAR-END RETIREMENT ACCOUNT TO-DO LIST

By Sarah Brenner, JD Director of Retirement Education The end of 2020 is almost here. With the end of the year come certain retirement account deadlines. Here are 5 items you should have on your 2020 year-end retirement plan to-do list: 1. Do a 2020 conversion If you...

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BE CAREFUL ABOUT USING YOUR IRA FOR A SHORT-TERM LOAN

By Ian Berger, JD IRA Analyst Thinking of using your IRA as a “short-term loan” to raise some extra cash for the holidays?  What could go wrong? Well, actually, two major things could go wrong. And either could lead to serious tax headaches. Let’s say Chloe started...

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DUBIOUS MULTI-LAYERED CRD TAX STRATEGY

By Andy Ives, CFP®, AIF® IRA Analyst Recently we became aware of a multi-layered tax strategy that we think is a bridge too far when it comes to Coronavirus-related distributions (CRDs). In fact, it may even be outright tax fraud. As most readers are aware, the CARES...

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10 THINGS YOU MUST KNOW BEFORE CONVERTING IN 2020

By Sarah Brenner, JD Director of Retirement Education The clock is ticking if you are considering converting your Traditional IRA to a Roth IRA in 2020. More IRA owners are making this move this year as historically low tax rates and COVID-related income losses have...

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CAUTION: FOUR TAX BREAK DEADLINES RAPIDLY APPROACHING

By Ian Berger, JD IRA Analyst Thanksgiving is behind us, and the end of the year will be here soon. (Many of us are truly thankful for that!)  This is a good time to remind you of certain tax breaks that will expire before we turn over the calendar to 2021. Many of...

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BACK TO THE RIGHT SIDE UP

By Andy Ives, CFP®, AIF® IRA Analyst We have collectively crawled into the hollow of a 2020 tree and found ourselves in the Upside Down. (That is a “Stranger Things” reference, for the uninitiated.) The SECURE Act turned beneficiary options upside down. The CARES Act...

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IRS ADDS NEW REASON FOR SELF-CERTIFICATION OF LATE ROLLOVERS

By Sarah Brenner, JD Director of Retirement Education The IRS has recently added a new reason for self-certification of late rollovers to its list. Revenue Procedure 2020-46 modifies the list of reasons to include an IRA or company plan distribution made to a state...

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WHAT LIMITS APPLY IF I PARTICIPATE IN TWO COMPANY PLANS?

By Ian Berger, JD IRA Analyst We continue to get questions about the limits that apply for folks who participate in multiple company savings plans at the same time or who switch jobs in the middle of the year. What’s confusing is that there are two limits – the...

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MILITARY BENEFITS

By Andy Ives, CFP®, AIF® IRA Analyst With Veterans Day being just last week, an overview of two military retirement benefits felt like an all-important and appropriate topic of discussion. One benefit pertains to a penalty exception for accessing retirement dollars...

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CRDS ARE STILL AVAILABLE

By Sarah Brenner, JD Director of Retirement Education The year 2020 has been a challenging one. With coronavirus cases rising in most of the country and economic relief stalled in Congress, many individuals may be looking to find funds to pay urgent bills. One...

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MORE ON AFTER-TAX PLAN CONTRIBUTIONS

By Ian Berger, JD IRA Analyst The October 19, 2020 Slott Report article, "Don't Overlook After-Tax Contributions!," explained how after-tax contributions in company plans work and discussed the dollar limits on them. This article will explain how distributions of...

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IRA TRICK-OR-TREAT!

By Andy Ives, CFP®, AIF® IRA Analyst Trick-or-treating in the time of a pandemic is a challenge. Social distancing while handing out candy requires some creativity. The Slott Report has elected to place a big bowl of random treats in front of our house for the kids to...

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IRA ROLLOVERS AND DEDUCTIONS: TODAY’S SLOTT REPORT MAILBAG

By Sarah Brenner, JD Director of Retirement Education Question: Hello, If an individual has a solo 401(k), is this considered a "retirement plan at work" that would limit the deductibility of IRA contributions? Thanks! Susan Answer: Hi Susan, Being an active...

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THE GHOST RULE

By Andy Ives, CFP®, AIF® IRA Analyst As Halloween approaches and the leaves change color, families gather ‘round weekend campfires, roast marshmallows, and share spooky stories. Watchful owls hoot in the dark. In the distance, a wolf howls at the moon. A rustle in the...

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IMPORTANT TRUST DEADLINE APPROACHES

By Sarah Brenner, JD Director of Retirement Educations For trusts that inherited an IRA in 2019, an important deadline is approaching. October 31, 2020 is the due date to provide required trust documentation to the IRA custodian to ensure that the longest payout...

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INHERITED IRAS AND QCDS: TODAY’S SLOTT REPORT MAILBAG

By Ian Berger, JD IRA Analyst Question: Sir, I inherited an IRA from my sister two years ago. She was collecting RMDs at 78. My question involves collecting my sister’s RMD. Does the 10-year withdrawal go into effect now or do I use the table under my age, which is...

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AM I ENTITLED TO ERISA CREDITOR PROTECTION?

By Ian Berger, JD IRA Analyst With the recent economic downturn, you may be more concerned than ever about keeping retirement plan funds safe from creditors. If you participate in a plan covered by the federal Employee Retirement Income Security Act (ERISA), you can...

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IRAS, LIFE INSURANCE & PIZZA

By Andy Ives, CFP®, AIF® IRA Analyst Many years ago, my wife and I went to lunch at a pizza joint in a strip mall. The friendly gray-haired host in sensible shoes (whom I pegged for mid-to-late 60’s), tucked two menus under her arm, grabbed a couple sets of silverware...

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BENEFICIARY FORM BASICS

By Andy Ives, CFP®, AIF® IRA Analyst An argument could be made that the easiest financial document to complete is the IRA beneficiary form. Yet somehow this basic information consistently gets overlooked, mishandled, lost or fouled up. It’s not rocket science. Don’t...

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WHAT’S A TOP HAT PLAN?

By Ian Berger, JD IRA Analyst Think of a top hat, and you’ll likely conjure up images of Franklin Delano Roosevelt or the temporarily-deceased Mr. Peanut or Rich Uncle Moneybags from Monopoly. But a “top hat plan” is also the informal name of a type of section 457(b)...

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8 THINGS YOU NEED TO KNOW ABOUT YOUR INHERITED IRA

By Sarah Brenner, JD Director of Retirement Education A significant percentage of IRA assets will ultimately go to nonspouse beneficiaries. When these beneficiaries inherit the funds, special rules kick in. Inherited IRAs are not like other IRA accounts. Here is what...

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SECURE ACT: “WE DON’T KNOW YET”

By Andy Ives, CFP®, AIF® IRA Analyst Gradually, the IRS is clarifying sections of the SECURE Act that require further guidance. In Notice 2020-68, released September 2, the IRS addressed a number of items in a Q&A format. For example, “Is a financial institution...

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IRS ISSUES GUIDANCE ON CERTAIN SECURE ACT CHANGES

By Ian Berger, JD IRA Analyst In Notice 2020-68, issued September 2, 2020, the IRS gave limited guidance on certain retirement provisions of the Setting Every Community Up for Retirement Enhancement Act (the “SECURE Act”). The SECURE Act was signed into law on...

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PENALTY-FREE IRA DISTRIBUTIONS FOR FIRST-HOME PURCHASE

By Sarah Brenner, JD Director of Retirement Education Despite the COVID-19 pandemic, or maybe even because of it, real estate markets in many areas of the country are busy right now. If you are considering jumping in, and if this is your first home purchase, coming up...

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PERILS OF THE 60-DAY ROLLOVER

By Andy Ives, CFP®, AIF® IRA Analyst As sure as the sun will rise, someone will take a distribution from his IRA tomorrow. And as sure as the moon will set, someone will fail to roll over his IRA distribution within 60 days. And as sure as the wind will blow, so too...

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RELIEF BEYOND AUGUST 31 FOR RMD REPAYMENTS

By Ian Berger, JD IRA Analyst Some of you may have received an RMD (required minimum distribution) from an IRA or employer plan earlier this year that you don’t want to keep. Since the CARES Act waived RMDs for 2020, “RMDs” received in 2020 are technically not RMDs...

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TAPPING AN ESA FOR VIRTUAL SCHOOL EXPENSES

By Sarah Brenner, JD Director of Retirement Education The upcoming school year for many students is going to look like nothing we have ever seen before. For many, computers and related technology will become an indispensable part of academic life. This means that...

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ROTH CONVERSIONS AND 2020 RMDS: TODAY’S SLOTT REPORT MAILBAG

By Sarah Brenner, JD Director of Retirement Education Question: In December of 2018 I did my first partial Roth IRA conversion into a new Roth IRA. I’m older than 59 ½. In December of 2019 I did my second partial Roth IRA conversion into the same Roth IRA opened in...

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“DOLLAR COST AVERAGE” YOUR ROTH CONVERSION

By Andy Ives, CFP®, AIF® IRA Analyst Dollar cost averaging is a tried-and-true investment strategy that has existed for decades. Using this technique, an investor divides up their entire amount to be invested and makes smaller periodic purchases over a desired time....

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RETURNING UNWANTED RMDS: TODAY’S SLOTT REPORT MAILBAG

By Andy Ives, CFP®, AIF® IRA Analyst Question: Client has a Thrift Savings Plan and took RMDs in January, February and March of 2020. Client then rolled the balance of the TSP into an IRA. Question is whether or not he can “repay” those RMDs to the IRA under Notice...

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3 RMD REPAYMENT REMEDIES ONLY AVAILABLE UNTIL AUGUST 31

By Sarah Brenner, JD Director of Retirement Education We are in the dog days of summer and this year is a crazy and unsettling time. The last thing on your mind may be your IRA. However, you should be aware that an important deadline is quickly approaching. If you...

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STOP NAMING TRUSTS AS IRA BENEFICIARIES!

By Andy Ives, CFP®, AIF® IRA Analyst Yes, trusts can play an instrumental role in estate planning. Yes, special needs trusts are invaluable to those with disabled or chronically ill family members. Trusts are essential for minors and for those who may struggle with...

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THE CARES ACT AND 2020 RMDS: TODAY’S SLOTT REPORT MAILBAG

By Ian Berger, JD IRA Analyst Question: I can't find the answer to this question anywhere, so I thought I'd go straight to the experts. Does the CARES Act waive the requirement for a surviving spouse to distribute the RMD in 2020 prior to re-registering the IRA in the...

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STRETCH IRA LIVES ON FOR SOME BENEFICIARIES

By Sarah Brenner, JD Director of Retirement Education Last year the SECURE Act became law and eliminated the stretch IRA for millions of IRA beneficiaries. However, for some IRA beneficiaries the stretch lives on. For most beneficiaries, the stretch is now replaced...

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ROLLOVERS AND INHERITED IRAS: TODAY’S SLOTT REPORT MAILBAG

By Sarah Brenner, JD Director of Retirement Education Question: I have a very simple ROTH IRA question. I borrowed money from my ROTH IRA with the intention of paying it all back in 60 days. To avoid any penalty, must I make one repayment of all the money I borrowed?...

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DEATH DURING A ROLLOVER

By Andy Ives, CFP®, AIF® IRA Analyst A financial advisor contacted me about her client who had recently passed away. The advisor was legitimately concerned about a rollover check received by the now-deceased individual. It had not been deposited into his IRA prior to...

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TAX RULES FOR ROTH 401(K) DISTRIBUTIONS

By Ian Berger, JD IRA Analyst With more 401(k) plans offering Roth contributions and more folks taking distributions from their plans, now’s a good time to review the tax rules governing Roth 401(k) distributions. Qualified distributions. If your Roth 401(k)...

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RMDS IN 2020: TODAY’S SLOTT REPORT MAILBAG

By Andy Ives, CFP®, AIF® IRA Analyst Question: Once the RMD’s for 2020 were suspended, I withdrew what would have been my RMD from my traditional IRA and deposited it in my Roth IRA.  Can I now withdraw that amount from my Roth and repay it to my traditional IRA?...

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RECHARACTERIZATION OF IRA CONTRIBUTIONS IS STILL HERE

By Sarah Brenner, JD IRA Analyst It happens. You have made a 2019 contribution to the wrong type of IRA. All is not lost. That contribution can be recharacterized. While recharacterization of Roth IRA conversions was eliminated by the 2017 Tax Cuts and Jobs Act,...

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EXTENDED ROLLOVER DEADLINES EXPLAINED

By Andy Ives, CFP®, AIF® IRA Analyst The IRA and plan rollover rules have been in constant flux this year. We are now past the original July 15 extended rollover deadline. This was the first extension date created by IRS Notice 2020-23. Distributions from an IRA or...

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IRS COMPENSATION LIMITS IN COMPANY RETIREMENT PLANS

By Ian Berger, JD IRA Analyst Admittedly, it’s not such a bad problem to have. Nonetheless, it’s true that high-paid company plan participants can have their benefits limited by the IRS compensation limit. The compensation limit is $285,000 for 2020 and goes up most...

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THE IRA CONTRIBUTION DEADLINE IS ALMOST HERE

By Sarah Brenner, JD IRA Analyst The countdown to the much delayed 2019 tax filing deadline is on. The deadline is July 15, 2020, which is only a couple of days away. Time is running out. Is your IRA ready? Making Your 2019 IRA Contribution Due to the COVID-19...

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TOP 12 RMD WAIVER QUESTIONS

By Andy Ives, CFP®, AIF® IRA Analyst As we have written on many occasions, the “Coronavirus Aid, Relief, and Economic Security Act” (CARES Act) waives required minimum distributions (RMDs) for 2020. This waiver applies to company savings plans and IRAs, including both...

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A ROUNDUP OF RECENT DOL AND IRS RETIREMENT PLAN GUIDANCE

By Ian Beger, JD IRA Analyst There’s been a flurry of recent government regulation of company retirement plans. Here’s a quick summary: Electronic Disclosure of Retirement Plan Documents On May 27, 2020, the Department of Labor published a final regulation making it...

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THE CARES ACT AND RMDS: TODAY’S SLOTT REPORT MAILBAG

By Andy Ives, CFP®, AIF® IRA Analyst Question: If someone took two IRA distributions earlier in 2020 that were considered RMDs, and now wishes to repay the cumulative amount back into the same IRA, are there any rules about the number of rollover deposits they can...

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EXCEPTIONS TO THE 10% EARLY DISTRIBUTION PENALTY FOR IRAS

By Sarah Brenner, JD IRA Analyst IRAs are supposed to be for saving for retirement but in challenging economic times like these many individuals may be forced to take distributions before retirement age. Be careful! If you tap your IRA before reaching age 59 ½, the...

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SIX MONTHS OF CRAZY – A SUMMARY OF RECENT RETIREMENT EVENTS

By Andy Ives, CFP®, AIF® IRA Analyst After a six-month sprint through a diabolical obstacle course of new laws, a pandemic, record unemployment, deaths, confusion and complete disruption of everyone’s professional and personal lives, this seems like a good time to...

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IRS EXTENDS ROLLOVER DEADLINE FOR 2020 RMDS

By Ian Berger, JD IRA Analyst The IRS has extended the rollover deadline for required minimum distributions (RMDs) taken from IRAs or company plans in 2020. In Notice 2020-51, released on June 23, the IRS said that any unwanted 2020 RMDs can be repaid via rollover to...

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IRS EXPANDS ELIGIBILITY FOR CORONAVIRUS-RELATED DISTRIBUTIONS

By Sarah Brenner, JD IRA Analyst On June 19, the IRS released additional guidance on coronavirus-related distributions (CRDs) from retirement accounts. The new guidance will make many more individuals eligible for these tax-advantaged distributions allowed under the...

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60-DAY ROLLOVERS: TODAY’S SLOTT REPORT MAILBAG

By Sarah Brenner, JD IRA Analyst Question: Thank you for all the great resources you provide. I have been looking for an answer to my specific situation and have not been able to find a clear answer to what I think is a pretty straight forward situation/fact pattern....

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IRS ALLOWS REMOTE WITNESSING OF SPOUSAL WAIVERS

By Ian Berger, JD IRA Analyst In the wake of the coronavirus pandemic, the IRS has temporarily relaxed the rule that spousal consent to certain retirement plan distributions and loans must be witnessed personally by a notary public or a plan representative. In Notice...

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SPECIAL NEEDS TRUSTS AND CRDS: TODAY’S SLOTT REPORT MAILBAG

By Andy Ives, CFP®, AIF® IRA Analyst Question: Under the SECURE Act, if we can assume a Special Needs Trust can qualify for the stretch via the disabled beneficiary, what happens when the special needs trust beneficiary passes? The next named beneficiary (remainder)...

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SECURE ACT’S 10-YEAR RULE BRINGS NEW PLANNING OPPORTUNITIES

By Sarah Brenner, JD IRA Analyst By now, most IRA owners have heard the bad news. The SECURE Act eliminates the stretch IRA for the majority of beneficiaries who inherit in 2020 or later. Instead, for most, a 10-year payout rule will apply. Here is how this new rule...

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ROTH CONVERSIONS: PAYING TAXES FROM ANOTHER SOURCE

By Andy Ives, CFP®, AIF® IRA Analyst The King of the Land wanted to send 100,000 of his greatest warriors off to battle. However, he was told that 20,000 of the warriors needed to remain behind to protect the castle. The King of the Land did not like this news. He...

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2020 RMD WAIVERS: TODAY’S SLOTT REPORT MAILBAG

By Ian Berger, JD IRA Analyst Question: I understand that I don’t have to take any RMDs during 2020.  However, is the CARES Act rule that it is an-all-or-nothing for RMDs or can I take a portion of my RMD for 2020 but not all John Answer: Hi John, Since RMDs are...

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SHOULD I TAKE A LUMP SUM BUYOUT?

By Ian Berger, JD IRA Analyst As a result of the current economic downturn, we can expect more and more companies to offer lump sum buyouts to employees with defined benefit (DB) plan benefits. A lump sum buyout is a limited opportunity for DB plan participants to...

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3 REASONS TO ROLL OVER YOUR RETIREMENT FUNDS TO AN IRA

By Sarah Brenner, JD IRA Analyst More than 40 million Americans have filed for unemployment since the Corona virus pandemic hit in in the middle of March. With job loss can come questions of what to do with retirement savings such as your 401(k) plan. A rollover to an...

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ONE MORE CARES ACT MISCONCEPTION

By Ian Berger, JD IRA Analyst The Coronavirus Aid, Relief, and Economic Recovery (CARES) Act continues to cause confusion. In the April 22, 2020 Slott Report, we discussed four misconceptions surrounding the new law. In this article, we add one more: If your employer...

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CONVERSION NIGHTMARES

By Sarah Brenner, JD IRA Analyst With markets down, many IRA owners are thinking this may be the time for a Roth IRA conversion. Converting when account values are down can be a good bargain. You pay a tax bill on a lower balance now in exchange for potential tax-free...

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CRDS AND ROTH CONVERSIONS – ABUSE OF THE RULES?

By Andy Ives, CFP®, AIF® IRA Analyst The coronavirus-related distribution (CRD) rules for Roth conversions have a gaping hole. An “affected person” (as we have defined in previous blogs), is entitled under the CARES Act to withdraw up to $100,000 from their IRA or...

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IRA PROTECTION AGAINST THE EVIL GENIE IN THE LAMP

By Andy Ives, CFP®, AIF® IRA Analyst The evil genie in the IRA lamp wants your money. He roars with laughter at the thought of you facing hard times. Given an opportunity, he will line the pockets of creditors with your IRA dollars, and he will serve your remaining...

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CARES ACT EXPANDS HSAS

By Sarah Brenner, JD IRA Analyst The recently passed CARES Act includes some changes that impact your HSA. These changes will allow you to access more medical services without worrying about your deductible, and also enable you to take more tax-free distributions from...

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IRS ISSUES Q&AS ON CORONAVIRUS-RELATED DISTRIBUTIONS

By Ian Berger, JD IRA Analyst Under the Coronavirus Aid, Relief, and Economic Security Act (the CARES Act), certain individuals can take up to $100,000 of distributions from IRAs and company plans during 2020 and receive special tax relief. Those distributions are...

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THE MEGA BACKDOOR ROTH IS USUALLY TOO GOOD TO BE TRUE

By Ian Berger, JD IRA Analyst For a number of years, the “mega backdoor Roth” strategy has been touted as a way for employees to convert large amounts of after-tax employee contributions to Roth IRAs. Unfortunately, in most cases the strategy won’t work. Here’s why....

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TECHNOLOGY, ROTH CONVERSIONS AND A SQUIRMING SON

By Andy Ives, CFP®, AIF® IRA Analyst 77 and sharp - that’s my dad. A voracious reader. Daily crossword puzzles. Curious. Engaged with the community. But he gets a little loose with technology. Comedic evidence suggests he is blissfully unaware if he is having a...

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4 CARES ACT MISCONCEPTIONS

By Ian Berger, JD IRA Analyst The Coronavirus Aid, Relief and Economic Recovery Act (CARES Act), signed into law on March 27, includes several important retirement-related provisions. Because some of these provisions are confusing, several misconceptions about the new...

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4 CARES ACT MISCONCEPTIONS

By Ian Berger, JD IRA Analyst The Coronavirus Aid, Relief and Economic Recovery Act (CARES Act), signed into law on March 27, includes several important retirement-related provisions. Because some of these provisions are confusing, several misconceptions about the new...

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QCDS – STILL AVAILABLE IN 2020 AND STILL A GOOD STRATEGY

By Sarah Brenner, JD IRA Analyst As the coronavirus pandemic has raged on, we have seen devasting images of overwhelmed hospitals and long lines of cars at food banks. If you are fortunate enough to have money to spare, you might be thinking about how you can help....

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RMDS & ROTH IRAS: TODAY’S SLOTT REPORT MAILBAG

By Sarah Brenner, JD IRA Analyst Question: I took 25% of my 2020 required minimum distribution (RMD) from an inherited IRA on March 15, 2020. Can that be “undone” in accordance with the CARES Act and if so, how?  Thanks. Audrey Answer: Hi Audrey, The CARES Act waives...

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ROLLING OVER AN RMD, PART 2 – “JUST WAIT A MINUTE”

By Andy Ives, CFP®, AIF® IRA Analyst I grew up in the northeast, where snow squalls sweep across Lake Ontario and cede to blue skies, where 85-degree summer days change to a biting rain at a moment’s notice. The folksy phrase around town was, “If you don’t like the...

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ROLLING OVER AN RMD, PART 2 – “JUST WAIT A MINUTE”

By Andy Ives, CFP®, AIF® IRA Analyst I grew up in the northeast, where snow squalls sweep across Lake Ontario and cede to blue skies, where 85-degree summer days change to a biting rain at a moment’s notice. The folksy phrase around town was, “If you don’t like the...

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QCDS AND ROTH CONVERSIONS: TODAY’S SLOTT REPORT MAILBAG

By Andy Ives, CFP®, AIF® IRA Analyst Question: Hi. What are the rules for QCDs now that required minimum distributions (RMDs) have been cancelled for 2020? Thanks for your help. Jerry Answer: Jerry, Qualified charitable distributions (QCDs) are unaffected by the CARES...

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NO “FIRST MONEY OUT” RULE FOR 2020

By Sarah Brenner, JD IRA Analyst On March 27, the massive “Coronavirus Aid, Relief, and Economic Security Act,” or the “CARES Act,” was signed into law. The CARES Act includes a waiver of required minimum distributions (RMDs) for 2020. This waiver applies to company...

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ROLLING OVER AN RMD

By Andy Ives, CFP®, AIF® IRA Analyst Like most people’s lives, the retirement world is upside down. This is made evident by a single statement: “Required minimum distributions (RMDs) can be rolled over.” Yes, that is the new normal – at least for this year. RMDs are...

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THE CARES ACT 2020 RMD WAIVER: TODAY’S SLOTT REPORT MAILBAG

By Ian Berger, JD IRA Analyst Question: The virus pandemic has prompted legislation that has eliminated the requirement for me to take a required minimum distribution (RMD) from my IRA for the year 2020. Am I therefore allowed to do a partial Roth IRA conversion in...

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CARES ACT RELIEF FOR RETIREMENT DISTRIBUTIONS AND PLAN LOANS

By Ian Berger, JD IRA Analyst The recently-enacted “Coronavirus Aid, Relief, and Economic Security Act,” or CARES Act, includes special tax relief for IRA and company plan withdrawals made in 2020 and for company plan loans. Who gets relief? Both the distribution and...

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CORONAVIRUS RELIEF FOR RETIREMENT ACCOUNTS

By Sarah Brenner, JD IRA Analyst As the coronavirus pandemic has spread, many Americans have been hit hard. Their retirement accounts have also taken a serious blow as markets have plummeted. In these tough times, there is a bit of good news as the government has come...

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BUILDING A SAFETY NET – SMALL BUSINESSES RETIREMENT PLANS

By Andy Ives, CFP®, AIF® IRA Analyst By their nature, small businesses struggle in the shallows. Now they face a tsunami. However, when the shutters are removed and customers return and the employees are back on the payroll, normal day-to-day concerns will be a...

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SPLITTING IRAS AFTER THE SECURE ACT

By Ian Berger, JD IRA Analyst It’s common for IRA owners to leave their assets to multiple beneficiaries – for example, their children. Before the SECURE Act, it usually made sense to split the IRA into separate accounts either before or after death. That’s because...

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INHERITED IRAS AND QCDS: TODAY’S SLOTT REPORT MAILBAG

By Andy Ives, CFP®, AIF® IRA Analyst Question: A daughter who has been diagnosed with rheumatoid arthritis is listed as the beneficiary on her father’s Roth IRA.  Does this disease qualify as a “chronic illness” for purposes of the exception to the 10-year rule? Is...

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SELF-CERTIFICATION FOR MISSED 60-DAY ROLLOVERS

By Andy Ives, CFP®, AIF® IRA Analyst When a person takes a distribution from his IRA or workplace plan, he has 60 days from the day of receipt to redeposit (i.e., roll over) those dollars into another qualified account. This assumes no other disqualifying rollovers...

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APRIL 15 DEADLINE LOOMS TO CORRECT 2019 EXCESS PLAN DEFERRALS

By Ian Berger, JD IRA Analyst The amount of annual elective deferrals you can make to a 401(k) or 403(b) plan is limited by the tax code. If you discover that you’ve over-contributed in 2019, time is of the essence to correct the error. If you don’t act quickly, the...

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QCDS AND THE 10-YEAR RULE: TODAY’S SLOTT REPORT MAILBAG

By Sarah Brenner, JD IRA Analyst Question: My dad was 86 when he died and I inherited half of his IRA, which I elected to stretch.  Am I correct in thinking that since I am not yet 70 ½, I am not allowed to direct qualified charitable distributions (QCDs) from this...

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RMD TRIVIA

By Andy Ives, CFP®, AIF® IRA Analyst True or False?  “It is mathematically impossible for an IRA account owner to have his first required minimum distribution (RMD) be due for the year 2020.” Here’s why this statement is true. First, we are not talking about inherited...

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SEVEN Q&AS ABOUT COMPANY PLAN LOANS

By Ian Berger, JD IRA Analyst Who can offer them? Most company retirement savings plans, such as 401(k), 403(b) and 457(b) plans, are allowed to (but not required to) offer plan loans. Loans are not allowed from IRAs or SEP and SIMPLE-IRA plans. What is the maximum...

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INHERITED IRAS: TODAY’S SLOTT REPORT MAILBAG

By Andy Ives, CFP®, AIF® IRA Analyst Question: Looking for your help. Husband has an inherited IRA (from his dad prior to the SECURE Act) and was taking RMDs using the single life table. Husband passes away in 2020 and leaves the inherited IRA to his wife who is age...

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10 THINGS TO KNOW ABOUT THE SECURE ACT’S 10-YEAR RULE

By Sarah Brenner, JD IRA Analyst The SECURE Act overhauled the rules for beneficiaries of retirement accounts. One significant change it brought is the new 10-year payout rule. Here are ten things you need to know about the new 10-year rule. 1. The 10-year rule...

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CAREFUL CONSIDERATIONS: SPOUSAL ROLLOVER OR INHERITED IRA?

By Andy Ives, CFP®, AIF® IRA Analyst A spouse beneficiary of an IRA faces many decisions. There is great flexibility and many items to consider. For example, how old was my spouse when he or she passed and what impact will that have on my available choices? Do I need...

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TAX RULES FOR DIFFERENT TYPES OF WORKPLACE PLANS

By Ian Berger, JD IRA Analyst Most workplace retirement plans allowing elective deferrals fall into one of these varieties: 401(k) plans for employees of private sector companies. 403(b) plans for employees of tax-exempt employers, public schools and churches. 457(b)...

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SECURE ACT REQUIRES ACTION IF A TRUST IS YOUR IRA BENEFICIARY

By Sarah Brenner, JD IRA Analyst Many IRA owners have named trusts as their IRA beneficiaries. You may be one. Trusts offer control from the grave and can be a smart choice, especially to protect beneficiaries who may be minors, have special needs or simply are not...

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QCDS AND INHERITED ROTH IRAS: TODAY’S SLOTT REPORT MAILBAG

By Sarah Brenner, JD IRA Analyst Question: Can a QCD be used to pay dues to a charitable organization? Answer: This is an area where we receive a lot of questions. To qualify as a QCD, there cannot be any benefit back to you from the funds that go from your IRA to the...

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INDIANA JONES AND THE 72(T) IDOL

By Andy Ives, CFP®, AIF® IRA Analyst Do you want to access your IRA funds penalty-free, even though you are under age 59 ½ and no exception fits your situation? It can be done. Starting a new business and need capital from your IRA, but don’t want to pay the 10% early...

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SPOUSAL PROTECTION IN COMPANY RETIREMENT PLANS

Ian Berger IRA Analyst One important difference between IRAs and company retirement plans is spousal protection. Except for community property states, spouses of IRA owners do not have any rights to the account. By contrast, many workplace plans must provide spouses...

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MOVING YOUR IRA FUNDS WHILE TAKING RMDS? PROCEED WITH CAUTION

By Sarah Brenner, JD IRA Analyst Are you looking for a better investment for your IRA? Are you thinking about making the move to another IRA custodian or financial advisor? You do have this opportunity. The IRA rules are set up to allow portability. However, if you...

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EDBS IN DETAIL: MINORS, DISABLED AND CHRONICALLY ILL

By Andy Ives, CFP®, AIF® IRA Analyst For those who inherit IRA accounts in 2020 or later, the SECURE Act permits five groups of people to stretch required minimum distribution (RMD) payments over their life expectancy. As I touched on in a recent Slott Report article...

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THE SECURE ACT AND RMDS: TODAY’S SLOTT REPORT MAILBAG

By Ian Berger, JD IRA Analyst Question: Hi Ed, Question on the new SECURE Act: Do you know if there were any changes to the payout period if an estate is the beneficiary of an IRA. Is it still a 5-year payout? Or is it now 10? Thanks, appreciate your help. Janet...

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SECURE ACT GIVES 401(K) RELIEF TO PART-TIMERS

By Ian Berger, JD IRA Analyst Part-time employees in companies with 401(k) plans won a big victory when the SECURE Act was signed into law on December 20, 2019. Before the SECURE Act, 401(k) plans could exclude employees if they did not work at least 1,000 hours of...

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THE SECURE ACT RUINS A PERFECTLY GOOD QCD

By Andy Ives, CFP®, AIF® IRA Analyst As we gradually peel back the layers of this legislative onion called the SECURE Act, more and more discoveries come to light. One revelation is how qualified charitable distributions (QCDs) are potentially affected. Could a QCD...

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2020 LIFE TABLES AND RMDS: TODAY’S SLOTT REPORT MAILBAG

By Andy Ives, CFP®, AIF® IRA Analyst Question: Hoping you might be able to offer some guidance. We have a client who has two IRA accounts.  The client is 80 years of age. He wants to convert the full amount in one of his IRA accounts to a Roth. The IRS says that...

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THE STRETCH ON A STRETCHER

By Andy Ives, CFP®, AIF® IRA Analyst The stretch IRA is on a stretcher and paramedics just loaded it into an ambulance. It is on life support. Prognosis: negative. For most new beneficiaries, the stretch will not survive. The SECURE Act is the perpetrator, and it...

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NO RMD RELIEF FOR THOSE 70 ½ IN 2019 UNDER THE SECURE ACT

Sarah Brenner, JD IRA Analyst The SECURE Act is here! Most of new law’s provisions kicked in on January 1, 2020, overhauling many of the rules for retirement accounts that have been with us for decades. One significant change the SECURE Act brings us is the delay in...

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HAPPY NEW YEAR

Ian Berger, JD IRA Analyst The clock is winding down to the ball-dropping in Times Square that will usher in a new year – and a new decade. The Ed Slott and Company team wishes to thank you for supporting The Slott Report and responding to our articles with such...

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ROTH CONTRIBUTIONS AND RMDS: TODAY’S SLOTT REPORT MAILBAG

By Andy Ives, CFP®, AIF® IRA Analyst Question: Hi Ed, Hope all is well.  I have a client that received the HEART benefit as her spouse passed away a few years ago.  We immediately moved those dollars into a Roth for her.  My question is, as we are doing some year-end...

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8 DAYS FOR 6 YEAR-END TRANSACTIONS

By Andy Ives, CFP®, AIF® IRA Analyst As of the writing of this Slott Report submission, it is Monday, December 23, 2019. T-minus 8 days before the end of the year, which means IRA owners have a tight window to complete any year-end transactions. Once the calendar...

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HELLO SECURE ACT, GOOD BYE STRETCH IRA

By Sarah Brenner, JD IRA Analyst With the clock ticking down on 2019, Congress is expected to enact a $1.4 trillion year-end spending bill to keep the government running. Tucked away inside this mammoth piece of legislation is the Setting Every Community Up for...

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FIVE QDRO Q&AS

By Ian Berger, JD IRA Analyst 1. What is a QDRO? A QDRO is a “qualified domestic relations order.” In plain English, it is a state court order obtained by divorcing parties that requires an ERISA plan to pay a portion of a participant’s benefit to the non-participant...

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QCDS AND INHERITED IRAS: TODAY’S SLOTT REPORT MAILBAG

By Sarah Brenner, JD IRA Analyst Question: As year-end approaches, I have just exceeded my 2019 RMD, combining total QCD's during the year and my regular monthly IRA withdrawals. If I make additional charitable contributions from my IRA this month, are they still...

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GUNFIGHT AT THE 401(K) CORRAL

By Andy Ives, CFP®, AIF® IRA Analyst When the chips are down, the providers hold all the cards. This is true for both IRAs and workplace plans. Ultimately, the IRA custodian (through its custodial form) and retirement plan sponsor (through the plan document) will...

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Weekly Market Commentary

December 10th, 2019 Chadd Mason, CEO The Cabana Group Yet Again, the Market Focuses on What Matters - Interest Rates and Earnings After a rocky start to last week, U.S. equity markets rebounded and finished higher, led by Friday's 1% bounce in the S&P 500. The...

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HOW THE TOP-HEAVY RULES FOR 401(K) PLANS WORK

By Ian Berger, JD IRA Analyst Just like eating too much pumpkin pie with whipped cream isn’t good for your waistline, being a “top-heavy” retirement plan also may not be healthy. Sponsors of certain retirement savings plans must have their plan tested each year to...

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THANKSGIVING PARADE

By Andy Ives, CFP®, AIF® IRA Analyst The Macy’s Thanksgiving Day Parade is a river of sights and colors and sound. A snappy marching band flows to an army of volunteers clutching the ropes of a six-story inflatable SpongeBob, swaying in the wind. Flag bearers and...

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ACTIVE PARTICIPATION

By Andy Ives, CFP®, AIF® IRA Analyst Jenny earns a salary of $1,000,000. She is single and is not an active participant in a company retirement plan. Jenny can contribute $6,000 to a traditional IRA and deduct the full amount on her taxes. Benny, also unmarried, has a...

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WHY YOU SHOULD NOT CARE ABOUT THE ROTH IRA FIVE-YEAR RULES

By Sarah Brenner, JD IRA Analyst Roth IRAs first arrived over twenty years ago. A lot has changed since 1998. That was the year that Google was founded and an electronic pet called a Furby was one of the most popular Christmas gifts. However, some things haven’t...

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TEN QCD RULES FOR 2019 YOU NEED TO KNOW

By Sarah Brenner, JD IRA Analyst If you are charitably inclined and have an IRA, you might want to consider doing a Qualified Charitable Distribution (QCD) for 2019. The deadline for a 2019 QCD is fast approaching. It is December 31, 2019 and many custodians have even...

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QCDS AT THE STATE LEVEL

By Andy Ives, CFP®, AIF® IRA Analyst Earlier this month, a tax notification service released information declaring that “North Carolina Governor Roy Cooper signed legislation allowing an income exclusion for distributions from individual retirement accounts (IRAs) to...

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HOW THE 401(K) NONDISCRIMINATION RULES WORK – PART 2

By Ian Berger, JD IRA Analyst Many 401(k) plans must pass two annual nondiscrimination tests: the ADP test and the ACP test. The November 11 Slott Report discusses the ADP test. This Slott Report tackles the ACP test and the options available to 401(k) plans that fail...

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By Ian Berger, JD IRA Analyst If you participate in a 401(k) plan, you probably know about the annual limit on the amount of your deferrals (for 2019, $19,000, or $25,000 if over age 50). But if you are a high-paid employee, another limit may apply. Welcome to the IRS...

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MODERATION

By Andy Ives, CFP®, AIF® IRA Analyst Hypersensitivity to caffeine - this is my affliction. So much so that I limit myself to one energy drink per week. It must be opened before noon and should be nursed for a minimum of 90 minutes. Any violation could result in me...

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WHO SHOULD BE YOUR IRA BENEFICIARY?

By Sarah Brenner, JD IRA Analyst IRAs are for saving for retirement. However, as these accounts have grown over the years, many IRA owners still have significant funds in their IRA at their death. This means that estate planning for IRAs is essential. Effective estate...

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VESTING RULES FOR COMPANY PLANS

By Ian Berger, JD IRA Analyst If you’re thinking about leaving your job, you may want to inquire about your company retirement plan’s vesting schedule. If you are close to becoming vested in a retirement benefit, it may pay to stick it out until you have enough...

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THE 5-YEAR FOREVER CLOCK

By Andy Ives, CFP®, AIF® IRA Analyst Buckle your seatbelt and hang on to your hat. This ride could get bumpy. We are about to embark on a conversation that might give some readers vertigo or whiplash or all of the above. An article I wrote about the two 5-year clocks...

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SEVEN THINGS TO KNOW ABOUT SPOUSAL IRA CONTRIBUTIONS

By Sarah Brenner, JD IRA Analyst Many individuals find themselves stepping away from a job for reasons such as raising children or being a caregiver to aging parents. When this happens retirement savings can take a hit. That does not necessarily need to be case. You...

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ALL ABOUT ERISA

By Ian Berger, JD IRA Analyst Contrary to urban legend, ERISA does not stand for “Every Ridiculous Idea Since Adam.” Instead, it is an acronym for the Employee Retirement Income Security Act of 1974. ERISA is a federal law that regulates employer-sponsored retirement...

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CARRY THE BOX

By Andy Ives, CFP®, AIF® IRA Analyst My wife teaches elementary school kids. Been at it for years. Long enough to have former students visit her classroom as adults. She was put on this Earth to teach. Tough job, though. Even at this early age, and oftentimes through...

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THREE THINGS TO KNOW ABOUT THE YEAR OF DEATH RMD

By Sarah Brenner, JD IRA Analyst There are always questions that come up as to the correct way to handle the required minimum distribution (RMD) for the year of death of the IRA owner. Here are three things you need to know about the year of death RMD. 1. The RMD for...

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RETROACTIVE

By Andy Ives, CFP®, AIF® IRA Analyst Retroactive adjective ret·​ro·​ac·​tive | extending in scope or effect to a prior time or to conditions that existed or originated in the past; especially: made effective as of a date prior to enactment, promulgation, or...

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FOUR OCTOBER 15 DEADLINES YOU DON’T WANT TO MISS

By Sarah Brenner, JD IRA Analyst October is upon us. This means fall is in full swing. Along with football, pumpkin-spice everything and stocking up on candy for trick-or-treat come four important October 15 deadlines you will not want to miss! 1. Did you contribute...

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DOLLAR LIMITS WHEN PARTICIPATING IN TWO COMPANY PLANS

By Ian Berger, JD IRA Analyst Knowing your limits is important when you’re sitting in a bar and realize that you have to drive home. It’s also important to know the dollar limits that apply when you participate in more than one company retirement savings plan or you...

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HIGHWAY TO THE DANGER ZONE

By Andy Ives, CFP®, AIF® IRA Analyst My son is 14. I make every effort to expose him to a wide array of cultural elements. A variety of music. Plays. History. Food. Movies from the 80’s and 90’s are a significant slice of the “Understanding Social References” pie...

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EXCEPTIONS TO THE 10% PENALTY FOR BOTH IRAS AND COMPANY PLANS

By Sarah Brenner, JD IRA Analyst Retirement accounts are supposed to be for saving for retirement. If you tap your retirement savings before reaching age 59 ½, you run the risk of being hit with the 10% early distribution penalty. However, there are exceptions to this...

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A SHORT PRIMER ON DEFINED BENEFIT PLANS

By Ian Berger, JD IRA Analyst Like cassette tapes and slide rules, defined benefit (DB) plans are becoming relics of the past. It’s estimated that 88% of private sector employees with a company plan in 1975 were covered by a DB plan. Today, that number is less than...

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TOP 10 RMD GOOFS, GAFFES AND BLUNDERS

By Andy Ives, CFP®, AIF® IRA Analyst People stumble over themselves all the time. Bad advice is provided, misinformation gets freely disseminated, and sometimes normally smart individuals do less-than-smart things. Stories of good folks fouling up their required...

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QCDS AND ROTH CONVERSIONS: TODAY’S SLOTT REPORT MAILBAG

By Sarah Brenner, JD IRA Analyst Question: Hello, I’ve been a follower of Ed’s expertise for over 10 years. The information has always been helpful and clearly explained. At this time, I’m looking to help a client minimize her taxes. She recently inherited an IRA from...

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RELIEF FOR JOINTLY SPONSORED RETIREMENT PLANS

By Ian Berger, JD IRA Analyst If you run a small company, you may be reluctant to offer a retirement plan to your employees because of the cost of plan administration and compliance. If so, you’re not alone: approximately 38 million American workers lack access to a...

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SQUALLS OUT ON THE GULF STREAM

By Andy Ives, CFP®, AIF® IRA Analyst As I write, Hurricane Dorian is pummeling the Bahamas, churning the ocean and producing catastrophic damage. Godspeed, Freeport. Forecasts suggest the storm will sweep north and brush the east coast of Florida, which is where I...

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BACK TO SCHOOL WITH AN ESA

By Sarah Brenner, JD IRA Analyst The calendar is turning to September and Starbucks is once again selling pumpkin spice lattes. It’s back to school time! We can all agree that education is expensive. If you have children, you know that you cannot afford to miss out on...

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IRA BENEFICIARIES AND NUAS: TODAY’S SLOTT REPORT MAILBAG

By Ian Berger, JD IRA Analyst Question: Hello, I have an IRA from my deceased father. The beneficiary is my mother, but she passed on before my father. The IRA custodian is saying this doesn't go through the estate but directly to me. I thought all IRA's that don't...

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CATCHING UP

By Ian Berger, JD IRA Analyst Who says getting old is all bad? Once you reach a certain age, Congress rewards your longevity by letting you contribute an extra amount to your IRA or workplace savings plan – with no strings attached. It’s a great way to boost your nest...

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DEATH, TAXES AND MISSED RMDS

By Andy Ives, CFP®, AIF® IRA Analyst Every year thousands of traditional IRA account owners turn 70 ½ years old. In addition, each year thousands of younger non-spouse beneficiaries inherit traditional and Roth IRA accounts. What do these two groups of people have in...

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ROLLOVERS & RMDS: TODAY’S SLOTT REPORT MAILBAG

By Sarah Brenner, JD IRA Analyst Question: We found a discussion on your website’s discussion board in 2011 regarding 60-day rollovers straddling two calendar years. We are trying to confirm that a rollover would still be valid even if the Form 1099-R and 5498 may be...

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3 THINGS YOU MUST KNOW IF YOU INHERIT AN INHERITED IRA

By Sarah Brenner, JD IRA Analyst IRAs have now been around for decades. This means these accounts are now being inherited by beneficiaries and even, increasingly, by successor beneficiaries. Here are 3 things you must know if you are a successor beneficiary who...

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THE SKINNY ON DC PLANS

By Ian Berger, JD IRA Analyst You may know that you participate in a DC retirement plan. But what exactly does that mean? (Hint: It doesn’t mean that your plan is sponsored by the District of Columbia.) “DC” actually stands for “defined contribution” plan. Defined...

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THE SKINNY ON DC PLANS

By Ian Berger, JD IRA Analyst You may know that you participate in a DC retirement plan. But what exactly does that mean? (Hint: It doesn’t mean that your plan is sponsored by the District of Columbia.) “DC” actually stands for “defined contribution” plan. Defined...

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BANKRUPTCY: FAIL TO PLAN? PLAN TO FAIL

By Andy Ives, CFP®, AIF® IRA Analyst Just as IRA and 401(k) plans have different levels of bankruptcy protection, so too do other possessions. Whether these assets are qualified or not, there are ways to shield oneself from creditors. Case in point - in order to...

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7 COMMON QUESTIONS ON THE SECURE ACT

By Sarah Brenner, JD IRA Analyst The Setting Every Community Up For Retirement Enhancement (SECURE) Act recently passed the House of Representatives by a large margin. It is currently stalled in the Senate. This bill includes a multitude of provisions that would...

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LESSENING THE HARDSHIP

By Ian Berger, JD IRA Analyst Participating in a company plan, like a 401(k) or 403(b) plan, is a great way to save for retirement. But to make sure that employees don’t use those plans as checking accounts, Congress has imposed limits on when you can withdraw your...

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USING NUA FOR AN RMD – 3 STEPS

By Andy Ives, CFP®, AIF® IRA Analyst Many company retirement plans – like a 401(k) – offer company stock as an investment option. Under special tax rules, a plan participant can withdraw the stock and pay regular (ordinary) income tax on it, but only on the original...

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SHOULD YOU LEAVE YOUR IRA TO A TRUST?

By Sarah Brenner, JD IRA Analyst You may wonder about naming your trust as your IRA beneficiary. For some that may be the way to go, but you should be careful. Trusts are not for everyone. There are trade-offs and consequences. Trusts as IRA beneficiaries create...

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GOING SOLO

By Ian Berger, JD IRA Analyst Sometimes it pays to go solo. For self-employed individuals looking to maximize their nest egg, a solo 401(k) plan -- also known as an “individual 401(k)” or a “uni-k” -- may be a better choice than a SIMPLE or SEP IRA. Who Can Have a...

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USING RETIREMENT DOLLARS WITHIN THE 60-DAY ROLLOVER WINDOW

By Andy Ives, CFP®, AIF® IRA Analyst By the look of everyone’s Facebook and Instagram photos, it appears we are all flying Gulfstream jets around the world, relaxing on far-away beaches and lighting Cuban cigars with twisted-up $100-dollar bills. Is the economy really...

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A SEP FOR YOUR SIDE GIG

By Sarah Brenner, JD IRA Analyst It is not unusual for many workers today to have a side gig. They may have job, and it might even be full time, but it’s still not enough to make ends meet. So, they operate their own business on the side. The extra income can be...

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RETIREMENT ACCOUNT ROLLOVERS: TODAY’S SLOTT REPORT MAILBAG

By Ian Berger, JD IRA Analyst Question: I read your November 29, 2017 explanation of rollovers and the time limitations. But my issue is still unclear to me. In December 2018, my husband made a transfer from his 401(k) to an IRA to a Roth IRA. We intended to do the...

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QUALIFYING TO BE QUALIFIED

By Ian Berger, JD IRA Analyst Many of you who participate in a company retirement plan may have heard that the plan is “qualified” or “tax-qualified.” That sounds reassuring, but what exactly does it mean? In other words, what qualifies a qualified plan to be...

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ROTH IRA & ROTH 401(K) – THE BASICS

By Andy Ives, CFP®, AIF® IRA Analyst Roth IRAs and Roth 401(k) plans are incredibly popular, and why wouldn’t they be? Both offer tax-free earnings and allow the account owner to pass tax-free dollars to their beneficiaries. However, despite the ubiquity of Roth...

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INHERITED IRAS AND RMDS: TODAY’S SLOTT REPORT MAILBAG

By Sarah Brenner, JD IRA Analyst Question: I have read your updates and shared information regarding the SECURE bill that is in the Senate currently.  The information discusses the non-spouse beneficiaries of IRAs will need to take distributions over 10 years as a...

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GOING IN REVERSE

By Ian Berger, JD IRA Analyst When driving your car, most of the time you’re going forward. But sometimes, like when you back into a parking spot in anticipation of beating the traffic after a sporting event or concert, you must shift gears to reverse. So it is with...

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TAKING A LITTLE BIT OF THE STING AWAY

By Ian Berger, JD IRA Analyst ‘Tis the season for bee stings and mosquito bites. Just like those summer irritations, 401(k) plan loans have their own annoying rules that can make them risky transactions. Fortunately, a provision of the 2017 tax reform law applied a...

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HAPPY 4TH OF JULY! – 4 IRA TIPS TO SHARE AT YOUR BARBECUE

By Sarah Brenner, JD IRA Analyst Happy 4th of July to all the loyal readers of the Slott Report! This summer holiday is a time for barbecues. This is a time when all ages come together to celebrate. Families will gather to grill hot dogs, roast marshmallows and watch...

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CAUTION! NO ROLLOVER FOR NONSPOUSE BENEFICIARIES

By Sarah Brenner, JD IRA Analyst Did you inherit an IRA from someone who is NOT your spouse? This is not uncommon. Maybe you inherited from a sibling or a parent or a friend. If this is your situation, you will want to proceed with caution. For nonspouse beneficiaries...

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DON’T FEAR THE 5-YEAR RULE

By Andy Ives, CFP®, AIF® IRA Analyst Prior to 2002, a default option for paying out required minimum distributions from an inherited IRA to a beneficiary was the 5-year rule. If the IRA owner died before their required beginning date and an election was not made in a...

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BEST THING SINCE SLICED BREAD?

By Andy Ives, CFP®, AIF® IRA Analyst Roth IRAs are a wonderful way to save for retirement. A person can sock away $6,000 a year (plus another $1,000 if they are age 50 or older) and the earnings will grow tax free. Plus, most custodians allow Roth IRA dollars to be...

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6 THINGS ABOUT ROLLOVERS THAT EVERY IRA OWNER SHOULD KNOW

By Sarah Brenner, JD IRA Analyst The road to retirement is long. Along the way you may need or want to move your retirement funds. Maybe you are leaving a job or maybe you are just looking for a new investment strategy. When the time comes to make a move, you will...

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THE PIANO MAN’S FIRST RMD

By Sarah Brenner, JD IRA Analyst Every single month since January of 2014, Billy Joel has headlined a sold-out show at Madison Square Garden. Demand for tickets to see the Piano Man has not waned. Ticket sell out quickly. Millions of fans will attest that Billy Joel,...

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THE TIME MACHINE

By Andy Ives, CFP®, AIF® IRA Analyst A time machine would be cool to have. Even if it only worked on financial assets, it sure would come in handy. One might jump into the future and see if an investment paid off, or you could look around to see where the smart money...

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GETTING THE CREAM OUT OF THE COFFEE

By Andy Ives, CFP®, AIF® IRA Analyst The pro-rata rule is the formula used to determine how much of a distribution is taxable when an IRA account consists of both pre-tax and after-tax (basis) dollars. The rule requires that all SEP, SIMPLE, and traditional IRAs be...

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SIMPLE IRAS AND 72(T) PAYMENTS: TODAY’S SLOTT REPORT MAILBAG

By Sarah Brenner, JD IRA Analyst Question: I am a financial advisor and want to be clear on something. If a client has a SIMPLE IRA that they are contributing to and have an IRA and are 70.5, can they aggregate the distributions for both and remove from the IRA? Wanda...

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WHICH LIFE EXPECTANCY TABLE DO I USE?

By Sarah Brenner, JD IRA Analyst When it comes time to calculate your required minimum distribution (RMD) from your IRA, you may wonder which life expectancy table to use. Last updated by the IRS back in 2002, there are three possible tables for IRA owners and...

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THE TWO-YEAR HOLDING PERIOD FOR SIMPLE IRAS

By Sarah Brenner, JD IRA Analyst SIMPLE IRAs are not so simple. One factor that makes SIMPLE IRAs tricky is that they are subject to unique rules, found nowhere else in the tax code, such as the two-year holding period. Two-Year Holding Period When does the two-year...

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72(T) & RMDS: TODAY’S SLOTT REPORT MAILBAG

By Andy Ives, CFP®, AIF® IRA Analyst Question: IRA HELP, I’ve got a client who is retiring early. He has roughly $1,000,000 in an IRA now which he could initiate a 72(t) with.  That will not generate enough cash flow to support their needs. He also has an additional...

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IRS ANNOUNCES HSA INFLATION-ADJUSTED LIMITS FOR 2020

By Sarah Brenner, JD IRA Analyst The IRS has announced the 2020 inflation-adjusted limits for Health Savings Accounts (HSAs). How an HSA Works An HSA is a tax-free account that is used to pay for qualified medical expenses that aren’t covered by insurance. It is...

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SCIENTIST MILTON IS STILL WORKING

By Andy Ives, CFP®, AIF® IRA Analyst Employer-sponsored retirement plans, like 401(k) and 403(b) plans, have some definitive benefits vs. IRA accounts. For example, company plans provide an unlimited amount of protection from bankruptcy, while IRA contributions and...

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“WRONG AIRPORT, DUDE”

By Andy Ives, CFP®, AIF® IRA Analyst After a recent Ed Slott conference in Dallas, Texas, I found myself sitting in a hotel café, surrounded by travel bags, having pizza with a few meeting attendees with later flights. “Anyone want to share an Uber to the airport?”...

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UNDERSTANDING THE SAME PROPERTY RULE FOR IRAS

By Sarah Brenner, JD IRA Analyst If you are planning on doing a 60-day rollover with your IRA funds, be sure you understand same-property rule. This is one of the lesser known rules that apply to rollovers and is one many taxpayers find confusing. For IRA-to-IRA or...

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USING A ROTH IRA TO PAY FOR HIGHER EDUCATION? BE CAREFUL!

By Sarah Brenner, JD IRA Analyst With college costs almost certain to keep increasing each year, parents need to explore every possible tool available to meet the challenge of paying for higher education. Roth IRAs are not just for retirement savings. They can play a...

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ROTH IRA: TWO CLOCKS

By Andy Ives, CFP®, AIF® IRA Analyst Roth IRAs are extremely popular, and why wouldn’t they be? Tax-free earnings over a lifetime can add up to a serious chunk of change. However, in order to receive those tax-free earnings, rules must be followed and timeframes must...

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REQUIRED MINIMUM DISTRIBUTIONS: TODAY’S SLOTT REPORT MAILBAG

By Jeremy T. Rodriguez, JD IRA Analyst Question: Good morning, We have a client that retired on 1/2/2019 and he was over 70.5.  He was not required to take his RMD in 2018 from his 401k since he was still working (he did take his 2018 RMD from his IRA).  He rolled...

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AVOIDING THE EARLY DISTRIBUTION PENALTY

By Jeremy T. Rodriguez, JD IRA Analyst To discourage early access to amounts invested in IRAs and company retirement plans, the IRS imposes a 10% early distribution penalty on withdrawals before age 59 ½. Even though Roth IRAs consist of after-tax contributions, the...

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TWO POPULAR QCD QUESTIONS

By Sarah Brenner, JD IRA Analyst In the wake of tax reform, more IRA owners are making use of the Qualified Charitable Distribution (QCD) strategy. This is a side effect of fewer people choosing to itemize and instead going with the larger standard deduction. If you...

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