• IRA BLOG

  • What a Year Means When it Comes to Your IRA Rollover

    The once-per-year rollover rule says that you can only roll over one IRA distribution from all of your IRAs (both traditional and Roth) in a one-year period. This is a tricky rule and many taxpayers have run into trouble with it. One area that can be very confusing is determining exactly what the definition of “year” is. Here is how it works. You can only rollover IRA funds once every 12 [...]

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    Avoid Penalties and Fees by Learning These Rules: Today’s Q&A Mailbag

    This week's Slott Report Mailbag looks into QCDs, RMDs, Rollover IRAs and Recharacterizations. As always, we recommend you work with a competent, educated financial advisor to keep your retirement nest egg safe and secure. Question: I put $5,500 in my new Roth IRA for both 2016 and 2017 in April 2017. I later found out my income was too high to open a Roth IRA. Another person advised me[...]

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    Options for a Spouse Beneficiary – Remain a Beneficiary or Retitle to Your Own Account?

    Warning! The options described here are for spouse beneficiaries named on the beneficiary forms of IRA accounts. Non-spouse beneficiaries and spouses who inherit through an estate have a different sets of rules. Your spouse has died and you are named the beneficiary of their IRA. What do you do now? The IRA custodian has automatically retitled the account as an inherited IRA and after all, [...]

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    5 Retirement Savings Strategies for Younger Workers

    No one can argue that the millennial generation faces big challenges when it comes to savings. Younger workers are dealing with record setting student loan debt, high housing costs and stagnant wage growth. It’s hard to save for retirement when you are worried about the next month’s rent. Here are five strategies to help younger workers get started saving for retirement. 1. Start Small [...]

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    Avoid Accidentally Making a Prohibited Transaction: This Week’s Q&A

    This week's Slott Report Mailbag examines TDAs, IRAs, and prohibited transactions.  As always, we recommend you work with a competent, educated financial advisor to keep your retirement nest egg safe and secure. Question: I am a retired New York City educator who has a considerable amount accumulated in a TDA. I would like to reduce my tax burden, as I am now 65 years of age. What would[...]

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    Hurricane Harvey Relief from IRS and the Department of Labor

    Here is a preview of what might come if Hurricane Irma hits the U.S. IRS and the Department of Labor (DOL) have made several announcements regarding various tax and retirement plan rules and deadlines that have been modified to allow relief for Hurricane Harvey victims. The latest was an announcement regarding the donation of leave time and vacation time pay to charities for use in helping [...]

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    Want to Donate to Harvey Victims? Consider a QCD

    As the flood waters slowly recede in the Houston area, many people are asking themselves how they can help the victims of Hurricane Harvey. For those who have IRAs and are charitably inclined a Qualified Charitable Distribution (QCD) may be one way you can help. QCD Rules Not everyone can do a QCD. A QCD is only allowed if the distribution is made on or after the date that you actually [...]

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    Do You Know What to Do When You Inherit an IRA? This Week’s Q&A.

    This week's Slott Report Mailbag looks into QCDs, RMDs and inherited IRAs. As always, we recommend you work with a competent, educated financial advisor to keep your retirement nest egg safe and secure. Question: Good afternoon. I have a quick question. Can a Roth conversion satisfy an RMD requirement in lieu of having a check sent to the client? The client is over 70 1/2. The client [...]

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    7 Things Your IRA Custodian Won’t Tell You

    It is important to know what your IRA custodian will tell you and what they will not or cannot tell you. The I in IRA stands for individual and many times it is up to the individual to know things or keep track of them. 1. 60-Day Rollovers – An IRA custodian will not remind you that an individual can only do one 60-day IRA-to-IRA or Roth IRA-to-Roth IRA rollover in a 12-month period. They may[...]

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    15 Things You Need to Know About ESAs

    Education is expensive. If you have children and you are concerned about how you will pay the school bills, you know that you cannot afford to overlook any possible option that may help you save. One savings tool that is frequently overlooked is the Education Savings Account (ESA). Here are 15 things you need to know about ESAs. 1. You may establish an ESA with the custodian of your choice and [...]

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    You Must Play by the Rules with RMDs and QCDs: Q&A Mailbag

    This week's Slott Report Mailbag examines Roth IRA transfers, QCDs and RMDs. As always, we recommend you work with a competent, educated financial advisor to keep your retirement nest egg safe and secure. Question: Dear Ed Slott and Company, Thank you for helping me with my question. I'm in the process of separating from service from a state public agency. My last date of service [...]

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    Paying for College – Should You Use Your IRA Funds?

    It’s back to school time and the costs for college are quickly mounting. Where is the money going to come from? Many times individuals look to their retirement funds to pay higher education expenses. Can this be done and is it a smart move? There is an exception to the 10% early distribution penalty for higher education expenses but, the exception to the penalty only applies to distributions [...]

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    Close is Not Enough When It Comes to the 10% Penalty

    A well-known quote attributed to baseball great, Frank Robinson, says “Close doesn't count in baseball. Close only counts in horseshoes and hand grenades.” In a recent Tax Court Case, David D. Pritchard et ux. v. Commissioner; T.C. Memo. 2017-136 (July 10, 2017),the Court found the exceptions to the 10% penalty for early distributions from retirement accounts to be more like baseball than [...]

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    Is There a Way Around the 10% Early Distribution Penalty? This Week’s Q&A

    This week's Slott Report Mailbag looks into the one-rollover-per-year rule, RMDs and the 10% early distribution penalty. As always, we recommend you work with a competent, educated financial advisor to keep your retirement nest egg safe and secure. Question: A couple months ago I took my RMD from a New York bank and deposited it into a savings account in Florida where I live. In the [...]

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    Say Goodbye to the myRA Account

    On July 28, the Treasury Department announced that it was ending the myRA program. The Department issued a very brief statement saying that as part of the Administration’s effort to assess existing programs and promote a more effective government it was determined that this program was not “cost effective” due to its low enrollment. The myRA program was introduced during the Obama [...]

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    Your NUA and Required Beginning Date Questions Answered: This Week's Q&A

    This week's Slott Report Mailbag examines NUA and the required beginning date (RBD) for taking an RMD.  As always, we recommend you work with a competent, educated financial advisor to keep your retirement nest egg safe and secure. Question: Hello and thank you in advance for your help. I appreciate the information you regularly provide to readers. I would like some clarity in regards[...]

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    Back to School? 10 Things You Must Know about Using your IRA for Educational Expenses

    The arrival of August means that it’s back to school time! This means it is time for new school supplies and other bigger expenses. Are you thinking about using your IRA to pay that large tuition bill? The rules can be complicated. Here are 10 things you will want to know: 1. Usually, if you take a taxable distribution from your IRA before you reach age 59 ½, you will be subject to an [...]

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    What’s Your IRA Worth?

    August 9, 2017
    What’s Your IRA Worth?

    Many IRA owners invest in assets other than the usual stocks, bonds, cash, and mutual funds. In fact, the tax code allows for IRAs to invest in just about anything out there except for collectibles, life insurance, and S-corporation stock. But when you invest in those “other assets,” what are they really worth? If you invest $1,000 in a publically traded stock, it is easy to determine the [...]

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    5 NUA Facts That May Surprise You

    You may have heard of the Net Unrealized Appreciation (NUA) tax break. This is a special rule that allows you to qualify for capital gains treatment on distributions of appreciated employer stock from your employer plan. With the market doing well, now may a be a time when this strategy is more appealing than ever. You may understand the basics of how these rules work but here are five facts about[...]

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    Don’t Inherit a Mess When Your Spouse Passes Away: This Week’s Q&A

    This week's Slott Report Mailbag looks into inherited IRAs, spousal rollovers, and 401(k)'s.  As always, we recommend you work with a competent, educated financial advisor to keep your retirement nest egg safe and secure. Question: Dear Mr. Slott, I am 83 years old with both a Traditional and a Roth IRA with Vanguard as the custodian of the retirement account. My wife is 73 years old[...]

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    Inheriting an Inherited IRA

    What are the rules when you inherit an inherited IRA? We get this question frequently. Let’s consider what happens when using designated beneficiaries. Jim dies and names Mike as his beneficiary on the beneficiary form. Five years later Mike dies and has named Phyllis, who is a successor beneficiary, on the beneficiary form. Titling The IRS has some complicated rules for titling [...]

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    The 10% Penalty Exception Quiz

    Retirement plans are intended to be used for retirement. However, sometimes life gets in the way and you need to tap those funds early. Generally, when you take a distribution from your retirement plan prior to reaching age 59 1/2, you will be hit a with a 10% early distribution penalty. However, there are some exceptions to the penalty. Determining whether an exception applies can be tricky [...]

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    When You Want to Transfer 401(k) Funds from a Former Employer: This Week’s Q&A

    This week's Slott Report Mailbag looks into IRA contributions and rolling over 401(k) assets from former employers.  As always, we recommend you work with a competent, educated financial advisor to keep your retirement nest egg safe and secure. Question: My husband will turn 70 years old in 2018. He is still working. Is he allowed to make a contribution for the year 2018 to a [...]

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    Hardship and Retirement Distributions – No Free Pass

    A very common mistake on the part of IRA owners and plan participants is thinking that distributions taken because of their financial difficulties are tax and penalty free. Hardship Withdrawals There is no hardship withdrawal from an IRA. You have access to your IRA funds at any time, for any reason. There is a hardship exception for distributions from employer plans which is optional. A [...]

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    Why Your Kids Don’t Want Your HSA

    Do you have an HSA? Have you thought about what will happen to those funds after you are gone? You may be surprised. At your death, any funds remaining in your HSA are payable to the beneficiary you name on the account. If your spouse is your beneficiary the news is good. If your kids get your HSA, they may not fare so well. Your Spouse Can Keep Your HSA Naming your spouse is a good [...]

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    Don’t Make the Same Mistakes These Advisors Made: This Week’s Q&A

    This week's Slott Report Mailbag looks into inherited SEP-IRAs, 403(b)s and inherited IRAs. As always, we recommend you work with a competent, educated financial advisor to keep your retirement nest egg safe and secure. Question: I attended a past seminar and was extremely impressed with your knowledge of retirement plans.  I was hoping that you could provide some guidance regarding one[...]

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    Five Things to Consider When Researching Retirement Questions on the Internet

    The internet can be a blessing and it can be a curse. It is a fantastic place to do research on almost anything, but is the information you find current and accurate? Here are five things to consider when doing internet research into retirement questions. Check the Date When was the article or blog written and/or posted? The tax code and rules change often. What was true three years or five [...]

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    5 Strategies to Reduce RMDs

    Nothing lasts forever. This includes tax deferral on your IRAs. Eventually, Uncle Sam is going to want his share and will require funds to come out of these accounts. That is when required minimum distributions (RMDs) must begin. What if you don’t need the money? What if you don’t want a tax hit? Here are five strategies to reduce your RMDs. 1. Move your money to your plan. Are you still [...]

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    Taxes Can Be Hefty If You Make These Rollover Mistakes

    This week's Slott Report Mailbag looks into taking RMDs from multiple accounts, 60-day rollovers and the once-per-year rollover rule.  As always, we recommend you work with a competent, educated financial advisor to keep your retirement nest egg safe and secure. Question: Dear Ed, We met many years ago through the IAFP (now FPA). My client turned 70 in January 2017 and wants to [...]

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    IRA Distribution Basics – Taxation of Distributions

    Most IRA accounts hold pre-tax contributions and rollover amounts from employer plans. For purposes of this blog, I am going to assume that there are no after-tax amounts held in any IRA, including SEP and SIMPLE IRAs. IRA distributions where the check is made payable to the IRA owner or the funds are transferred to a non-IRA account are almost always taxable. There are, of course, [...]

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    Questions about Your Inherited IRA? This Week’s Mailbag Q&A

    This week's Slott Report Mailbag looks into inherited IRAs, RMDs, and NUAs. As always, we recommend you work with a competent, educated financial advisor to keep your retirement nest egg safe and secure. Question: I have a question about a spouse inheriting from her husband's "Qualified Annuity" upon his death. He was an NYPD police officer. She was the sole beneficiary at his death on [...]

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    Six Things to Know About the Year-End Account Balance Used for RMDs

    1. General Rule As a general rule, the account balance used for calculating required minimum distributions (RMDs) is the prior year-end account balance, with no adjustments. For example, if you are calculating an RMD for 2017 you would use the 2016 year-end account balance. If you are calculating a missed RMD for 2014, you would use the 2013 year-end account balance. If you have your first[...]

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    Do You Know When the Pro-Rata Rule Applies? This Week’s Q&A Mailbag

    This week's Slott Report Mailbag looks into direct rollovers, Notice 2014-54, the pro-rata rule and NUAs.  As always, we recommend you work with a competent, educated financial advisor to keep your retirement nest egg safe and secure. Question: Hello, I have attended some of Ed’s seminars in the past and have a specific client question that I was hoping you can help me with. In [...]

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    Once-Per-Year Rollover Rule – The Exceptions to the Rule

    As with most IRA rules, there are exceptions to the once-per-year rollover rule. The rule applies to IRA-to-IRA and Roth IRA-to-Roth IRA 60-day rollovers. Just to be clear, an IRA rollover occurs when a check is issued by the IRA or Roth IRA custodian that is payable to the account owner. The following are the exceptions. Check Payable to the New Custodian When a check is issued that is [...]

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    Once-Per-Year Rollover Scenarios – What’s Ok and What’s NOT Ok

    The once-per-year IRA rollover rule sounds pretty easy to understand. You may only do one IRA-to-IRA (or Roth IRA-to-Roth IRA rollover) per year (365 days). However, there are many ways it can go wrong. Consider the following two scenarios. One involves multiple distributions and the other involves multiple rollover deposits. One is ok and the other is not. One Distribution and Multiple [...]

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    Avoid 60-Day Rollover Mistakes: This Week’s Q&A

    This week's Slott Report Mailbag looks into 60-day rollovers, IRA withdrawals, and NUAs.  As always, we recommend you work with a competent, educated financial advisor to keep your retirement nest egg safe and secure. Question: A few weeks ago, I withdrew money from my IRA (they withheld 10% for taxes). Later I discovered I did not really need this money.  Can I repay this money within [...]

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    Quiz Yourself With These IRA Questions!

    After you’ve answered the questions below, scroll down to see the answers and see how well you know your stuff! 1) Of Roth IRAs, Roth 401(k)s and inherited Roth IRAs, which, if any, are subject to required minimum distributions? 2) Technically speaking, what does IRA actually stand for? 3) Which type of account(s) hold more of American’s retirement money today; IRAs OR 401(k)s, [...]

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    The High Cost of IRA Mistakes

    So you think you don’t need/can’t afford an advisor? Have you considered the cost of making IRA mistakes? Even seemingly simple transactions are subject to rules and restrictions under the tax code. Did you contribute too much by mistake? This mistake cannot be corrected by simply withdrawing the excess amount. There are rules on how to fix the mistake. If you are not thoroughly familiar with [...]

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    Calculating RMDs with Multiple Beneficiaries: This Week’s Q&A

    This week's Slott Report Mailbag looks into calculating RMDs with multiple beneficiaries and inheriting IRAs. As always, we recommend you work with a competent, educated financial advisor to keep your retirement nest egg safe and secure. Question: Good afternoon. I have a question when one is faced with calculating RMDs and have multiple primary beneficiaries listed. Which [...]

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    The 10% Penalty and Converted Funds - Five Things You Need to Know

    The Roth IRA rules can be complicated. One area that is especially complex is understanding how the 10% penalty applies to converted Roth IRA funds. Here are five things you need to know if you already have converted funds in your Roth IRA or if you are just trying to decide whether Roth conversion is the right strategy for you. 1. The 10% early distribution penalty is not assessed at the time [...]

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    America’s IRA Experts are in Las Vegas!

    Greetings Slott Report readers! This week, Ed and I are in Las Vegas for the first ever AICPA Engage Conference. Engage has taken some of the biggest (and in my humble opinion, best) AICPA conferences, such as the Advanced Personal Financial Planning Conference and the Advanced Estate Planning Conference, and merged them into one giant conference. As I write this, I haven’t even started [...]

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    This Week’s Q&A: Is Roth Conversion Right for Everyone?

    This week's Slott Report Mailbag looks at converting a traditional IRA to a Roth IRA, as well as making Roth contributions in the year of retirement.  As always, we recommend you work with a competent, educated financial advisor to keep your retirement nest egg safe and secure. Question: I have watched a few videos of Ed Slott speaking and he seems to be a big proponent of converting [...]

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    Important Ages in Retirement Planning

    Age 50 Catch-up contributions for most retirement plans and IRAs can be made beginning in the year you are going to turn age 50. The only plan that does not allow catch-up contributions is the SEP IRA. The following are the catch-up limit amounts. IRA/Roth IRA  $1,000 SIMPLE IRA     $3,000 Employer plans (401(k), 403(b), governmental 457(b), etc.)            $6,000 [...]

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    How a Roth 401(k) is Different than a Roth IRA

    Roth 401(k)s and Roth IRAs have a lot in common. Both offer the ability to make after-tax contributions now in exchange for tax-free earnings down the road if the rules are followed. However, there are some important differences between the two plans that you will want to understand. Contribution Limits One major difference is the amount that you may contribute. Your Roth IRA contribution is[...]

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    Inherited an IRA with Missed RMDs? This Week’s Q&A

    Inherited an IRA with Missed RMDs? This Week’s Q&A This week's Slott Report Mailbag looks into missed RMDs, inherited IRAs, and QDROs.  As always, we recommend you work with a competent, educated financial advisor to keep your retirement nest egg safe and secure. Question: Have you ever encountered a situation where the beneficiary of a deceased IRA never took the RMD dating back[...]

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    3 Ways to Decimate a Retirement Account in a Flash

    3 Ways to Decimate a Retirement Account in a Flash 1) Missing the 60-day Rollover Window If you want to move your retirement account from one institution to another, you can do it one of two ways; directly or indirectly. Moving your account directly is the preferred way because it avoids a lot of headaches, but for various reasons, sometimes people choose to use the indirect method. When [...]

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    Tax-Free Roth IRA Conversions?

    Tax-Free Roth IRA Conversions? We received many questions this past tax season about Roth IRA conversions that were supposed to be tax-free, but were not. Here is the scenario. Pam is eligible to make an IRA contribution but is not eligible to deduct it. She also is not eligible to make a Roth IRA contribution. Pam is advised to make an after-tax IRA contribution to her “after-tax” IRA [...]

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    Have You Faced This Dilemma with Spousal Contributions? This Week’s Q&A

    Have You Faced This Dilemma with Spousal Contributions? This Week’s Q&A This week's Slott Report Mailbag looks into IRA beneficiaries, Roth IRAs, and spousal contributions. As always, we recommend you work with a competent, educated financial advisor to keep your retirement nest egg safe and secure. Question: Hello, My brother left an IRA and listed me as the only beneficiary, [...]

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    State and City-Run IRA Plans Are Not Going Away

    State and City-Run IRA Plans Are Not Going Away On April 13, President Trump signed into law legislation that blocked Obama-era Department of Labor (DOL) regulations encouraging the establishment of IRA plans run by cities and municipalities. On May 17, he signed similar legislation applying to state-run IRAs. While these new developments may make the road ahead for both city and state run IRA [...]

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    DOL Fiduciary Rule to Go into Effect June 9

    DOL Fiduciary Rule to Go into Effect June 9 The long-running saga of the Department of Labor (DOL) fiduciary rule took another turn on May 22 when Secretary of Labor Alexander Acosta confirmed that there would be no delay in the June 9, 2017, implementation date. Mr. Acosta said that after careful consideration, there was no legal basis to extend the deadline. Mr. Acosta’s announcement means[...]

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    The 99% Rule for Spousal Beneficiaries of Retirement Accounts

    The 99% Rule for Spousal Beneficiaries of Retirement Accounts It sounds funny to say, but death is a part of life for all of us. It’s one of the few things that all of us will have in common at some point, and it’s one of the few issues that must be addressed in every plan. While every situation is unique and we all have our own goals and objectives, the overwhelming majority of married [...]

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    Inherited IRAs and Roth IRA Distributions. This Week’s Q&A Mailbag.

    Inherited IRAs and Roth IRA Distributions. This Week’s Q&A Mailbag. This week's Slott Report Mailbag looks into inherited IRAs, RMDs, and Roth IRA distributions. As always, we recommend you work with a competent, educated financial advisor to keep your retirement nest egg safe and secure. Question: I inherited a traditional IRA from my husband, and it has been retitled into my [...]

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    One-Rollover-Per-Year Rule and Spouse Beneficiaries

    One-Rollover-Per-Year Rule and Spouse Beneficiaries Hopefully, by now everyone has heard that IRA owners can only do one IRA-to-IRA or Roth IRA-to-Roth IRA 60-day rollover in any one-year period. This interpretation of the 60-day rollover rules was part of a 2014 Tax Court decision (Bobrow v. Commissioner, T.C.Memo. 2014-21). What was unclear from this ruling and from subsequent IRS guidance was [...]

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    How Your IRA Can Cost You When It Comes to Medicare

    How Your IRA Can Cost You When It Comes to Medicare You have done the right thing for years. You have diligently saved and accumulated funds in your IRA.  At some point, the funds that you have put away for years must come out. Uncle Sam wants his share. When you reach age 70 ½, you must take a required minimum distribution (RMD) for that year and for every year thereafter.  You may not [...]

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    Preparing for Inherited IRAs: This Week’s Q&A Mailbag

    Preparing for Inherited IRAs: This Week’s Q&A Mailbag This week's Slott Report Mailbag looks into inherited IRAs, calculating RMDs, and 60-day rollovers.  As always, we recommend you work with a competent, educated financial advisor to keep your retirement nest egg safe and secure. Question: I read the Slott Report on a regular basis and enjoy the new information I learn. I have [...]

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    7 Ways the IRS Knows…

    7 Ways the IRS Knows… It’s not a good question to be asking, and it’s certainly not the right question to be asking, but one fairly common question asked by both advisors and clients is “How are they going to know?” The “they,” they’re referring to, is the IRS. For those that have ever wondered, here are the answers to seven common “How are they going to know” questions. [...]

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    The 10% Early Distribution Penalty Exceptions – Know the Rules

    The 10% Early Distribution Penalty Exceptions – Know the Rules This is a reminder that not all 10% early distribution penalty exceptions apply to all retirement plan distributions. Here are the three biggest mistakes that we see. Higher Education – From IRAs Only Retirement funds can be used to pay for higher education expenses, but only when those funds come from an IRA account. This [...]

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    Problems with the Once-Per-Year Rollover Rule? This Week’s Q&A

    Problems with the Once-Per-Year Rollover Rule? This Week’s Q&A This week's Slott Report Mailbag looks into 72(t) payments, CD-IRAs, and the once-per-year rollover rule. As always, we recommend you work with a competent, educated financial advisor to keep your retirement nest egg safe and secure. Question: I have a client who wants to take her 72(t) starting this month.  If we do our [...]

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    6 Things Every Non-Spouse IRA Beneficiary Needs to Know

    6 Things Every Non-Spouse IRA Beneficiary Needs to Know It is not unusual to inherit an IRA from someone who is not your spouse. Many people inherit an IRA from a parent or a sibling. If this is the case for you, here are six things you will want to know. 1. Take some time. When you inherit an IRA, it is important that you don’t make any rash moves. Sometimes beneficiaries act too quickly [...]

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    3 Reasons a 401(k) Deferral Beats an IRA Contribution

    3 Reasons a 401(k) Deferral Beats an IRA Contribution 1) There Are No Restrictions Preventing a Tax Break When you defer a portion of your salary into a traditional 401(k), the amount deferred will reduce your taxable income dollar-for-dollar. This is true regardless of how much income you (and your spouse, if applicable) have. In contrast, contributions to a traditional IRA are generally [...]

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    What the Trump Tax Plan Means for Your Retirement

    What the Trump Tax Plan Means for Your Retirement On April 26, 2017, the Trump administration released its highly-anticipated tax reform plan. The administration said the goals of the plan include growing the economy, creating jobs and simplifying the tax code. The changes proposed are significant and if passed (and that is a big if) could have a major impact on your retirement planning. A Tax[...]

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    Did You Have a Loss of Funds in an IRA Thanks to Your Broker’s Illegal Transactions? This Week’s Q&A

    Did You Have a Loss of Funds in an IRA Thanks to Your Broker’s Illegal Transactions? This Week’s Q&A This week's Slott Report Mailbag looks into inherited IRAs, RMDs, illegal trades, and PLRs. As always, we recommend you work with a competent, educated financial advisor to keep your retirement nest egg safe and secure. Question: My sister died at age 77. She left me as the [...]

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    So You Think You Need to Name a Trust as the Beneficiary of Your IRA

    So You Think You Need to Name a Trust as the Beneficiary of Your IRA In two weeks I had three trusts come across my desk that were named as the beneficiary of the account owner’s IRA. The account owner had now died and the universal question was, “Now what?” The first trust was a Colorado trust. In all fairness, the attorney most likely advised the client not to name this trust as the [...]

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    7 Things You Need to Know About the Once-Per-Year Rollover Rule

    7 Things You Need to Know About the Once-Per-Year Rollover Rule In 2014, the Tax Court in the Bobrow case ruled that the once-per-year rollover rule applies to all of an individual’s IRAs, not to each of their IRA accounts separately. The Court’s surprising ruling conflicted with a long-standing IRS position in earlier editions of IRS Publication 590 and in private letter rulings. Several [...]

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    If You're Over 70 1/2 Years Old and Still Working You Need to Know This

    If You're Over 70 1/2 Years Old and Still Working You Need to Know This This week's Slott Report Mailbag looks into still working exceptions, RMDs, and IRA transfers.  As always, we recommend you work with a competent, educated financial advisor to keep your retirement nest egg safe and secure. Question: Here’s a question I have not found an answer for. When a worker over the age [...]

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    How to Increase Your Chances of Audit to 100%

    How to Increase Your Chances of Audit to 100% Congratulations! You’ve made it through yet another tax season. By now, you should have either filed your return or an extension. If you did the former, and actually filed your return, a three-year statute of limitations clock has begun to tick. This three-year period is generally the amount of time that the IRS has to examine your return via an [...]

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    Interesting Use of the QCD Strategy

    Interesting Use of the QCD Strategy Qualified Charitable Distributions (QCDs) are now a permanent part of the tax code. They allow individuals who are at least 70 ½ years old at the time of the transfer to directly transfer IRA funds to a qualifying charity. The individual gets no charitable deduction for these contributed funds, but, they do not have to include the funds in income. It is as if [...]

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    What Victims of Casualty Theft Need to Know: This Week’s Q&A

    What Victims of Casualty Theft Need to Know: This Week’s Q&A This week's Slott Report Mailbag looks into Casualty Theft, IRS rules, Medicare, and Roth conversions.As always, we recommend you work with a competent, educated financial advisor to keep your retirement nest egg safe and secure. Question: Hello. It has been some time since I’ve reached out to Ed Slott and your website[...]

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    Last Minute IRA Contribution Advice

    Last Minute IRA Contribution Advice The 2016 tax-filing deadline is upon us. Are you considering making a 2016 IRA contribution? It’s not too late, but time is quickly running out. Here are some  quick words of last minute advice to keep in mind as you make your contribution. 1. Don’t Miss the Deadline. The deadline for making your 2016 IRA contribution is the tax-filing deadline, [...]

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    Sometimes It Pays to Treat Your Kids Unequally

    Sometimes It Pays to Treat Your Kids Unequally As the father of more than one child, I understand the desire to try and treat children as equally as possible. You certainly don’t want one child to think you love him/her any less, or more, than your other children (though children will inevitably feel that way at one time or another), and you want the best for all of your children. But while [...]

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    The Consequences of Breaking Rollover Rules

    The Consequences of Breaking Rollover Rules This week's Slott Report Mailbag looks into IRA rollovers, IRA transfers, and back-door Roth IRAs. As always, we recommend you work with a competent, educated financial advisor to keep your retirement nest egg safe and secure. Question: I made the mistake of moving more than one IRA account as a roll over and not a direct transfer as I was [...]

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    An IRA Rollover Quiz

    April 5, 2017
    An IRA Rollover Quiz

    An IRA Rollover Quiz Most people think it is easy to move their retirement assets. But is it? The following is a quick quiz. How many of these rollover questions can you get correct? The answers are at the end of the quiz. You are moving funds out of your employer plan to your IRA. The funds are going directly to your IRA. Is this a rollover? You are moving funds out of your employer [...]

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    The Ultimate Rainy Day Fund; The Roth IRA

    The Ultimate Rainy Day Fund; The Roth IRA A recent Pew Charitable Trusts study released in March came to the scary conclusion that roughly one-third of Americans would have trouble coming up with $2,000 in the event of an emergency. Clearly, this is a problem. Try as one might, emergencies are bound to happen from time to time. Some of them may not have an impact on your finances, but many [...]

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    This Week's Q&A: Converting a Pre-Tax IRA to a Roth and More

    This Week's Q&A: Converting a Pre-Tax IRA to a Roth and More This week's Slott Report Mailbag looks into converting and contributing to different IRAs, 401(k)s, and RMDs.  As always, we recommend you work with a competent, educated financial advisor to keep your retirement nest egg safe and secure. You can find one in your area here. Question: Three part question: In December [...]

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    Roth IRA Recharacterizations: 11 Things You Need to Know at Tax Time

    Roth IRA Recharacterizations: 11 Things You Need to Know at Tax Time 1. It is not too late to recharacterize a Roth IRA conversion done in 2016. 2. Only funds actually distributed from an IRA or employer plan in 2016 will count as a 2016 Roth conversion. 3. A recharacterization of a 2016 Roth IRA conversion can be done up to October 16th, 2017 even if you have already filed your 2016 income[...]

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    What You Should Know Before You Name an HSA Beneficiary

    What You Should Know Before You Name an HSA Beneficiary If you have an HSA, you will want to give some thought to what will happen to this account after your death. The rules are a little tricky and careful planning is important to minimize the tax bite. HSA Beneficiaries You should name a beneficiary for your HSA, just as you would for your IRA or company retirement plan. After your death,[...]

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    Don't Lose Out on Claiming a Loss: This Week's Q&A

    Don't Lose Out on Claiming a Loss: This Week's Q&A This week's Slott Report Mailbag looks into claiming a loss in a traditional IRA, and 403(b) transfers. As always, we recommend you work with a competent, educated financial advisor to keep your retirement nest egg safe and secure. Question: I receive your emails relating to IRAs.  I have a question regarding claiming a loss in a [...]

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    Is a Trusteed IRA Right for You?

    Is a Trusteed IRA Right for You? Trusteed IRAs have been in the news recently. More and more financial organization are making these products available. Is a trusteed IRA a good strategy for you? Here is what you need to know about this increasingly popular option. An Important Decision When you have an IRA, at some point you must think about what you want to happen to your funds after your[...]

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    Strategies to Make the Most of Your Retirement Assets

    Strategies to Make the Most of Your Retirement Assets “Confidence comes from being prepared.” —John Wooden A successful retirement plan does not happen overnight nor can it exist without proper preparation. A client once asked me, “How can we properly prepare for retirement if we do not know what the rules will look like when we retiree?” This was a very valid question[...]

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    7 IRA Questions to Ask Before You File Your Return

    7 IRA Questions to Ask Before You File Your Return 1) Did you make a deductible IRA contribution for 2016? If yes, make sure the deduction is reflected on line 32 of your Form 1040. 2) Did you make a non-deductible IRA contribution for 2016? If yes, make sure the contribution is reported on Form 8606. The contribution will not, however, be reported anywhere on your Form 1040. If you [...]

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    Mailbag Q&A: Early Distributions, Back-door Roth Conversions and More

    Mailbag Q&A: Early Distributions, Back-door Roth Conversions and More This week's Slott Report Mailbag looks into early distributions, back-door Roth conversions, and Roth IRAs. As always, we recommend you work with a competent, educated financial advisor to keep your retirement nest egg safe and secure. Question: A tax payer lost his job in March. If he took an early distribution [...]

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    Things to Tell Your Tax Preparer During Tax Season

    Things to Tell Your Tax Preparer During Tax Season Any time you get a 1099-R for a retirement plan transaction, make sure you give it to your tax preparer. The IRS gets copies of your 1099-Rs, so they need to be included on your income tax return. They cannot be ignored, even if they are for a non-taxable transaction. How will your tax preparer know it is a non-taxable transaction? You have to [...]

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    How Cupid’s Arrow May Save Your Retirement Plan

    How Cupid’s Arrow May Save Your Retirement Plan Over $23 trillion sits in various types of retirement accounts across America, according to the Employee Benefit Research Institute. Even that figure may be low. Since 2011 when that figure was calculated, markets have increased and retirement savers have contributed even more to their plans, adding thousands of dollars to the average [...]

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    6 Tips for Making Your 2016 Roth IRA Contribution

    6 Tips for Making Your 2016 Roth IRA Contribution Tax season is well underway. This is the time when you may be considering contributing to a retirement account. You may be interested in the Roth IRA, which offers the promise of tax-free withdrawals in retirement if you follow the rules. If you are deciding whether a 2016 Roth IRA contribution is the right move for you, here are 6 tips to keep in[...]

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    Can You Really Transfer That Penalty Free? This Week's Q&A

    Can You Really Transfer That Penalty Free? This Week's Q&A This week's Slott Report Mailbag looks into IRA transfers and international transfers. As always, we recommend you work with a competent, educated financial advisor to keep your retirement nest egg safe and secure. Question: Hello. I am a 55 year old, single, self-employed woman with $4,700 in a traditional IRA that I am not[...]

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    QCD – Tell Your CPA About It

    QCD – Tell Your CPA About It Did you or your client do a QCD (Qualified Charitable Distribution) last year? Make sure the tax preparer knows about it. The IRA custodian is not required to report a QCD transaction on Form 1099-R. Instead, it will show up as a regular distribution to the IRA owner. A regular distribution is normally a taxable event. A tax preparer, especially at this time of [...]

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    There’s No Place Like Home: Unlocking the Door to Greater Retirement Income

    There’s No Place Like Home: Unlocking the Door to Greater Retirement Income Running out of money while there is still much life to live is frightening. The specific concern is that retirees might spend down their assets at a faster pace than their investment gains accrue.  Financial advisors are commonly tasked with helping clients determine if, and under which circumstances, they will have [...]

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    After Death, Don't Leave Your Loved Ones This Headache

    After Death, Don't Leave Your Loved Ones This Headache This week's Slott Report Mailbag looks into beneficiaries, inherited IRAs, RMDs and annuities. As always, we recommend you work with a competent, educated financial advisor to keep your retirement nest egg safe and secure. Question: A spouse inherits a Savings and Investment Plan from her husband at his death. She fails to name her[...]

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    If IRAs Had Oscars…

    March 1, 2017
    If IRAs Had Oscars…

    If IRAs Had Oscars… Announcer: And the award for Best Type of Account to Help John Doe in Retirement goes to… …the Roth IRA! Roth IRA: I… I… I don’t know what to say. I mean this is all so unexpected. I’d like to thank John Doe for believing in me when no one else would. I mean, he had CPAs tell him that he was crazy. He had friends tell him that he was crazy. He had [...]

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    IRS OKs Spousal Rollover. . . with a Twist

    IRS OKs Spousal Rollover. . . with a Twist In recent Private Letter Ruling (PLR 201706004) the IRS allowed a widow to do a spousal rollover, but with an interesting twist that also ruled the five-year rule applied because the IRA had no designated beneficiary. Widow’s Story The story begins after the death of her husband, and the widow had a very unpleasant surprise. She was not named as [...]

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    Sending Out a SOS for Those Taking RMDs and Inheriting IRAs

    Sending Out a SOS for Those Taking RMDs and Inheriting IRAs This week's Slott Report Mailbag looks into inherited IRAs, beneficiaries, and RMDs when you are still working. As always, we recommend you work with a competent, educated financial advisor to keep your retirement nest egg safe and secure. Question: I have been told that I can escape future RMD requirements by transferring IRA[...]

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    Age 70 ½ Confusion for Retirement Accounts

    Age 70 ½ Confusion for Retirement Accounts Required minimum distributions (RMDs) must begin from most of your retirement accounts at age 70 ½. But it is not as easy as just looking at when you are 70 ½. First of all, it is not when you actually turn 70 ½. Your required distributions begin in the year you turn 70 ½. That means that those of us who are born from January through June turn 70[...]

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    How to Avoid a Penalty on Your Excess IRA Contribution

    How to Avoid a Penalty on Your Excess IRA Contribution Did you make your IRA contribution for 2016? If you did, you may want to take some time now during tax season to be sure your contribution is an allowable contribution and not an excess contribution. What is an excess IRA contribution? Excess contributions to IRAs can happen for a wide variety of reasons. No one can contribute more than[...]

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    Obstacles with IRA Contributions and RMDs: This weeks Q&A

    Obstacles with IRA Contributions and RMDs: This weeks Q&A This week's Slott Report Mailbag looks into spousal contributions, IRAs, the IRS guidelines, and RMDs. As always, we recommend you work with a competent, educated financial advisor to keep your retirement nest egg safe and secure. Question: I read your excellent post of December 07, 2015 titled “How a Stay-At-Home Spouse [...]

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    Conquer Your Fear of Tax Season

    Conquer Your Fear of Tax Season One of the most common questions asked during tax season is, “Do I have to file a tax return?” The answer, of course, is a bit complicated, but in general, if your income is equal to or greater than the sum of the standard deduction plus your personal exemption, you must file a return. The standard deduction is higher for those 65 or older, so age makes a [...]

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    An IRA Beneficiary Quiz. Can You Pass this Exam?

    Most people think it is easy to leave an IRA to their heirs. But is it? The following is a quick quiz. How many of these beneficiary questions can you get correct? The answers are at the end of the quiz. 1. The IRA owner has four children. He names the oldest child as the beneficiary of his IRA and the executor of his will which divides all his assets equally among the four children. Who gets [...]

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    You Missed a RMD! Now What? This weeks Q&A

    You Missed a RMD! Now What? This weeks Q&A This week's Slott Report Mailbag looks into missed RMDs, IRA transfers, and Testamentary Trusts. As always, we recommend you work with a competent, educated financial advisor to keep your retirement nest egg safe and secure. Questions: I am sure you can help me with this situation. A person died on November 29, 2015.  His Roth IRA was [...]

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    Sometimes the Score at Halftime DOES Matter

    Sometimes the Score at Halftime DOES Matter On Sunday night we were treated to the first ever overtime in Superbowl history. It was a great game (with a lousy outcome – sorry, not a Pats fan). Of course, what most people will remember is that the Patriots finished off what may be the greatest comeback in sports history (that hurts to say), and that it was only the score at the end of the game [...]

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    5 Things Every Roth IRA Owner Should Know Before Taking a Distribution

    5 Things Every Roth IRA Owner Should Know Before Taking a Distribution Are you one of the growing number of savers who has a Roth IRA? If so, there will come a time when you will want to take funds from your account. Here are 5 things that every Roth IRA owner should know before taking a distribution. 1. Your Roth IRAs are treated as one account.Things can get a little tricky if you have more[...]

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    Did you Inherit an IRA? Don't Inherit a Mess. This weeks Q&A Mailbag.

    Did you Inherit an IRA? Don't Inherit a Mess. This weeks Q&A Mailbag. This week's Slott Report Mailbag looks into inherited IRAs, beneficiaries, and backdoor Roth IRA strategies. As always, we recommend you work with a competent, educated financial advisor to keep your retirement nest egg safe and secure. Question: My client just inherited an inherited IRA from her spouse, who [...]

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