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

IRA BLOG

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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6 WAYS THAT ROTH IRAS AND ROTH 401(K)S ARE DIFFERENT

By Sarah Brenner, JD Director of Retirement Education Both Roth 401(k)s and Roth IRAs 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...

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IRS ISSUES NEW RMD TABLES . . . FOR 2022!

By Ian Berger, JD IRA Analyst Good news! You can look forward to somewhat smaller required minimum distributions (RMDs) from your IRA and company retirement savings plan beginning in 2022. That’s because, on November 6, the IRS released new life expectancy tables that...

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

By Andy Ives, CFP®, AIF® IRA Analyst Question: Great work you all do. Been a reader of Ed for a long time. How would this scenario work? New client of mine's husband passed away in 2019 and he had not taken his RMD. The plan was to transfer the account to my firm and...

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10% PENALTY EXCEPTIONS – IRA ONLY!

By Andy Ives, CFP®, AIF® IRA Analyst When a person under the age of 59 ½ takes a withdrawal from their IRA or company plan - like a 401(k) – there is a 10% penalty. However, this penalty can be avoided if the withdrawal qualifies for an exception. Some exceptions...

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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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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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DON’T OVERLOOK AFTER-TAX PLAN CONTRIBUTIONS!

By Ian Berger, JD IRA Analyst With the popularity of Roth 401(k) contributions, after-tax employee contributions have gotten short shrift. But, if your plan offers them, after-tax contributions are worth considering because they can significantly boost your retirement...

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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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