• By Andy Ives, CFP®, AIF® IRA Analyst Question: Hi, I inherited my husband's 401(k) when he died last year. I kept the assets with the 401(k) administrator, believing I had to do that to take distributions without 10% penalty. (I am under 59 ½ years old). If I roll over the 401(k) to an inherited IRA, will I still be able to take penalty-free distributions? Thank you Donna [...]

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    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 up a lot is who must take this RMD. It is an all-too-common scenario. An IRA owner has passed their required beginning date [...]

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    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 next century of educational excellence. Before joining The College, Nichols served as Executive Vice President, Governmental [...]

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    By Ian Berger, JD IRA Analyst Question: Hi, Ed, I am hoping I get to attend one or more of your events IN PERSON this year! If you have time for a refresher . . . . Jon’s 2021 RMD is $200k. He takes $100k as a distribution to himself in February and later, he decides to satisfy the remaining $100k as a QCD in November. Does this work as far as the timing of the QCD? Thank [...]

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    By Andy Ives, CFP®, AIF® IRA Analyst In my blog entry from March 22, I discussed the formula for calculating the amount of a direct Roth IRA contribution when your income falls within the Roth phaseout limits. Another common phaseout covers how much of a Traditional IRA contribution can be deducted. As with the Roth contribution phaseout, this income level cutoff is not a “cliff,” [...]

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    By Sarah Brenner, JD Director of Retirement Education Question: Has the deadline to make an IRA contribution for 2020 been extended since the 2020 tax filing date has been extended to May 17, 2021? Robert Answer: Hi Robert, Yes. The 2020 IRA contribution deadline is also extended to May 17, 2021. Question: Hi Ed, My mother recently passed away in February 2021 from [...]

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    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 the first place. But there are still many DB plans out there, and it’s important to know that they operate very [...]

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    By Andy Ives, CFP®, AIF® IRA Analyst When it comes to contributing directly to a Roth IRA, an individual must have modified adjusted gross income below a certain level. This income level cutoff is not a “cliff,” meaning if you go one dollar over the level, you do not immediately become ineligible for a Roth IRA. There is a phaseout range where the amount of the direct Roth IRA [...]

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    By Andy Ives, CFP®, AIF® IRA Analyst Question: Hi, I found you by searching to find out if we can offer two SIMPLE IRA options for our employees. I don't know if that is something permitted. The idea is to have a cryptocurrency option set up as a SIMPLE in addition to the SIMPLE we already have in place. I'm reaching out in the hopes someone can help me with a definitive answer. I [...]

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    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 what you need to know if you must take a 2021 RMD. Many IRA holders have had concerns that there would be a need to take both an[...]

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    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. Solo plans are typically used by sole proprietors but are also available if your business is incorporated or [...]

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    By Ian Berger, JD IRA Analyst Question: I have self-directed traditional and Roth accounts at an SDIRA Custodian.  Can I do a Roth  conversion of an illiquid asset from the traditional to the Roth account?  The investment I want to convert is a debt-only asset (no equity component) generating a fixed 8% dividend. It has a consistent FMV from year to year. I know I will pay tax on the [...]

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    HOUSE RULES

    Mar

    10

    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 all those under the purview of management. I have house rules of my own when it comes to card games, darts, boardgames and[...]

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    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 much money to go around. However, there is an often-overlooked tax break that may make saving for retirement more [...]

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    By Sarah Brenner, JD Director of Retirement Education Question: I am 75 years old and am planning to retire this year.  I have a 401(k) plan with my employer and, I assume, need to roll it over into an IRA.  In this case do I need to take a 2021 RMD?  If so, how is it calculated?  I have taken RMDs on my other IRA accounts so I know how to use the factor according to my age, but what [...]

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    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 Security Act. A law enacted on March 27, 2020 that, among other items, waived RMDs for 2020 and allowed CRDs. [...]

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    Thursday, February 25, 2021 A Preview of Ed Slott’s New Book: The New Retirement Savings Time Bomb By Ed Slott, CPA If you’re a dedicated Ed Slott and Company fan, at this point, you’ve likely heard about my upcoming new book, The New Retirement Savings Time Bomb (Penguin Random House, 2021). If you haven’t, then you’ve come to the right place to get a sneak peek [...]

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    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 2020, that deadline is April 15, 2021. If you have made a Roth IRA contribution for 2020, or are still planning to make one,[...]

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    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 are required to allow rollovers out of the plan, they do not have to permit rollovers into the plan. So, before [...]

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    By Ian Berger, JD IRA Analyst Question: Hi, I have a client that took a $14k IRA distribution on 1/10/2021 and another $14k distribution on 2/10/2021. He wants to replace all $28k using the 60 day rollover as funds are no longer needed. Does the 60 day rollover rule allow him to replace all 28k (from both distributions) within 60 days from the first distribution on 1/10/2021? Or [...]

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    By Andy Ives, CFP®, AIF® IRA Analyst Surprisingly, the rules governing what happens when an ex-spouse acquires a Roth IRA after divorce are unclear. There are no specific directions in the Tax Code or in the regulations. However, there is definitive guidance for a spouse who inherits a Roth IRA due to death. It makes sense to look to these rules after death for direction on how to process a[...]

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    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 of most Americans and created enormous economic and psychological stress. The result has been more speculation about the future[...]

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    By Andy Ives, CFP®, AIF® IRA Analyst Question: I am going to turn 72 in December of 2021. When I take my RMD, what is the dollar amount I use to calculate my RMD? Is it the account value ending December 31, 2020, or December 31, 2021? Thank you for any clarification. Bob Answer: Bob, Since you turn 72 in December of this year, 2021 is your very first year for having to take[...]

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    By Ian Berger, JD IRA Analyst One of the many unfortunate effects of the coronavirus pandemic is the number of folks who have lost their jobs. Besides the loss of income, many of these individuals also face unexpected and unpleasant tax consequences if they have an outstanding 401(k) plan loan. If you leave your job (whether voluntarily or involuntarily) with an unpaid loan balance, your [...]

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    By Sarah Brenner, JD Director of Retirement Educations Question: Hi! I am over 60 and have had a self-directed Roth IRA for the past 15 years. I would like to roll some of it over to another self-directed Roth where I could invest in crypto-currency. Is this possible? If so, how does the 5-year rule apply for the new Roth? Thank you! Steve Answer: Hi Steve, It is possible [...]

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    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 beverage. Required minimum distributions cannot be rolled over, period. Yes, last year was different in that RMDs were waived [...]

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    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 and make errors.  Here are three tips to avoid tax problems with your SEP. 1. Execute the SEP Documents. Who cares [...]

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    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 IRAs and company retirement plans: 1. Non-spouse beneficiary Roth conversions. In 2006, Congress revised the tax code [...]

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    By Ian Berger, JD IRA Analyst Question: I hope you can help me with this, as I cannot find the answer anywhere or from anyone. In 2019, my client Frank, passed away. His cousin, Lisa, inherited his IRA. In 2020, Lisa passed away. Her husband, Rob, inherited the IRA. They are all the same age. Do distributions fall under the 2020 rule or the 2019 rule? One of the exceptions to the [...]

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    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 you take a Coronavirus-related distribution (CRD) last year? That will require some additional reporting (Form 8915-E). Did[...]

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    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 a distribution taken in one calendar year can even be rolled over in the next. There is no problem with this! Nothing [...]

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    By Sarah Brenner, JD Director of Retirement Education Question: We had a client who died with no beneficiaries on his $500k 401(k). He wasn’t married and only 45 years old. His parents are disclaiming rights to the inheritance, so it’s going to his siblings. Is there any way these two siblings can stretch the retirement account into an inherited IRA? If so, what does that look like? [...]

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    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 longer available. Yet the economic damage caused by the pandemic is still very much with us. So, without CRDs, where do you turn[...]

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    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 contribution. The opposite is also true. A Traditional IRA contribution can be recharacterized to a Roth [...]

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    By Andy Ives, CFP®, AIF® IRA Analyst Question: I recently retired and I plan to relocate to Tennessee. I would like to purchase a new home. Can I pull funds from my IRA to do so, and what would be the implications? Thank you. Edna Answer: Edna, If you are over 59 ½, you have full access to your IRA dollars with no strings attached – other than having to pay taxes on the[...]

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    By Sarah Brenner, JD Director of Retirement Education The SECURE Act made many changes to the rules for beneficiaries who inherit retirement accounts. One of the most significant ones is the end of the stretch IRA for most beneficiaries. However, there are some beneficiaries called “eligible designated beneficiaries” (EDBs) who can still use the stretch.  How well do you understand this [...]

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    By Ian Berger, JD IRA Analyst There’s been some confusion about the retirement plan aspects of the COVID-19 stimulus package signed into law on December 27, 2020. One national news network has reported that the new law extends the CARES Act tax breaks for coronavirus-related distributions (CRDs) into 2021. This is incorrect! At least for the moment, CRDs are no longer available. The [...]

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    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 I still make my contribution now, or do I need to wait until I actually have earned income?” There is no need to [...]

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    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 suggestions for your IRA for 2021. 1. Act sooner, rather than later. Thinking about making an IRA contribution? You have [...]

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    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. For example, income from a part time job would work. If you are married and your spouse has earned income, you can [...]

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    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 life expectancy tables expected to become effective in 2021. And who knows what other IRS guidance and momentous court [...]

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    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 write a check to a charity from your checkbook IRA in hopes that it would be a qualified charitable distribution[...]

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    By Andy Ives, CFP®, AIF® IRA Analyst Question: Recently, I received two checks, one for all assets in a Traditional IRA and one for all assets in a Roth. Mindful of the 60-day rollover rules, I endorsed one of them to my brokerage company to complete an IRA-to-IRA transfer. When attempting to do the same with the Roth funds, I was told that this would create another rollover and run [...]

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    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 challenging period. The end of the year is always a time to look back. 2020 has been a busy year at the Slott Report. In January, the [...]

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    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 still very much with us. The onset of the pandemic led Congress last March to also pass the CARES Act, which included certain [...]

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    By Ian Berger, JD IRA Analyst Question: Hello, Can you still recharacterize a Roth contribution (due to income limits) to a Traditional IRA and then subsequently convert the IRA back to a Roth in the same year? Will this conflict with the new law that prohibits undoing a Roth conversion? Thanks you for your help, Marie Answer: Hi Marie, You can still do this. The 2017 [...]

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    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). However, Bob could not deduct any of the contributions because he has always been over the phase-out range for tax filers [...]

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    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 are considering converting an IRA to a Roth IRA in 2020, time is quickly running out. The deadline for 2020 conversion [...]

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    By Sarah Brenner, JD Director of Retirement Education Question: I am 79 and still employed. My employer has an SEP for me and I have a Rollover IRA from a previous employer. Can I transfer my Rollover IRA to the SEP account? Thank you, George Answer: Hi George, There are no restrictions in the tax law against combining a SEP IRA and traditional IRA that contains funds [...]

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    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 her holiday shopping early this year and, as usual, spent more than she had budgeted. Now the credit card bill is coming[...]

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    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 Act created CRDs which waive the 10% early distribution penalty on up to $100,000 of 2020 distributions from IRAs and [...]

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    By Andy Ives, CFP®, AIF® IRA Analyst Question: My father passed away in 2019 and left me an IRA. Will the SECURE Act apply, or will it be grandfathered under the pre-2020 rules? Thank you. Aram Answer: Aram, Since your father passed away in 2019, we will default to the old pre-SECURE Act rules. You are permitted to set up an inherited IRA and stretch payments over your [...]

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    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 combined to make this an ideal time to trade off the tax hit of a conversion for the promise of future tax-free Roth IRA [...]

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    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 these actions require cooperation from third-party IRA custodians and plan administrators, so you need to act fast. As that great[...]

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    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 turned required minimum distribution rules upside down. The election and social unrest turned politics and race relations[...]

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    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 unclaimed property fund and later claimed by an IRA owner or plan participant. Rev. Proc. 2020-46 is effective as of October 16.[...]

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    By Ian Berger, JD IRA Analyst Question: Good Morning, We have a client that passed away in November of 2019 at the age of 85. Her beneficiaries would be required to take their RMD in 2020. Are they eligible under the CARES Act to forgo that RMD for this year? Thank you, Linda Answer: Hi Linda, Yes, the CARES Act waiver of RMDs otherwise required for 2020 applies to [...]

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    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 “deferral limit” and the “annual additions limit,” and you need to comply with both. Deferral limit. The deferral [...]

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    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 prior to the age of 59 ½. The other relates to the treatment of military benefits when a soldier has made the ultimate [...]

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    By Sarah Brenner, JD Director of Retirement Education Question: Is there any problem with someone who is self-employed and has an active SEP making a deductible SEP contribution and an IRA QCD after age 70 1/2?  In this case, the QCD would come from the IRA while the SEP continues to be funded.  Does any offset apply? Bill Answer: Hi Bill, This is an interesting question! The [...]

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    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 the two retirement accounts that you will want to understand. 1. Contributions limits are higher for Roth 401(k)s One [...]

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    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 are used to calculate RMDs. The new tables are not effective until 2022. RMDs are waived for 2020, and RMDs for 2021 will be [...]

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    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 take the RMD when it got to my firm as there was plenty of time. However, the insurance company kept rejecting the [...]

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    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 apply to both IRAs and plans, some to plans only, and some to IRAs only. With the craziness that is our current world, the [...]

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    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 possibility is a coronavirus-related distribution (CRD). While the first phase of the pandemic may be gone, the economic turmoil is [...]

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    By Ian Berger, JD IRA Analyst Question: Our estate planning attorney prepared trust documents a few years ago and he advised us to name the trust as a beneficiary.  This was done after discussion with him regarding a situation in case our son(s) divorce their wives.  The trust is prepared so that our sons are designated beneficiaries. I've been reading your Slott Report article that [...]

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    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 after-tax contributions are taxed and can be rolled over separately. If you have both pre-tax deferrals and after-tax [...]

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    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 pick from. We bought a lot of candy, so feel free to take more than one… Twix. Do not name your estate as your IRA [...]

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    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 participant in a retirement plan for the year can limit your ability to deduct your traditional IRA contribution, [...]

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    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 participant in a retirement plan for the year can limit your ability to deduct your traditional IRA contribution, [...]

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    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 savings. What are they? After-tax contributions are elective deferrals made from already-taxed salary. You make after-tax [...]

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    By Andy Ives, CFP®, AIF® IRA Analyst Question: An 85-year-old died in 2020 and left his IRA to his 53-year-old son. Father did not take 2020 $107,000 RMD. Does the son have to take it? Does the son have to take anything in first 9 years, including this RMD? Thank you. Answer: The CARES Act waived RMDs for IRAs in 2020. Even if an IRA owner dies in 2020, his year-of-death RMD [...]

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    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 bushes. A twig snaps. What was that?!? A dad in a flannel shirt shines a flashlight under his chin, his features [...]

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    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 period possible is available for the inherited IRA. Generally, only individuals who are named on an IRA beneficiary form can be [...]

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    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 73? Charles Answer: Hi Charles, Since your sister died before 2020, the rules in effect before the SECURE[...]

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    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 sleep well at night. Your plan accounts are completely shielded from creditors – whether or not you’ve declared [...]

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    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 wrapped in white paper napkins, and led us to our booth. Since the noontime rush was yet to hit, our host decided to chat.[...]

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    By Sarah Brenner, JD Director of Retirement Education Question: Would you kindly clarify the rule that governs the withdrawal period and the tax implication (if any) of RMDs from an inherited IRA? The SECURE Act and the IRS document 590B are not clear. Here is the situation: I have a traditional IRA with my granddaughter as the sole beneficiary. My understanding is that before the SECURE[...]

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    By Sarah Brenner, JD Director of Retirement Education Times are tough. Unemployment is high and bills are piling up for many. These realities have forced a lot of people to look for sources of extra cash. For many Americans, their IRA is their biggest, or maybe only, savings available. It may be tempting to consider tapping into it in these challenging times. Distributions taken before age 59 [...]

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    By Andy Ives, CFP®, AIF® IRA Analyst Question: Hi there! I have a quick question, so I thought I’d reach out to you to get your take on this. This year, IRA RMD’s have been waived, even for inherited IRA’s. That said, if a non-spouse inherits an IRA this year – and the new RMD rules dictate a 10-year withdrawal – but this year’s RMD is waived – does this year (2020) [...]

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    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 complicate things. Keep it simple if you can. Case in point: an attorney drafted a fancy addendum to a beneficiary form[...]

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    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) plan for management employees (hence the name “top hat”) of private tax-exempt companies such as hospitals. A top hat [...]

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    By Ian Berger, JD IRA Analyst Question: Ed and team, I am sure my question has been asked by others.  Now under the SECURE Act with no more stretch features to an inherited IRA, if a person dies and leaves his IRA to a child and that child waits 9 years and 11 months after the year of death and named his children (taxpayer’s grandchildren) as his successor beneficiaries, do they have [...]

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    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 you need to know if you inherited an IRA from someone who is not your spouse: 1. You should consider all your options before[...]

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    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 that serves as trustee, issuer, or custodian for an IRA required to accept post-age 70½ contributions in 2020 or [...]

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    By Sarah Brenner, JD Director of Retirement Education Question: Does the SECURE Act have any implication to Roth IRA account inheritance longevity? Please let me know.  Thank you. Regards, Vikram Answer: Hi Vikram, The SECURE Act does affect inherited Roth IRAs in the same way it affects inherited traditional IRAs. Most beneficiaries who inherit a Roth IRA in 2020 or later[...]

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    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 December 20, 2019. Notice 2020-68 does not address one of the most significant SECURE Act changes: the elimination of the [...]

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    By Andy Ives, CFP®, AIF® IRA Analyst Question: Good Afternoon Ed Slott and Company, LLC, I was inquiring about a recent situation with a client that came up and if you could be of any assistance. We recently had a client pass away who was the account holder of an inherited IRA from his mother. This client died in July 2020. The deceased listed his wife as 100% primary beneficiary of [...]

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    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 with a down payment can be daunting. Here is how an IRA can help a first-time homebuyer. Exceptions to the 10% Penalty [...]

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    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 will the icy gusts from the IRS as penalties and taxes accumulate like a snowdrift upon said distribution when the 60-day [...]

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    By Ian Berger, JD IRA Analyst Question: I had taken an RMD in January 2020 from an IRA account. Then in July, I returned a portion back to the same IRA. Now I want to return another portion back to the IRA. Are multiple transactions for reversal allowed? Thanks for your quick reply in advance. Piyush Answer: Hi Piyush, You are allowed to pay back an IRA distribution [...]

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    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 and are eligible for rollover. The IRS has relaxed the usual 60-day rollover rule if an RMD is repaid by August 31. (The [...]

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    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 having reliable equipment and internet access is more important than ever. For many families this is just another unexpected expense[...]

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    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 December of 2018. The traditional and Roth IRA’s are held at the same company, so the conversions are easy. Does the [...]

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    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. The goal of dollar cost averaging is to minimize the potential volatility of a single large investment. Essentially, dollar [...]

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    By Ian Berger, JD IRA Analyst Many of you may have already received, or may be receiving, an RMD (required minimum distribution) from your employer plan this year. If the CARES Act waived 2020 RMDs from plans and IRAs this year, how could a company plan be making RMD payments? The answer is a little complicated. Under the tax code, plans are allowed to force participants to receive a [...]

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    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 2020-51. Thanks. Answer: Yes, the three RMD payments can be “repaid” to the IRA, but a deadline is fast [...]

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    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 took your 2020 required minimum distribution (RMD) from your IRA and now want to repay it, your time may be running out. The [...]

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    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 managing money. Trusts also allow for post-death control of assets. But they are not for everyone, nor are they a panacea when [...]

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    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 surviving spouse's name? The deceased spouse had reached their required beginning date. I've read Notice 2020-51, but [...]

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