generic tax questions

Submitted by Carrie Baeten on Fri, 2024-01-26 15:02

Hi,
Can you help me with some questions:
1) Can you confirm the difference for an IRA beneficiary if within 10 years old versus over the 10 years age difference?
2) For a beneficiary roth IRA, no rmds required, correct?
3) Do most investment companies notify client when the beneficiary IRA is almost 10 years old to remind them to close that account?
4) Do you have a client sales sheet that explains the taxation on social security?
5) How is agi calculated?
6) In a Roth IRA, can you take out deposit within the first 5 years without a penalty?
7) For a 529 or education IRA, if there is unused money, can you transfer into a roth?
8) If income allows it, can you max out 401k roth and still do separate individual roth IRA?
9) Confirming stocks and mutual funds- after holding for 2 years, a distribution would be capital gains, not taxes?
10) confirming step up in basis after death for individual mutual funds and stocks and real estate, correct? If the mutual funds or stocks were jointly held and 1 partner dies, is it a 50% step up?

Thank so much.



Submitted by Alan - IRA critic on Fri, 2024-01-26 15:41

  1. If the beneficiary is NOT more than 10 years younger than decedent, the beneficiary is an EDB and the 10 year rule does not apply. The EDB beneficiary can stretch an inherited IRA over their life expectancy.
  2. Correct, unless the beneficiary is an EDB. No annual RMDs if the beneficiary is a 10 year rule beneficiary.
  3. Unknown, but they should and the IRS will want them to.
  4. Unknown, as we are volunteers, and not employees of Ed Slott.
  5. There are several versions of calculated AGI. For example, to deduct an IRA contribution, another to make Roth contributions, another for IRMAA, another for SS taxation, etc. These are all known as modified AGI because they have different adjustments from actual tax return AGI.
  6. Yes, there is no waiting period to withdraw regular Roth contributions tax and penalty free.
  7. You can under certain stringent conditions per Secure Act 2.0. The IRS has not yet clarified all the questions over this provision. Funds in an ESA must first be transferred to a 529 before eventually qualifying for a Roth rollover. The 529 must have been open for 15 years, and only amounts already in the 529 5 years before the Roth rollover are eligible for rollover. The beneficiary must also have enough earned income to qualify for a Roth contribution.
  8. Yes, these limits are separate.
  9. Gains upon sale of securities are generally at the lower LTCG rate if they have been held over 1 year.
  10. The basis of these assets are adjusted to the value at the DOD. This usually results in a step up, but could also result in a step down. Jointly held assets for spouses in a common law state generally get a 50% basis adjustment, 100% in community property states. If the JT are not spouses, the portion with the basis adjustment is the portion that the decedent contributed.


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