You can’t cherry pick to take out just the after-tax contributions like you can do with a Roth IRA, said Ian Berger, an IRA analyst with Ed Slott & Co. in Rockville Centre, N.Y.
Contributions from employers and charities have the same tax treatment as the $1,000 seed money.
Conventional wisdom says seniors should wait until the end of December to take their required minimum distribution (RMD)—that’s the minimum amount that tax law requires most people age 73 or older to withdraw annually from their traditional IRAs and employer-sponsored retirement accounts.
The payments, part of the new domestic policy law, are for U.S. citizens born this year through 2028. The idea is that the money in the accounts will have many years to grow.
Ed Slott, an author and IRA and retirement plan expert, agrees that the penalties can likely be waived, especially if the taxpayer is acting in good faith.
“More people are putting more money away, which is great, but I think a lot of them are putting it in the wrong place, in a 401(k) rather than a Roth,” said CPA and retirement expert Ed Slott. While 401(k)s allow workers to contribute pre-tax income, the funds are subject to taxation when withdrawn; Roth funds are taxed beforehand….
Ed Slott, America’s foremost IRA expert and founder of the Elite IRA Advisor Group, joins host, Dave Alison, as he explores the “retirement tax time bomb.” Learn why the SECURE Act represents one of the most significant shifts in retirement planning history and how advisors can position themselves to deliver extraordinary value during this transition.
Ed Slott joins Michael Kitces to share the never-before-told origin story of how he became “America’s IRA Expert.” From taking over a dying CPA firm to risking his last $5,000 on a newspaper ad, Ed reveals how he built a national brand by specializing in IRAs and
unapologetically charging premium fees for premium value. This episode offers rare insight into
the mindset, marketing, and mission behind Ed Slott and Company.
The Internal Revenue Service has added a tax reporting code on Form 1099-R for qualified charitable distributions — a welcome change, according to Ed Slott of Ed Slott & Co.
The tax and retirement expert considers Roths a ‘Swiss army knife’ for tax planning.
But Slott cautions that racing to convert a traditional IRA to a Roth IRA when the market tanks can be tricky. “You can’t time it,” he said.
“I have heard stories already from people who said, ‘Oh, the market was down 2,000 and the next day it was down a thousand, so I’m going to convert now.’ And by the time the order was processed, it was up 3,000.”
His advice: Do a series of smaller annual conversions over time, or even monthly and keep in mind that Roth conversions are permanent. “There are no backies, no do-overs. This has got to be a planned event,” he said.
