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Question:I have a question about avoiding RMDs for a still-working 72 year old in a 401k plan. Suppose they don’t have to take 401k RMDs due to the still-working exemption from RMDs. Let’s say the person knows they will retire next year in February 2020 when they will be 73. If they do an IRA rollover while still employed in January 2020, would that avoid the RMD for the 401k plan?Is it correct to assume that the rollover amount from the 401k would not be included in the IRA RMD calculation for 2019, but would be included for 2020 (since 401k amount was not in IRA at end-2018, it would not be included in calculation)?

A disclaimer is an interesting tool. It is a denial or disavowal of legal claim, or a formal refusal to accept an interest in something. “Release” and “waiver” are good synonyms. Oftentimes a disclaimer statement is used by a person looking to shield themselves from legal repercussions. A shady politician might disclaim any responsibility or liability from the things he “may or may not have said.” It would be nice if we could disclaim the bad things in life, like a stubbed toe or a failing grade in math class.Disclaimers are not just for people looking to cover their tails. They can certainly be used for the benefit of others, especially with retirement plans. For example: a husband dies but neglects to name a beneficiary on his IRA account.

Question:My Daughter is a 30-year old RN and I want to help her contribute to an IRA. She has a 401K at the hospital where she works, but she only contributes to maximize their 4% matching. It is my understanding she can still contribute (up until April 15th, 2019) $5,500 to either a 2018 ROTH or a 2018 traditional IRA. At her age, the growth on an IRA over time should be huge. Would a ROTH always be a better IRA to put her $5,500 and forgo the reduction on her taxable income from the traditional IRA?Thanks!TedAnswer:Ted,I completely agree with everything you’ve said. Your daughter should continue to contribute to her employer at least up to the amount necessary to get the maximum matching contribution.

When a legal question is clear, I like to imagine the landscape like the great plains of the midwestern United States. The land is flat and lush, meaning problems are easily identified and the area can be easily traversed. On the other hand, when the question isn’t so clear, the terrain reminds me of the moon; rocky, dark, desolate, and full of potholes and craters.Naturally, we hope that every legal issue we encounter is like the rolling plains of the breadbasket of America. Unfortunately, that is not always the case. And such is the situation when it comes to the protection of inherited IRAs in bankruptcy court.

Much attention is paid to the favorable options available when spouses are named as IRA beneficiaries. However, a significant portion of IRA assets will end up being inherited by individuals who are not a spouse of the decedent. Many people name siblings, friends, children or others as their IRA beneficiaries. Also, IRA assets that start off with spouse beneficiaries often end up in the hands of non-spouse beneficiaries. How so? A typical scenario is for spouses to name each other as IRA beneficiaries. After the death of first spouse, the surviving spouse will often transfer the inherited IRA assets to an IRA in their own name. At that point they are likely to name a non-spouse beneficiary if they do not remarry. Because IRA assets frequently wind up being inherited by someone other than a spouse, it is critical to understand both the possibilities and pitfalls for these non-spouse beneficiaries.When an IRA owner dies, there is no probate or other process necessary to transfer the IRA funds to the beneficiary named on the beneficiary designation form. Instead, the IRA becomes the beneficiary’s property by the fact of the IRA owner’s death. Generally, the beneficiary will provide a death certificate to the IRA custodian. The account will then be retitled as a

Question:Hello,I am a CPA and was not sure if in 2019 alimony was considered earned income for making a Roth IRA contribution. Would appreciate any clarification you can provide.Thank you very much.Have a great day!DaleAnswer:Dale,This issue was one of the changes enacted under the Tax Cuts and Jobs Act. Under the old law, alimony was taxable to the recipient. That means it would be considered earned income and therefore able to be used in making a Roth IRA contribution.

There are many gaps. Generation gap, stop-gap, The Gap Band. In baseball you can hit into the gap. Football linemen have an A-gap, B-gap and C-gap to concern themselves with. Of course, there is the Cumberland Gap. And there is a very important gap to consider when dealing with IRAs – the “Gap Period.”The gap period begins on the date of death of an IRA owner and ends on September 30 of the following year. A significant amount of planning activity can, and should, take place within this window, including:Post-Death Distributions (i.e. “Cash-outs”): If a charity is named as an IRA beneficiary, there is a good chance they will want the money as soon as possible. The same can be said for an individual who does not care to stretch the IRA and would prefer a lump sum payout. These cash-outs should be completed during the gap period.

Question:If I convert Trad IRA funds to a Roth IRA, does the ratio of After-Tax Contribution to Total IRA holdings include 401k holdings or only IRA holdings.

If you have an IRA, you may have heard the term “required beginning date” or “RBD.” This is an important date that every IRA owner should understand. The significance of the RBD is not limited to IRA owners. It is a critical date for IRA beneficiaries as well. Here are 10 things you need know about the RBD:1. The RBD for an IRA owner is the date by which the first required minimum distribution (RMD) must be taken.2. For IRA owners, the RBD is always April 1 of the year following the year they reach age 70 1/2. There is no exception to this rule for IRAs.3. There are a few exceptions to the April 1 RBD for plan participants. These include the “still working” exception for employer plans and the “old money” exception for 403(b)s. These exceptions do not apply to IRAs.

When it comes to 401(k) plans, I feel like the Johnny Cash lyric…“I’ve been everywhere, man.”I’ve wholesaled record keeping platforms to financial advisors and sold direct to business owners. I’ve taught novice investors about their mutual fund options and crawled through the weeds of 401(k) plan design with CPAs. I’ve helped enroll participants, assisted advisors with fund selection, worked for a third party administrator (TPA), and participated in 401(k) plans myself.Despite the popularity of retirement plans, understanding how the core pieces fit together remains a mystery to most. In order to explain the moving parts to those looking to implement a new plan, I fashioned an analogy called: “So You Want to Throw a 401(k) House Party.”