The Slott Report

Make Your 2024 IRA Contribution by April 15

There is still time! You can still make a prior-year (2024) IRA or Roth IRA contribution up to the tax filing due date, April 15, 2025. For most people, there is no extension beyond that date, regardless of whether a tax return extension is filed.

10% Penalty Exceptions: IRAs and Plans

If a person under age 59½ takes a withdrawal from his IRA or workplace plan, there is a 10% early withdrawal penalty…unless an exception applies. There are currently 20 exceptions, with a 21st on the way. Here are those exceptions, with some brief commentary.

Surprise! You May Still Be Eligible for the Stretch IRA

The arrival of the SECURE Act means the end of the stretch IRA for many beneficiaries. Instead, a 10-year payout rule applies for most IRAs inherited by non-spouse beneficiaries. However, the SECURE Act does allow the stretch to continue for certain select groups of beneficiaries. These beneficiaries are called “eligible designated beneficiaries” (EDBs).

IRA Trivia: Missed RMD or Excess Contribution?

Here is an all-too-common situation that seems counterintuitive: A participant in a 401(k) retires and must take his required minimum distribution (RMD). This person requests that his entire 401(k) plan balance be directly rolled over to an IRA. The plan follows the participant’s direction, and the entire amount is sent to the IRA.

Avoid Double Trouble by Fixing 2024 Excess 401(k) Deferrals by April 15

Everyone knows that April 15, 2025, is the deadline for filing 2024 income tax returns. But April 15 is also a crucial deadline if you made too many 401(k) deferrals in 2024. If you don’t fix the error by that date, the tax consequences are serious. Having a tax filing extension for 2024 does NOT give you more time.

How Roth IRA Distributions Are Taxed

Do you have a Roth IRA? If you do, there will very likely come a time when you want to take a distribution from that account. The distribution rules for taxation of Roth IRA distributions can be complicated, but if they are followed, the reward is tax-free withdrawals in retirement.