IRA Rollovers and Roth Contributions: Today’s Slott Report Mailbag
Question:Can a person do a rollover from both his traditional AND Roth IRAs in the same twelve months?Best regards,Matthew
401k
The Still-Working Exception and Roth Conversions in an RMD Year: Today’s Slott Report Mailbag
Question:If you continue to work past age 73, are you exempt from required minimum distributions (RMDs)? My 73 year-old wife is still working and contributing to her company's 401(k), and she doesn't own more than 5% of the company. Is she required to take out any RMD? Could you please clarify this rule for me? Thank you.
New 401(k) Provisions That Become Effective in 2025
Get ready! Several new 401(k) provisions from the SECURE 2.0 Act kick in on January 1, 2025. One that we’ve already written about is the ability of employees to make extra catch-up contributions in a year they turn age 60, 61, 62 or 63 by the end of the year. (This “super catch-up” also applies to SIMPLE IRA participants.) Here are two others:
IRS Gives Guidance on Penalty-Free Withdrawals for Financial Emergencies and for Victims of Domestic Abuse
If you take a taxable withdrawal from your IRA or 401(k) (or other company plan) before age 59 ½, you normally have to pay a 10% penalty in addition to taxes. But Congress continues to carve out exceptions to this penalty, and there are now 20 available. In Notice 2044-55, the IRS recently gave us guidance on the new SECURE 2.0 penalty exceptions for withdrawals from IRAs and workplace plans to pay emergency expenses and for victims of domestic abuse.
Rolling Over Your In-Plan Conversion? Watch Out for the Recapture Rule
More and more Americans have retirement savings in Roth 401(k)s. With their rising popularity come some complicated tax issues. These funds are often rolled over to Roth IRAs at retirement or when a participant changes job.
Roth 401(k) to a Roth IRA Rollover: How Does This Work?
As retirement account questions go, this is the shortest inquiry with the longest answer. When asked what factors to consider...
Government Report Highlights Confusion Over 401(k) Distribution Options
A recent government report highlights how confused 401(k) participants are when they have to decide what to do with their...
When a Reverse Rollover Makes Sense
By Ian Berger, JDIRA AnalystFollow Us on X: @theslottreport In a famous “Seinfeld” episode, George Costanza, unemployed, living with his parents...
MORE ON AFTER-TAX PLAN CONTRIBUTIONS
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 contributions in your 401(k), you can’t just take out your after-tax funds to avoid paying taxes on the withdrawal. Instead, a pro-rata rule treats part of your distribution as taxable.
GUNFIGHT AT THE 401(K) CORRAL
When the chips are down, the providers hold all the cards. This is true for both IRAs and workplace plans. Ultimately, the IRA custodian (through its custodial form) and retirement plan sponsor (through the plan document) will dictate what a person can and cannot do with his retirement dollars. Prior to sauntering into a local saloon and sitting down at the poker table, be sure to know the rules of the game before asking to be dealt in.For example, if a deceased IRA owner named both his son and daughter as beneficiaries, the custodian can refuse to allow the children to stretch the inherited IRA RMD payments over their own life expectancies. Additionally, what if the beneficiary son wants to disclaim his portion of the IRA? A custodian does not have to accept disclaimers, either.
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Please contact Matt Smith at [email protected] or (516) 536-8282 with any questions.