Sometimes, you want to leave your IRA to a minor beneficiary but don't trust him or her to leave the inheritance alone once they turn legal age. One way around this is to use a trust. Ed Slott, America's IRA Expert, answers a listener's question about this very topic and provides some information on how to go through the process properly as well as the pros and cons.
Ed Slott's video blog answers a consumer question on naming a minor as an IRA beneficiary. America's IRA Expert discusses the pluses and pitfalls of this approach as well as the possibility of using a trust in this process.
Let's assume you did the unforgiveable and took a distribution from your IRA (or other retirement plan) that was payable to you, other than a required distribution. Within 60 days you presented the funds to an IRA (or Roth IRA) custodian for redeposit. Then something happened and the funds do not end up in an IRA (or Roth IRA) account. You do not discover the error immediately. Typically it is discovered at tax time. What are your options?
I think we can all accept that the Tax Code is confusing. After all, it has to provide the rules for an extraordinarily vast array of circumstances. Sometimes though, the Code goes beyond merely confusing and borders on the bizarre. “Why would Congress do that?” you might ask yourself… and you’re not alone. While there are more than just a handful of bizarre items in the Tax Code, we’ve chosen to highlight three of them that relate directly to IRAs.
Prior to April 18, 2011, several articles posted in The Slott Report contained reminders about the importance of making your 2010 IRA contribution. Among other things, we indicated that $5,000 was the maximum amount you could contribute to your IRA for 2010, with an additional "catch up" contribution of $1,000 if you were age 50 or older on December 31, 2010. Click to read more about what is compensation for IRA and Roth IRA contribution eligibility.
I think we can all accept that the Tax Code is confusing. After all, it has to provide the rules for an extraordinarily vast array of circumstances. Sometimes though, the Code goes beyond merely confusing and borders on the bizarre. “Why would Congress do that?” you might ask yourself… and you’re not alone. While there are more than just a handful of bizarre items in the Tax Code, we’ve chosen to highlight three of them that relate directly to IRAs.
There is often a lot of confusion when it comes to the post-death IRA distribution rules. Frequently, beneficiaries and/or their advisors believe they are subject to what is called the 5-year rule – meaning they have to empty the inherited account within 5 years after the date of death - when in fact, they may actually have much longer to do so.
The big issue in the news these days is how to resolve the "debt ceiling" issue. In essence, our legislators are just trying to figure out how much of a loan, as a nation, we can take. As the events of the recent past have taught us, borrowing can be a dangerous game, but when it comes to IRAs, borrowing can be more than just dangerous. It can be a fatal error that can decimate a lifetime of savings.
Taxpayers believe that because they have already paid the income tax on Roth IRAs that the Roth IRA balance will not be included in the estate for estate tax purposes. As the title indicates, your IRA or Roth IRA will be included as part of your taxable estate at your death. Click to read more about where it says this.
Click to read how spousal rollovers and the RMD for year of death should work under the IRA rules.
