RMD Withdrawals and the 10-Year Rule: Today’s Slott Report Mailbag
Question:
I’m 68 years old. I would like to start IRA withdrawals. What are the rules for withdrawing before my RMDs are required at age 72?
Thanks,
Bob
Uncategorized
401(k), 403(b), 457(b): Does it Really Matter?
There are three types of company savings plans:
401(k) plans if you work for a for-profit company;
403(b) plans if you work for a tax-exempt employer, a public school or a church; and
457(b) plans if you work for a state or local government.
First Dollars Out Rule and the Still-Working Exception
For those who have 401(k)s or other employee retirement plans (but not SEP or SIMPLE plans), the required beginning date (RBD) for when required minimum distributions (RMDs) are to begin is the same as for IRA owners – April 1 of the year after a person turns 72. However, if the plan allows for the “still-working exception,” the RBD can potentially be delayed if a worker is still working for the company where they have the plan. (Also, the worker cannot own more than 5% of the company in the year they reach age 72.)
401(k) PARTIAL ROTH CONVERSIONS AND USING QCDs TO OFFSET RMDs: Today’s Slott Report Mailbag
Question:
Hello,
I’m learning a lot from Ed Slott’s latest book, “The New Retirement Savings Time Bomb,” but I do have a question on 401(k) Roth IRA conversions. I’m recently retired with a company 401(k). I’m leaning towards keeping the 401(k) (rather than rolling it into my IRA). Is it possible to do an annual direct conversion (partial) from my 401(k) to my Roth IRA, keep the remaining funds in the 401(k), and repeat the process every year until reaching RMD age?
Thank you,
Understanding the Same Property Rule
For IRA-to-IRA or Roth-to-Roth 60-day rollovers, the same property received is the property that must be rolled over. These rules also apply to SIMPLE and SEP IRAs. You cannot receive a distribution of cash and then roll over shares of stock purchased with the cash or shares that you currently own. If cash is distributed from an IRA, then cash must be rolled over within 60 days.
TAKE ADVANTAGE OF CATCH-UP CONTRIBUTIONS!
Tax Day 2022 seems like an appropriate time to review a sometimes-overlooked way to get extra dollars into your IRA or company savings plan. Folks age 50 or older are allowed to make “catch-up” contributions with no strings attached. These extra contributions allow you to build up your savings while enjoying an immediate tax break (if making pre-tax contributions) or a tax break down the road (if making Roth contributions).
Inherited IRAs and Employer Retirement Plans: Today’s Slott Report Mailbag
Question:
Hello,
Client (72) has recently inherited a “Beneficiary IRA” account. My question is for next year: Can she use qualified charitable distributions for her beneficiary IRA?
Thank you,
Kathy
Last-Minute IRA Tax Deadlines & Rules
The deadline for filing your 2021 tax return is this Monday, April 18. It is extended through the weekend because IRS offices in Washington DC are closed on Friday, April 15, in observance of the locally recognized Emancipation Day. As such, this buys all of us a couple of extra days to complete our returns. For procrastinators, or for those who simply had time get away from them, there is still sand in the hourglass to complete certain IRA transactions.
5 Takeaways from the New SECURE Act Regulations
The SECURE Act was signed into law in late December of 2019. This new law upended the rules for retirement accounts. With it came many questions, and IRS guidance was eagerly anticipated. Finally, on February 23, the IRS released new proposed regulations that incorporate all the changes brought about by the SECURE Act. Since then, we have been busy combing through 275 pages of complicated new rules. As the dust begins to settle, here are 5 of our takeaways from the new SECURE Act regulations.
Inherited IRAs and SEP Accounts: Today’s Slott Report Mailbag
Question:
I have a non-spousal inherited IRA account. Once I take out my RMD for the year, am I able to take out excess funds and roll those into a Roth account?
Thank you.
Answer:
Inherited IRA accounts do not follow all the same rules nor do they have all the same benefits as your own IRA. For one, inherited IRA dollars are not permitted to be converted to a Roth IRA. This is true even if you have satisfied your RMD for the year on that inherited IRA account.
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