Many individuals find themselves stepping away from a job for reasons such as raising children or being a caregiver to aging parents. When this happens retirement savings can take a hit. That does not necessarily need to be case. You may be able to continue to save with an IRA.
If you are married you may be able to make a contribution to your IRA based on your spouse’s taxable compensation for the year. These IRA contributions are called “spousal IRA contributions.” Here are seven things to know about spousal contributions:
You make your IRA contribution using your spouse’s compensation. Your spouse can still contribute to an IRA, too. In fact, if your spouse has $14,000 in taxable compensation for the year, you can both contribute $6,000 to your IRAs for 2019, plus an additional $1,000 each if you are both over the age-50 catch-up limit.
Contrary to urban legend, ERISA does not stand for “Every Ridiculous Idea Since Adam.” Instead, it is an acronym for the Employee Retirement Income Security Act of 1974. ERISA is a federal law that regulates employer-sponsored retirement plans and health plans. (ERISA does not cover IRAs because they are not sponsored by an employer.)
For retirement plans, ERISA imposes certain requirements on the sponsoring employer and other plan officials. These requirements include:
Filing annual reports with the IRS;
Providing certain communications to plan participants, including a plan summary (called a “summary plan description”);
Complying with certain standards for eligibility, vesting and plan funding;
Question:
Hello,
I was wondering, will incorrect information on a Beneficiary Designation form cause it to be invalid? I see forms with a wrong or missing date of birth, or ones listing more than one beneficiary, each assigned 100%.
Thanks,
Susan
Answer:
Susan,
An error on a beneficiary form could certainly invalidate it. However, it is ultimately up to the custodian to determine if a beneficiary form is acceptable or not as it depends on the magnitude of the error. Of course, the last thing anyone wants to deal with during this time is questions about who the beneficiaries are on an account. Even if the custodian does accept a form with apparent mistakes, there could still be a legal battle if someone felt disinherited. If you see a form with errors, the best course of action is to have a new form completed properly, dated and signed.
My wife teaches elementary school kids. Been at it for years. Long enough to have former students visit her classroom as adults. She was put on this Earth to teach. Tough job, though. Even at this early age, and oftentimes through no fault of their own, students headed down a rugged path to a hard life are already identifiable. Broken families, financial problems, emotional and developmental issues, learning difficulties. Kids desperate for help. A good teacher will push and pull and inspire and challenge and guide every student to the finish line.
In my mind, a child’s education is a large wooden crate, constantly being filled with knowledge and experiences. This box needs to be carried from kindergarten through college, but no child can carry their box alone.
There are always questions that come up as to the correct way to handle the required minimum distribution (RMD) for the year of death of the IRA owner. Here are three things you need to know about the year of death RMD.
1. The RMD for the year of death will only need to be taken if the IRA owner died after his required beginning date. The required beginning date for IRAs is April 1 of the year following the year the IRA owner reaches age 70 ½. If the IRA owner dies before this date, there is no RMD required for the year of death. This is true even if the IRA owner is already age 70 ½ and even though he has already taken part of the RMD.
Question:
I turn 70 ½ this year and my last day of work was September 30, 2019. Am I required to take an RMD from my work profit sharing 401(k) plan by April of 2020 and, if so, is the RMD calculated on the 12/31/18 account balance? My employer will roll my profit sharing 401(k) into my IRA on January 2, 2020.
Thank you for your help.
Retroactive
adjective
ret·ro·ac·tive | extending in scope or effect to a prior time or to conditions that existed or originated in the past; especially: made effective as of a date prior to enactment, promulgation, or imposition.
I like that word, and it’s fun to say. Retro-active. Plus, it is powerful. Making something retroactive gives one the ability to reach back in time and change things for better or worse. “Retroactive to January 1 of this year, all employees earned a weekly $100 bonus.” Or, “Retroactive to last Monday, the speed limit on Main Street is reduced to 25 mph from 35 mph. Any driver who exceeded 35 mph from then forward will receive a speeding ticket in the mail.”
“Retroactive” is a superpower that occasionally rears its head in the retirement world and can turn back the hands of time:
Question:
I attended the two-day event in Washington DC.
Is there any news on the attempts in Congress to change the stretch-out?
Jim
Answer:
Hi Jim,
It sounds like you are asking about the status of the Setting Every Community Up For Retirement Enhancement Act of 2019 (SECURE Act). This proposed legislation would do away with the stretch IRA for most beneficiaries and replace it with a ten-year payout period.
The SECURE Act overwhelmingly passed the House this spring. It is currently being held up in the Senate. There were some reports that it would be passed by the Senate last month, but that turned out not to be the case.
We are watching this bill carefully to see if Senators can all come to agreement on it or if it will be brought to the Senate floor. Currently, the holding pattern continues, but there are some who believe action could be taken later this year. Stay tuned.
October is upon us. This means fall is in full swing. Along with football, pumpkin-spice everything and stocking up on candy for trick-or-treat come four important October 15 deadlines you will not want to miss!
1. Did you contribute too much to your traditional or Roth IRA for 2018? Maybe you were 70 ½ or over in 2018 and made a contribution to a traditional IRA. Or, maybe your income ended up being higher than you expected and it turned out you were ineligible for the Roth IRA contribution you made. If you made an excess contribution to your traditional or Roth IRA for 2018, you will want to fix that mistake by withdrawing the contribution, plus net income or loss attributable.
Knowing your limits is important when you’re sitting in a bar and realize that you have to drive home. It’s also important to know the dollar limits that apply when you participate in more than one company retirement savings plan or you change jobs during the year.
Deferral limit. There are actually two limits at play. One is a limit on the amount of elective deferrals you are allowed to make in any calendar year. With one exception, the deferral limit is based on the total deferrals to all of your plans. So, this limit is usually a per person limit. The limit is indexed periodically and for 2019 is generally $19,000, or $25,000 if you’re age 50 or older as of the end of the calendar year.
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