Counting Down to the New Year IRA-Style

By Jeffrey Levine, IRA Technical Expert
Follow Me on Twitter: @IRAGuru4EdSlott

Can you believe it? Today is the last day of 2014 already. That means we’re just hours away from New Year’s Eve parties, talk of resolutions we’re not really going to keep, and perhaps, a bit of the old bubbly. And of course, no New Year’s celebration is complete without a final countdown. So with that in mind, the final 2014 Slott Report article counts down, 10 to 1, to the new year IRA-style.

9 is for the months left before the September 30, 2015 deadline to cash out for IRA beneficiaries that inherited accounts in 2014. If such a beneficiary’s share of an inherited IRA has been completely paid out by that date, their life expectancy will not considered when calculating the RMDs for any remaining beneficiaries.

8 is for the number of different types of retirement accounts the IRS has included on its rollover chart, which you can see here.

7 is for the number of provisions that were directly retirement-related in the President’s budget this past year. You can read our full analysis of those provisions here. You should expect more of the same in this year’s budget, which will probably be released sometime in late January. After it’s released, the Slott Report will, of course, provide a full breakdown of any retirement-related provisions.

6 is for the number of options that may be available to you when deciding what to do with your company retirement plan after retiring. The six potential options are leaving your assets in the current plan, rolling the assets to a new plan, rolling the assets to a traditional IRA, converting the assets to a Roth IRA, converting the assets via an in-plan Roth conversion and taking a lump-sum distribution.

5 is for $5 million, the approximate amount of your estate than can generally pass federally estate tax free to someone other than your spouse. The exact estate tax exemption for 2015 is $5,430,000. You can find the entire 2015 IRA and tax tables here.

4 is for the approximate number of weeks until you can expect to receive a letter from your IRA custodian letting you know the total value of your 2015 required minimum distribution (RMD). IRA custodians are required to let you know this amount, or at least offer to calculate it for you (using certain safe-harbor methods that may not actually result in an accurate calculation) by the end of January.

3 is for the number of months until the required beginning date (RBD) for someone turning 70 ½ years old in 2014. If you are an IRA owner and you turned age 70 ½ at any point in 2014, you must take your first RMD by your April 1, 2015 RBD, or you could find yourself subject to a 50% penalty.

2 is for the number of different 5-year rules that apply to Roth IRA distributions. One 5-year rule tells you whether distributions of your converted amounts are subject to the 10% early distribution penalty if they are withdrawn prior to reaching age 59 ½. The other 5-year rule is part of determining if a withdrawal is considered a qualified distribution. Qualified distributions are always 100% tax and penalty free.

1 is for the total number of 60-day IRA-to-IRA and Roth IRA-to-Roth IRA rollovers you can do in a single year (365 days) under the new interpretation of the once-per-year rollover rule … combined! This interpretation is effective beginning January 1, 2015.