IRA Rollovers & Keeping Track of Your Contributions: Today’s Slott Report Mailbag

Friday, September 10, 2021

By Sarah Brenner, JD
Director of Retirement Education
Follow Us on Twitter: @theslottreport

Question:

Ed

I heard on a podcast that you are the number one authority on IRAs, so I want to go to the most informative source.  Could you answer this question for me?

I have a Roth IRA and suddenly I was unable to view and edit my beneficiaries. I was told by the custodian that it was because the account was moved from a previous bank when they were bought out. I contacted the current custodian and they told me to open another Roth IRA with them and just transfer the funds.

Do you see any issues with me doing this such as the 5-year rule or early withdrawals?

Sincerely,

Robert

Answer:

Hi Robert,

You can go ahead and transfer your Roth IRA funds without worry. This will not affect the 5-year holding periods required for tax- and penalty-free Roth IRA distributions. It is a good decision to go with the direct trustee-to-trustee transfer rather than having distribution be a paid to you and then doing a 60-day rollover. Transfers avoid the headaches of both the 60-day rule and the once-per-year rule that apply to 60-day rollovers.

Question:

I opened a Roth IRA in 2021 with a $7,000 contribution.  Where will I report this when I file my taxes? Thank you in advance for answering this question.

Answer:

This is a question that comes up a lot and the answer may surprise you. Roth IRA contributions are not reported on your federal income tax return. The Roth IRA custodian will send you and the IRS Form 5498 showing the Roth contribution. However, it is still a good idea to keep your own records and track your Roth IRA contributions. This information is important to determine when your Roth IRA funds can be accessed tax- and penalty-free.

 

 

Post Views: 101
Posted in: , ,

Content Citation Guidelines

Below is the required verbiage that must be added to any re-branded piece from Ed Slott and Company, LLC or IRA Help, LLC. The verbiage must be used any time you take text from a piece and put it onto your own letterhead, within your newsletter, on your website, etc. Verbiage varies based on where you’re taking the content from.

Please be advised that prior to distributing re-branded content, you must send a proof to [email protected] for approval.

For white papers/other outflow pieces:

Copyright © [year of publication], [Ed Slott and Company, LLC or IRA Help, LLC – depending on what it says on the original piece] Reprinted with permission [Ed Slott and Company, LLC or IRA Help, LLC – depending on what it says on the original piece] takes no responsibility for the current accuracy of this information.

For charts:

Copyright © [year of publication], Ed Slott and Company, LLC Reprinted with permission Ed Slott and Company, LLC takes no responsibility for the current accuracy of this information.

For Slott Report articles:

Copyright © [year of article], Ed Slott and Company, LLC Reprinted from The Slott Report, [insert date of article], with permission. [Insert article URL] Ed Slott and Company, LLC takes no responsibility for the current accuracy of this article.

Please contact Matt Smith at [email protected] or (516) 536-8282 with any questions.