This is the season for charitable giving. And this year, it is especially so for those who want to get the most tax benefit from charity deductions before new Tax Cuts and Jobs Act becomes law. The Act effectively reduces the tax-saving value of the charitable contribution deduction for many.
This week's Slott Report Mailbag answers readers' questions about QCDs and basis from a Roth conversion.
Recharacterization is currently one of the few “do-overs” allowed under the tax code. Its days may now be numbered. The tax reform legislation currently pending in Congress would do away with recharacterization at the end of 2017.
This week's Slott Report Mailbag answers readers' questions about rollovers, spouse as the beneficiary, and the backdoor Roth.
Creating a self-directed IRA is relatively straightforward. It is not a creation of the tax code, but rather stems from the investment policies of the custodian that administers the IRA account. The agreement will allow you to diversify your IRA assets across a wide range of investments that you choose. However, when investing self-directed IRA assets, it is important that you and your advisor understand the types of transactions to avoid. These transactions, called “prohibited transactions,” can lead to serious tax consequences, including the disqualification of your IRA assets.
This holiday season consider giving the gift of a big head start on lifetime financial security to the children in your family by giving them funds to contribute to Roth IRAs. There's no lower age limit on having a Roth IRA as long as a child has earned income. And an early start on saving can have a tremendous long-term payoff through the power of compound interest.
This week's Slott Report Mailbag answers reader questions about delaying RMDs from an employer plan and IRA rollovers.
In 2014, the Tax Court ruled that an IRA owner could do only one, IRA-to-IRA or Roth IRA-to-Roth IRA, 60-day rollover in a 12 month period. This rule applies no matter how many IRA and/or Roth IRA accounts the IRA owner might have. The 12 months is a full 12 months, not a calendar year. The 12 month period will start with the date that IRA or Roth IRA funds are received.
If you have an IRA, you should realize that what goes in must come out. In other words, your tax deferral will not last forever. Eventually, Uncle Sam will want his share. When you reach retirement age, required minimum distributions (RMDs) will kick in. Are you prepared? Take our RMD quiz and see how well you understand the basic RMD rules.
If you have a 401(k) account or other employer sponsored retirement plan, you probably already know that a distribution before you reach age 59½ is going to be subject to a 10% penalty. One exception to the 10% early withdrawal penalty allows participants in a qualified plan to take a distribution from the plan after leaving the job as long as they are age 55 or older. This rule, sometimes called “The Rule of 55,” is an exception to the early withdrawal rules that generally levy a 10% penalty on amounts withdrawn before age 59 ½. This exception does not apply to IRA distributions.
