The Slott Report

This week's Slott Report Mailbag answers readers' questions about changes in QCDs, Roth Recharacterization, Roth conversions, and NUA stemming from the Tax Cuts and Jobs Act.

Now that it looks like they’ve been spared from elimination in the most recent version of tax reform, it’s worth taking a look at nonqualified deferred compensation plans (“NQDC plans”). NQDC plans take different forms, including salary reduction arrangements, bonus deferral plans, excess benefit plans, and supplemental executive retirement plans. For some clients, this may be a way to defer a greater percentage of income than under traditional qualified plans. It is also a way to attract and retain key employees. These types of plans will be paired with traditional qualified plans to maximize tax savings.

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.