The Slott Report

This week's Slott Report Mailbag looks into 403(b) plans, RMDs, still-working exceptions, and trusts. 

In a post last week, we talked about the Roth recharacterization deadline which is fast approaching. October 16, 2017 is the last date to recharacterize a 2016 Roth conversion. Another important deadline that is coming up is for trusts that became the beneficiaries of retirement assets in 2016. A qualifying trust can use the life expectancy of the oldest beneficiary of the trust to calculate required minimum distributions that are payable to the trust as the beneficiary of the IRA. A qualifying trust is often referred to as a look-through or see-through trust. There are four requirements that a trust has to meet in order to be a qualifying trust. From § 1.401(a)(9)-4, A-5.

Millions of Americans were affected by Hurricanes Harvey, Irma, and Maria. You may be one of them. If you are, there is some encouraging news. On September 29, President Trump signed H.R. 3823, the “Disaster Tax Relief and Airport and Airway Extension Act of 2017” into law. The new law provides a package of tax relief for Hurricane victims, including a provision that allows penalty-free distributions from retirement accounts.

This week's Slott Report Mailbag examines RMDs when you are still working past 70.5 years old and inheriting multiple IRAs.

This is the story of Al, Bob and Carl. Each cousin is the non-spouse beneficiary of his father’s 401(k) plan. Their fathers worked together at the local automotive factory for their entire lives and were all covered by the same plan. The default distribution option in the plan for non-spouse beneficiaries is a five-year payout.

Did you convert your traditional IRA to a Roth IRA in 2016 and now you are reconsidering that move? Did you make a 2016 traditional IRA contribution and later discover the contribution was not deductible? Did you contribute to a Roth IRA, not knowing that your income was above the limits for eligibility? If you answered, “yes” to any of these questions, there is a deadline rapidly approaching that you will want to know about. That is the October 16, 2017 deadline for recharacterizing 2016 conversions and IRA contributions. Here are 8 things you need to know about recharacterization.

This week's Slott Report Mailbag examines 401(k)s, Roth 401(k)s, and spousal beneficiary rules.

Many times when individuals divorce the IRA is split between the spouses. This is done through the divorce decree or separation agreement. An IRA is never split using a qualified domestic relations order (QDRO). That is only used for splitting employer plans, such as 401(k)s.

As medical expenses continue to increase, planning for them in retirement takes on greater importance. One approach is to shift thinking of the Health Savings Account (HSA) as an account to defray medical expenses annually to an account with pre-tax dollars and tax-free earnings to defray medical expenses years from now in retirement.

Have you inherited an IRA? What type of IRA is it? Your answer will matter a lot when it comes to your tax bill. Inheriting a traditional IRA will have very different tax consequences than inheriting a Roth IRA.