This week's Slott Report Mailbag looks at taxes associated with converting a Traditional IRA into a Roth; we also have a 2-part question regarding a living trust as the designated beneficiary on a 403b Plan -- that living trust then designated her children as equal beneficiaries.
As many know, you may not need to start taking Social Security at age 62; you can start any time after that until age 70. After 70, there's no point in waiting longer because your Social Security benefits won't increase moving forward. If you don't have an immediate need for the money and you're healthy enough to anticpate a long retirement, waiting will increase the size of the Social Security checks you'll eventually receive. Long-term, you may come out ahead.
I like to ask clients “If what you thought to be true turned out not to be true, when would you want to know? Since the beginning of mankind, people have been told things that turned out not to be true. The World is Flat. Radio has no future (Lord Kelvin 1897). The horse is here to stay, but the automobile is only a novelty – a fad. (Advice from a president of Michigan Savings bank to Henry Ford’s lawyer. Horace Rackham). What if you were told you are not part of an employer retirement plan but you really were? What could be the implications?
What happens when a beneficiary misses their first RMD? IRS answered this question recently in Information Letter 2016-0071 in response to an inquiry. The question was if the 5-year rule was automatically required when a non-spouse beneficiary named on the beneficiary form missed their first required minimum distribution (RMD) in the year after the death of a Roth IRA owner. As unbelievable as it may seem, IRS had never before directly addressed the issue of a beneficiary missing their first RMD.
Your IRA savings are intended to be used for your retirement. However, if you are like many others, your IRA may be your biggest asset. If you are looking to become a home owner, you may need your IRA funds to make that happen and there is a special break in the tax code that can help you.
This week's Slott Report Mailbag answers a couple questions regarding beneficiaries of an IRA.
The word “rollover” is used frequently in writing and talking about distributions from retirement plans. Many times it is used incorrectly. It is crucial that retirement account owners and their advisors know the meaning of the word rollover to safegaurd their savings.
This week's Slott Report Mailbag examines required distributions and moving IRA money to a charity.
Distributions taken from an IRA before attaining the age of 59 ½ are generally subject to an early distribution penalty of 10% of the taxable amount of the distribution. Congress put the penalty in place to deter IRA owners from using their funds before their retirement. However, Congress also realized that sometimes we really do have a need for these funds so they made some exceptions to the penalty. One of these exceptions is the disability exception. But there is a catch.
Distributions taken from an IRA before attaining the age of 59 ½ are generally subject to an early distribution penalty of 10% of the taxable amount of the distribution. Congress put the penalty in place to deter IRA owners from using their funds before their retirement. However, Congress also realized that sometimes we really do have a need for these funds so they made some exceptions to the penalty. One of these exceptions is the disability exception. But there is a catch.
