The Slott Report

Avoid This Common SEP IRA Mistake

A Simplified Employee Pension (SEP) is an employer sponsored retirement plan where contributions are made to employees’ IRAs. Don’t be fooled by the name! Although these plans are in fact designed to be “simplified” or less complex than other types of retirement plans, there are ways to go wrong and make errors. A seemingly small mistake with a SEP IRA plan can cause big problems.

How to Pay No Tax on Your Capital Gains Using a Free Step-Up in Basis

In order to encourage investments in companies, the tax code provides for the preferential treatment of capital gains (gain on property, such as a stock) if the investment being sold had been held for greater than one year. To illustrate this point, examine the following chart, which summarizes the ordinary income tax rates vs. the long-term capital gains rates that apply at various income levels.

The IRA Definition of Compensation

In order to make an IRA or Roth IRA contribution, you must have “compensation.” What exactly is the definition of compensation for IRA purposes? This article explains the various forms.

3 Self-Directed IRA Issues To Understand … Before You Take the Plunge

The increase in investment opportunities that are often available in self-directed IRAs can be enticing, but these investments often present unique challenges that should be proactively addressed. The list of challenges is long, but here are three of the most important things to consider before you establish a self-directed IRA accounts.

Don’t Make This Common RMD Mistake – It’s a Big Penalty!

With the first group of Baby Boomers turning age 70 ½ this year, there is a whole new group of IRA owners who will begin taking required minimum distributions (RMDs). It is important that they know the rules about aggregating RMDs in order to avoid this frequent mistake made by individuals, advisors, and even IRA custodians and employer plans.

Another RMD Conundrum: How Can I Liquidate My IRA With RMDs Approaching?

This week's Slott Report Mailbag answers a consumer's question on how to handle taxes with charitable gifts and walks a husband through the complicated process of moving IRA funds to a Roth IRA while facing required minimum distributions (RMDs). As always, we recommend you work with a competent, educated financial advisor to keep your retirement nest egg safe and secure.

Exceptions to the Pro-Rata Rule for IRA Distributions

Have you ever made non-deductible IRA contributions? Or, rolled over after-tax funds from your company plan to your IRA? If so, you will want to know about the pro-rata rule. The pro-rata rule is a rule that almost always determines the taxation of an IRA distribution when the IRA owner has any IRA containing after-tax amounts. However, some IRA distributions are not subject to the pro-rata rule. These exceptions may provide an opportunity for you to lower the tax bill that comes with an IRA distribution or conversion.