Not only are the holidays upon us, but it is time to make sure that required distributions (RMDs) from retirement plans are taken before year end (or before the cutoff date imposed by the IRA custodian). One question that comes up frequently is what RMDs can be added together. We answer this in detail below.
This week's Slott Report Mailbag answers questions about inherited IRAs and naming a trust as the beneficiary of employer plan retirement assets. This to read a Q&A with our IRA Technical Expert.
Whenever you receive an IRA distribution, you have 60 days from the day you receive it to roll it over, tax-free, to another IRA. The failure to complete a rollover within 60 days means the funds aren't eligible for rollover, and that means the IRA distribution will be taxable to you. Also, if you’re under age 59 ½ at the time, the 10% early distribution penalty will apply. But in some cases, you can get more time to complete a tax-free rollover.
Private Letter Ruling 201347025 is an IRS first when it comes to the 60-day rollover rule. A taxpayer we will call "Ron" asserted that his failure to accomplish IRA rollovers within the 60-day rollover window was due to inaccurate advice from an IRS agent. Click to find out what happened to Ron.
For IRA distribution purposes, all IRAs (except Roth IRAs) are considered one big giant IRA. It doesn’t matter if you have one IRA that was rolled over from a former employer, and one SEP IRA with your current employer, and one contributory IRA where you put annual contributions, and one after-tax IRA where you put contributions for which you do not take a deduction. All four IRAs will be considered one IRA any time you take a distribution.
When managing your retirement account, you should be aware of the unexpected ways those employer-sponsored or IRA accounts could actually COST you. Jeffrey Levine details 3 of those situations in the article below.
If you are an IRA owner and are over age 70 ½ this year, you have to take your required minimum distribution (RMD) by December 31, 2013. If you want to give money to charity this year and haven’t yet taken your IRA RMD, you should consider giving your RMD directly to the charity. Click to find out why.
Many individuals are advised by their attorneys to set up a trust. There are a lot of good reasons to have a trust. But you really have to think twice before naming a trust as the beneficiary of an IRA. Read that sentence again – think twice before naming a trust as the beneficiary of an IRA. When that happens, who is the beneficiary of the IRA? Click to find out.
An individual inherited an IRA and later went bankrupt. This is becoming more and more common as more beneficiaries are inheriting IRAs and blowing the money! Now the question becomes, "Are inherited IRAs protected in bankruptcy?"
With Thanksgiving just days away, let’s reflect on some of the IRA rules you should be thankful for this year.
