The Slott Report

This week's Slott Report Mailbag includes your questions (and our answers) on IRA contribution limits, Roth IRA distribution rules and using the pro-rata rule.

One of the best ways to legally avoid current income taxes is by contributing to an employer-sponsored retirement plan. While it’s too late to make any contributions to 401(k)s and 403(b)s for last year, you actually have until April 17, 2012 to set up and fund a new IRA or add money to an existing one and have the contribution count for 2011. The last day to contribute for the prior year is generally April 15, but in 2012 the 15th falls on a Sunday and the 16th is Emancipation Day, a holiday in the District of Columbia that affects tax filing deadlines the same way federal holidays do.

For many who have IRAs, they are looking to use those funds in a down economy. But IRA distributions come with strings attached. There is income tax due on most IRA distributions since IRA funds are generally pre-tax funds.

Life insurance is not only the single biggest benefit in the tax code, but it is also the most cost effective way to protect a large-balance IRA. Many owners of large-balance IRAs are concerned about protecting IRA values during volatile markets. Life insurance proceeds can do just that with its incredible leverage.

Ed Slott's video blog answers a consumer question on naming a minor as an IRA beneficiary. America's IRA Expert discusses the pluses and pitfalls of this approach as well as the possibility of using a trust in this process.

Let's assume you did the unforgiveable and took a distribution from your IRA (or other retirement plan) that was payable to you, other than a required distribution. Within 60 days you presented the funds to an IRA (or Roth IRA) custodian for redeposit. Then something happened and the funds do not end up in an IRA (or Roth IRA) account. You do not discover the error immediately. Typically it is discovered at tax time. What are your options?

This week's Slott Report Mailbag features questions (and our answers) about inherited IRAs, SEP IRAs and Net Unrealized Appreciation. Quick to read a Q&A with our IRA Technical Consultants.

Have you ever received an email, text message or automated phone call from what appears to be your bank or other financial institution warning you that there is a problem with your account? Perhaps you’ve received one informing you that your account has been locked due to too many unsuccessful attempts to access the account, or some other reason that requires you to “verify” or “confirm” your information and/or identity in order to fix the problem?

Ed Slott discusses Republican presidential candidate Mitt Romney's unorthodox IRA in this video blog. Ed walks you through Romney's reported account value, its pitfalls, tax expenses and what steps he should take now to avoid problems down the road in this video. This issue has come up several times in discussions about Romney's reported wealth, his assets and the release of his tax returns.

You have just inherited an IRA or employer plan from someone other than your spouse. What now?