Question:Hi,I have a client that needs funds for a short period of time, so he plans to use the 60-day rollover rule to borrow money from his IRA and return it within 60 days. He has a Traditional IRA and a Roth IRA. He is under the impression he can do a 60-day rollover for each account. My understanding is that he can only do one 60-day rollover regardless of account type during any 365-day period, so he can only take funds from his IRA or Roth, but not both. Am I correct?
Most IRA distributions will be taxable. However, if you have ever made nondeductible contributions to your IRA or rolled over after-tax funds from your company plan to your IRA, then the rules can get a little bit tricky. You will need to understand the pro-rata rule.
When you file for bankruptcy, one thing you usually don’t have to worry about is protecting your IRA funds from creditors.That’s because, in just about every case, all of your IRA (and Roth IRA) monies are off limits. Under the federal bankruptcy law, IRA assets up to a certain dollar limit cannot be reached by creditors. That dollar limit is indexed every three years based on the cost-of-living. The current dollar limit is currently $1,362,800, but on April 1 it goes up to $1,512,350 until March 31, 2025.
Question: I established a Roth IRA in 2011 and needed to withdraw $ 30,000 in 2021 to pay for my daughter’s first year of college tuition. I am under 59 1/12 and the 1099-R has a code of J meaning early distribution and no known exception. Will my distribution, therefore, be fully taxable and will I have to pay the 10% early withdrawal penalty? I was told by the Company holding my Roth IRA that it would be a fully NON-taxable distribution and no penalty as it was used for educational purposes. Please advise. Thank you
Here we go again. In my March 14 Slott Report entry (“Monitoring Concurrent Life Expectancies? – SMH”), I railed against the IRS for a seemingly pointless rule in the new SECURE Act regulations directed at elderly IRA beneficiaries. (Subsequently, I saw other commentary criticizing that same rule as “nasty” and “mean spirited.”) In today’s article, I am back on my soapbox calling out more baffling guidelines.
It may be hard to believe it but the countdown to the 2021 tax filing deadline is on. The deadline is April 18, 2022, for most filers. That is really only a few weeks away. Time is running out. Is your IRA ready?Making a 2021 IRA ContributionApril 18, 2022 is the deadline for making a 2021 IRA contribution. This is true even if you have an extension to file your tax return. That does NOT give you extra time to make a traditional or Roth IRA contribution. So, if you are thinking about making that contribution you will need to move quickly.
Question:Hey Ed-Long time reader and listener of yours…and have bought a few copies of your latest book to share with clients! Prior to us being involved, my client made a Backdoor Roth contribution in 2021. He did this despite his income being below the threshold limits. Also, he had existing IRA balances. Is there anything he can do? Are the 2018 recharacterization rules such that he is stuck with any tax implications?
With many 401(k) (and 403(b) and 457(b) plans) offering multiple participant accounts, your plan statement is probably more complicated than ever. Here’s a brief primer to help you understand what each account represents:Pre-tax deferral account. All retirement savings plans allow for pre-tax deferrals. You make these contributions from before-tax pay. Both the contributions and earnings are taxable when paid out.
I am usually patient with the IRS. I understand the massive workload they have, and there are tax cheats lurking around every corner. The IRS does its best to ensure no loopholes exist for bad actors to circumvent tax laws to avoid paying their fair share. However, when it comes to some of the guidance in the recently released SECURE Act regulations, my patience has run out.
Question:Ed,I read your 2/28/22 Slott Report on the updated SECURE Act information for non-eligible designated beneficiaries (non-EDBs) that requires annual RMDs to continue if the original owner was taking them prior to his death and also requires the account to be emptied by the end of year 10.
