As you approach your golden years, you may be looking to simplify your life to wring the most out of retirement. It may be time to right size and move from a larger house with an abundance of maintenance to a smaller space that is easier to manage. It may also be time to declutter and organize years of belongings. Make a new start. Retirement accounts should not be overlooked as part of this process. Consolidating these accounts can go a long way towards simplifying life.
By Ian Berger, JDIRA AnalystFollow Us on Twitter: @theslottreport The Build Back Better Act of 2021, recently passed by the House...
Question:Dear Ed Slott and Company,I am a longtime subscriber, having met and talked with Ed at several industry conferences, going back well over 20 years. Which, with all of Ed’s great work and active networking, puts me in a pretty big club!In any event, a CPA has turned to me with a problem.A client of his passed away earlier this year with $1.7M in her IRA. Her Estate was the beneficiary of the IRA. Her 80+ year old siblings are the beneficiaries of the estate. I know, not great facts. But, it gets worse.
When it comes to taxes and the 10% early distribution penalty, do not allow the underlying investments within a Traditional IRA to confuse what is applicable. Earnings within an IRA are just earnings. It does not matter if those earnings come from appreciation, capital gains, dividends, rents, annuity income, interest, or really any other form of growth. If it happens within the IRA, it is essentially just “earnings.”
It’s hard to keep up with the news out of Washington these days! We have been getting a ton of questions on how the new tax proposals recently passed by the House Ways and Means Committee would impact Roth conversions. Here is the rundown.
Question:Good morning,I have an inherited IRA. I took a manual withdrawal from it in late August. I thought I had deleted my auto withdrawal on the custodian’s website. I just noticed today that another distribution was taken on 9/17. I have done nothing with the money in the core account that it was transferred to. Is there any way for me to reverse this error?Thank you for any assistance.
Congress designed 401(k) plans as retirement savings vehicles – not as checking accounts. So, there are restrictions on when employees can make “in-service withdrawals” (i.e., withdrawals while still working).It’s important to remember that while 401(k) plans must abide by these withdrawal rules, plans are free to impose even more restrictive rules. So, you’ll need to check your plan summary or ask your plan administrator or HR rep for the particular withdrawal rules that apply to you.
In most states the legal age for alcohol consumption is 21. And you must actually be 21. When you hand your driver’s license to the bouncer and he shines a little flashlight on your date of birth, it is not good enough to say you will be turning 21 in a couple of months. Unless today is your 21st birthday or later, the bouncer will wave you away, denying access to the premises.
Question:If your employer contributes to either a SEP IRA or a SIMPLE IRA, can you (the employee) also contribute to a Roth IRA?Regards,Alfred
The House Ways and Means Committee has released a draft of proposed changes to retirement accounts, including adding income limits for conversions and eliminating the back-door Roth conversion strategy. These proposals are designed to raise revenue and are likely, at least in part, a response to recent headlines about large Roth IRAs held by billionaires. Unless otherwise noted, the proposals would be effective for 2022. Here is what this means for your retirement account.
