You may be familiar with Health Savings Accounts (HSAs). These accounts have been around now for a while. They work with high deductible health insurance and are known for their triple tax benefits. Contributions can be deducted. Earnings are tax deferred while in the HSA account and, if HSA funds are used for qualified medical expenses, both contributions and earnings are tax-free when distributed. While you may know the basics, here are 5 HSA benefits that may surprise you:
It’s that time of the year! College bills for the Fall semester are arriving, and you may be thinking of tapping into your retirement savings to help with the costs. If you’re under age 59 ½, be careful. Your withdrawal may be subject to a 10% early distribution penalty unless you are able to take advantage of an exception to that penalty. (Remember that, even if you qualify for the exception to the penalty, distributions from traditional IRAs will be taxable.) Here’s what you need to know about the higher education expense exception:
Question:Hi,I have a client who died in 2021 before taking his 2021 RMD. He designated various charities as beneficiaries of his IRA.The IRA custodian is advising the executor to take the RMD, however according to a previous post by Mr. Slott, Revenue Ruling 2005-36 states in this scenario the RMD is to be paid to the beneficiaries. I suggested the client ask the custodian to request confirmation from their legal department. Any other steps?Thank you,LP
1. What is the NUA (Net Unrealized Appreciation) tax break? It is the opportunity to pay tax at long-term capital gains rates on the appreciation of company stock held within a company plan vs. paying ordinary income rates on that growth.2. Who is a potential candidate for NUA? Anyone with highly appreciated company stock in their workplace plan, like a 401(k).
On July 15 and 16, financial advisors from around the country gathered virtually for Ed Slott and Company’s Instant IRA Success workshop. We took a deep dive into the rules governing retirement accounts and engaged in some lively discussions of issues that advisors on the front line are facing regularly as they help their clients plan for a secure retirement. Here are five takeaways to share from our recent meeting:
Mr. Slott,Would a person who took a Coronavirus-Related Distribution from his IRA in 2020, with intent to repay within 3 years, be disqualified from taking a distribution and making a 60-day rollover in 2021 if it is within 12 months of the CRDThank you,
In the May 17, 2021 Slott Report, we discussed the rules governing required minimum distributions (RMDs) from defined benefit (DB) plans, also known as “pension plans.” We said that DB plan payments usually have no problem satisfying the RMD rules, but there are two special rules that sometimes apply.
A surviving spouse has a number of options regarding how to deal with IRAs inherited from his or her deceased spouse. The age of both the deceased and surviving spouse will most often dictate the decision as to how to proceed. Typically, a surviving spouse who is age 59 ½ or older will do a spousal rollover with the assets. A spousal rollover allows the surviving spouse to consolidate the inherited IRA into her own, thereby minimizing future paperwork and confusion. She will have full and unfettered access to the assets (other than potential taxes due).
Question:Ed,I recently saw an email from you on QCDs when deductible IRA contributions are made in the same year. It discussed how these two transactions interact with each other.I am also wondering if the offset to the QCD would also occur for a SEP IRA or SIMPLE IRA contribution?Thank you for your help.
When you contribute to a traditional IRA you make a deal with Uncle Sam. You can get a tax deduction and tax deferral on any earnings in your IRA. However, eventually the government is going to want its share and will require funds to come out of these accounts. That is when you must start required minimum distributions (RMDs). You may not need the money and you may not want the tax hit. Here are some strategies that can help reduce your RMD.
