RMD RULES FOR INHERITED IRAS AND 401(k) DISTRIBUTIONS: TODAY’S SLOTT REPORT MAILBAG
Question:
I have a new inherited IRA, and I believe that I am subject to BOTH the 10-year rule and to annual RMDs. Is this true?
401(k)
“Mid-Air” Roth Conversions
If ever I was traveling from Los Angeles to Atlanta, I would choose a direct flight with no layovers. I want the most efficient route to my destination. Point A to Point B. Take off, land. Assuming no difference in ticket price and all things being equal, if another LAX to ATL itinerary included a stop in, say, Chicago, would there be any reason to take it? Why pass through another airport in another city when I can fly direct?
More on the Roth Catch-Up Contributions Delay
The August 28, 2023 Slott Report summarized IRS Notice 2023-62, where the IRS delayed the effective date of the SECURE 2.0 rule requiring catch-up contributions by higher-paid older employees to be made on a Roth basis.
The Age 50 Exception and the Still-Working Exception: Today’s Slott Report Mailbag
QUESTION:
Hello! I recently came across one of your articles and decided to reach out to you in hopes of getting some clarification re: the Secure Act 2.0 and distributions as a qualified public safety employee. In a nutshell, I am a 17-year career firefighter for a county government. With the new Secure Act 2.0, it seems as though I can take distributions after 25 years of service, OR age 50, whichever comes first, without penalty. If this is true, would I be eligible to begin taking distributions at age 47, without penalty?
Anomalies and Exceptions
As already-complicated IRA rules spiral further into an abyss of confusion, it comes as no surprise that irregularities exist. Up is down and left is right. Green means stop, red means throw your hands up in exasperation.
NUA and Silver in Your IRA: Today’s Slott Report Mailbag
Question:
I have a large amount of stock from a previous employer in my 401(k). I had been reinvesting the dividends for the last 23 years since I left the company. I no longer want to reinvest the dividend to buy additional shares. Most of the stock has appreciated considerably since I bought it.
Required Minimum Distributions: Today’s Slott Report Mailbag
Question:
Hello and thank you for all the great, helpful information you continue to send out.
I am due to take my first RMD (required minimum distribution) in 2024 which would make my required beginning date April 1, 2025 if I understand correctly. My intention is to empty my traditional IRA next year and convert it to my existing Roth. My question is, if my traditional IRA shows a zero balance by my required beginning date, would that still require a RMD be taken for 2024? I’d like to know if I can convert the entire account or if I have to take an RMD and then convert the rest. I think the answer is I would have to take an RMD, but am not 100% sure.
Thanks so much,
Dana
Mandatory Roth Catch-up Contributions Required for 2024
One of the more controversial provisions of the new SECURE 2.0 law concerns 401(k) catch-up contributions.
Most 401(k) plans – as well as 403(b) and governmental 457(b) plans – permit employees who are age 50 or older to make catch-up contributions. The limit for catch-ups in 2023 is $7,500, allowing for total elective deferrals of up to $30,000.
How the Retirement Plan Compensation Limit Works
It’s certainly not a bad problem to have. But employees with very high compensation cannot have their retirement plan benefits based on all of their pay. Instead, the tax code allows only compensation up to a certain dollar amount to be taken into account.
Do Spouses Have Any Rights to Retirement Plan Accounts?
One important way that IRAs differ from company retirement plans is with respect to spousal financial rights. Most married IRA owners do not need spousal consent before designating a beneficiary other than the spouse. By contrast, most married plan participants do need to get their spouse to agree to a non-spouse beneficiary. And married participants in some types of plans also need spousal consent before taking a lump sum distribution from the plan.
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