Last week in Kansas City, the Ed Slott team hosted our first in-person training program for members of our Elite Advisor Group since late 2019. While we managed to stay in contact with everyone via virtual meetings for the last two years, it was good to again see people face-to-face. The conversations were lively and interaction among the members during the breaks was spirited.
There are three types of company savings plans:
401(k) plans if you work for a for-profit company;
403(b) plans if you work for a tax-exempt employer, a public school or a church; and
457(b) plans if you work for a state or local government.
Question:
Hello,
I’m learning a lot from Ed Slott’s latest book, “The New Retirement Savings Time Bomb,” but I do have a question on 401(k) Roth IRA conversions. I’m recently retired with a company 401(k). I’m leaning towards keeping the 401(k) (rather than rolling it into my IRA). Is it possible to do an annual direct conversion (partial) from my 401(k) to my Roth IRA, keep the remaining funds in the 401(k), and repeat the process every year until reaching RMD age?
Thank you,
Question:
Hello,
Client (72) has recently inherited a “Beneficiary IRA” account. My question is for next year: Can she use qualified charitable distributions for her beneficiary IRA?
Thank you,
Kathy
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.
The amount of annual pre-tax deferrals and Roth contributions you can make to a 401(k) plan is limited by the tax code. If you exceeded that limit in 2021, time is of the essence to correct the error. If you don’t act quickly, the tax consequences can be serious.
For 2021, you were limited to $19,500 in pre-tax deferrals and Roth contributions (plus an additional $6,000 if you were at least age 50 at the end of the year).
Are you considering opening up a new solo 401(k) and looking to maximize your 2021 contribution? If so, you may need to act quickly. There is a December 31, 2021 deadline for establishing a new plan if you want to make 2021 elective deferrals.
The IRS has released the cost-of-living adjustments (COLAs) for retirement accounts for 2022. As expected, due to inflation in the economy, many of the dollar limit restrictions on retirement accounts will increase next year.
The September 29, 2021 Slott Report summarized the rules for taking non-hardship withdrawals from 401(k) plans. This article will focus on the hardship withdrawal rules.
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.
