A taxpayer's mental illness kept him from understanding how to proceed when his former bank decided to close his accounts and distribute all of his IRA funds. After his death, the widow realized she had unintentionally deposited the IRA funds into a non-IRA account. She filed a Private Letter Ruling (PLR) with IRS to rectify the issue. What did IRS decide?
When you retire or switch jobs, you will be entitled to receive the funds from your company retirement plan. At that point you will be notified of your options on what to do with that money. The basic options you have are to receive the funds personally or do a direct rollover (sometimes called a direct transfer) of the funds to an IRA. If you want to do a rollover to your IRA, there are problems if you choose to have the money distributed to you personally. We detail these problems below.
A recent IRS private letter ruling (PLR) showcased what can happen when a company retirement plan is terminated, and a common mistake that can occur when paying out those funds to employees or ex-employees. When a company retirement plan such as a 401(k) plan is terminated, the company has to go through a lot of formal steps to terminate it beyond simply deciding to discontinue the plan. These steps as well as what you can do to take action are detailed below.
I talked to two different advisors this week who had almost the exact same story involving inherited IRAs.A client inherited a small IRA from a parent and the kind bank employee gave them a check. Wouldn’t this make most beneficiaries happy? Not necessarily. Click to find out why.
Most of the time we are telling you how important it is to check IRA beneficiary forms to be sure they reflect your current planning objectives – such as the stretch IRA. It is also important to check the IRA agreement or an employer’s summary plan description (SPD) for the plan. Click to find out why.
If you're receiving a distribution from your employer's retirement plan, such as a 401(k) or 403(b) plan, you have the choice to roll over those funds tax-free to an IRA. There are two ways to do that. Click below to hear more about each choice.
If you’re thinking about moving your IRA funds to a different IRA custodian, generally the better way to do it is by transferring the funds directly to another financial institution. IRA-to-IRA transfers are often called direct transfers or trustee-to-trustee transfers. In a direct transfer between IRAs, you don’t have use or control of the IRA money while it’s being moved between two financial institutions. A benefit of using direct transfers between IRAs is that transfers do not have to follow the IRA 60-day rollover rules.
If you're thinking about converting some or all of your IRAs to a Roth IRA, there are two ways to do it. The two ways are by taking an IRA distribution or by direct transfer. Regardless of which method you choose, it will be treated and reported as a distribution from your IRA and a conversion deposit into your Roth IRA. IRA-to-Roth IRA conversions are taxable to you as ordinary income, but no 10% penalty applies, even if you’re under age 59 ½. Click to learn more about the best way to convert your IRA to a Roth IRA.
IRS has announced that they are going to go along with the Tax Court decision in the Bobrow case, but they won’t do so until at least January 1, 2015. What's this mean? We detail this ruling below.
In a recent 60-day rollover private letter ruling request, an individual was allowed to complete a rollover of only a portion of his IRA distribution. Click to find out what happened.
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