Question:I'm retired, over age 59 ½, and want to take a single 401(k) distribution and convert it to my Roth IRA. Do I follow same 60-day rollover rules and first have to rollover the distribution to a Traditional IRA and then convert it, or can I deposit it directly into my Roth IRA?
The “Martin Scenario”: Martin, age 40, has never done an IRA rollover before. He took a distribution from his traditional IRA in December 2021 for $10,000 and deposited it into his checking account. Martin took another distribution from his IRA in January 2022 for $50,000. He also deposited this into the same checking account.
A person is allowed only one IRA-to-IRA or Roth-IRA-to-Roth-IRA 60-day rollover per year. This 12-month period is a full 12 months – it is not a calendar year. Accordingly, we refer to this as the “once-per-year rule.” For example, if a person received an IRA distribution in March that is subsequently rolled over, he is not eligible to initiate another 60-day IRA or Roth IRA rollover with a distribution received before the following March. The 12 months begin with the date the funds are received by the account owner. (Day of receipt is an important distinction. This could buy a person a couple of days when the 60-day deadline is approaching and a check was originally mailed to the IRA owner.)
Question:Hi,I turn 72 this year and have to take my first required minimum distribution (RMD). I am also in the process of converting most of my IRA into a Roth IRA. I know I have to take my RMD first before the conversion. Since this is my first year of RMDs, I know one of the options is to delay the RMD until April of next year.
Less than two weeks into the new year seems like a good time to provide a few reminders and warnings when it comes to Qualified Charitable Distributions (QCDs). As a quick refresher, remember these QCD facts:Only available to IRA (and inherited IRA) owners who are age 70½ and over.Capped at $100,000 per person, per year. (For a married couple where each spouse has their own IRA, each spouse can contribute up to $100,000.)
In 2021, the Slott Report produced roughly 100 diverse retirement-related articles and answered approximately 100 reader questions in our weekly Mailbag. We do our best to present topical IRA and retirement plan issues in the most creative, interesting, and informative manner. We hope you enjoyed the content and learned some new things.
Question:Hi Mr. Slott:I enjoy your website's very helpful information! I know that the IRS rules limit us to one indirect (60-day) IRA rollover every 12-month period. Are Health Savings Account (HSA) indirect rollovers counted as one of these rollovers, or are the IRA and HSA once-per-12-month rules separate?
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My November 29 Slott Report entry was titled “The Pro-Rata Rule Explained – You are Not Getting Taxed Twice.” I closed that article by stating there are exceptions to the pro-rata rule and ways to clean up an IRA that contains a mix of pre-tax and after-tax dollars (basis). Included here are three exceptions to pro-rata and how IRA owners could potentially “isolate basis” – reduce an IRA to only after-tax dollars, thereby setting the stage for a tax-fee Roth conversion.
Question:Good afternoon, Mr. Slott. I am trying to complete my taxes for last year, and the tax agent is stating that, because I had two 401(k) rollovers (each from a different employer), that I would be charged a penalty for one of these.
