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.
Despite the reduction in the penalty for missing required minimum distributions (RMDs) in the new SECURE 2.0 law, it looks like you will still be able to get the IRS to waive the penalty altogether.
Before 2023, if you missed an RMD the IRS could impose a penalty equal to 50% of the missed amount. However, the IRS almost always waived the penalty if you took the RMD and filed Form 5329 (with a reasonable cause explanation) with the IRS.
Question:
In a recent blog post, you said that the deadline for contributing to a Roth IRA for 2022 is April 18, 2023. Does that include converting a traditional IRA to a Roth?
When you leave your job and aren’t fully vested in your company plan account, the plan will forfeit your unvested portion. Recently, the IRS issued new guidance clarifying the forfeiture rules.
We continue to get questions about the ability of employees to withdraw from 401(k) plans while still working. The tax code includes certain restrictions on these in-service withdrawals. Plans must follow these rules or they risk losing their tax-qualified status.
But plans are also free to impose even more restrictive rules than required by the tax code
Question:
Hello,
I have an inherited IRA which falls under the 10-year rule. I understand that the IRS has tried to clear up the 10-year RMD (required minimum distribution) confusion but I am still not sure which RMD Table I am supposed to use! I am a non-spouse (daughter of the deceased) and it's confusing. Will I need to make up the RMDs for the first two years when the rules were not clearly stated?
Thank you,
Considering that it made 92 new IRA and retirement plan changes and is 357 pages long, it’s not surprising that the new SECURE 2.0 law has several unintended drafting errors and lots of unresolved questions.
The drafting errors will have to be fixed, either by Congress in “technical corrections” legislation or by the IRS. The first concerns the delay in the age when RMDs (required minimum distributions) must start. The way SECURE 2.0 now reads is that someone born during 1959 will have two RMD ages: 73 and 75.
The new SECURE 2.0 law fixes a glitch that has made it difficult for new solo 401(k) plans to be opened up retroactively for a prior year.
A solo 401(k) plan is a great retirement savings vehicle for self-employed business owners with no employees (other than their spouse). In a solo 401(k), the sole proprietor (or other business owner) is considered to wear two hats – as an employee and as an employer. This allows both elective deferrals and employer contributions. The 2023 elective deferral limit is $22,500, or $30,000 if age 50 or older, while the employer contributions maximum is 20% of adjusted net earnings (or 25% of compensation if the business is incorporated). There’s also an overall limit for combined deferrals and employer contributions; in 2023, it’s $66,000 or $73,500 if the $7,500 age-50-or-older deferrals are made.
Question:
Hi,
Thank you for all the helpful insight on retirement. I wish I heard about your website earlier. I turned 72 last year and followed your advice on QCDs (qualified charitable distributions) but don't know how to claim it.
My RMD (required minimum distribution) was $50k in 2022. I did a QCD of $10k and then withdrew $40k by the end of 2022. My taxable amount should be $40k and not $50k as listed on the 1099-R. How do I reflect that in my tax filing?
Thank you for your assistance.
How much can you contribute when you’re in two different retirement plans at the same time or at different times in the same year (e.g., after changing jobs)? The answer is complicated because there’re actually two different contribution limits – the “elective deferral limit” and the “overall contribution limit.”
