Those of you who participate in 401(k) plans or certain 403(b) plans should see something new on your next quarterly statement for the period ending June 30, 2022.
For the first time, the statements must include illustrations of the monthly payments you would receive if your current plan account balance was used to purchase an annuity. This new requirement is part of the SECURE Act passed by Congress in December 2019. Congress intended that employees will see the illustrations and realize that their lump sum account balance may not produce high enough monthly income to last their lifetime. This, in turn, will persuade workers to increase their retirement plan savings rate.
Question:
Good Day,
I have a client (age 65) who inherited a traditional IRA from her mother in 2020. I know that she must empty the account by 12/31/30. She is not an eligible designated beneficiary (EDB). I’m trying to calculate the 2022 RMD
Usually, rollovers involving 401(k) accounts and IRAs involve moving dollars from a plan to an IRA. But sometimes it makes sense to instead do a “reverse rollover” – from an IRA to a 401(k).
Let’s get some bad news out of the way: Although 401(k)s (and other company plans) are required to allow rollovers out of the plan, they are not required to allow rollovers into the plan. So, before withdrawing your IRA, check with your plan administrator or HR to make sure you can do a reverse rollover. Also, the tax code only allows reverse rollovers of pre-tax (deductible) IRA funds. Roth IRA funds and after-tax (non-deductible) IRA accounts are not eligible.
Question:
Hi,
I am age 50 and am targeting retirement at age 55. My current employer is selling the division I work for, and I see the potential that I could be laid off at, say, 52. If this were to happen, could I join a new employer with a 401(k) plan, roll my old 401(k) over to the new plan, and then take a distribution (both the rolled-over funds and the new 401(k) funds) under the rule of 55? The statute suggests that I could do this, but I have seen comments that the rollover funds wouldn't count.
Employees leaving their jobs are often surprised to discover they aren’t entitled to the full balance of their company plan account. The reason is that some plans impose a vesting rule on certain types of contributions.
What do the vesting rules mean? They tell you how much of your plan benefit you actually own and cannot be taken away from you. If you’re fully vested, you’re entitled to your entire benefit. If partially vested, you only get a portion of your benefit.
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,
Tax Day 2022 seems like an appropriate time to review a sometimes-overlooked way to get extra dollars into your IRA or company savings plan. Folks age 50 or older are allowed to make “catch-up” contributions with no strings attached. These extra contributions allow you to build up your savings while enjoying an immediate tax break (if making pre-tax contributions) or a tax break down the road (if making Roth contributions).
A bill designed to increase savings in IRAs and company plans has passed the House of Representatives, but it’s not yet law.
The bill is officially called the “Securing a Strong Retirement Act of 2022,” but many are calling it “SECURE 2.0” since it’s seen as an expansion of the original SECURE Act from 2019.
When you file for bankruptcy, one thing you usually don’t have to worry about is protecting your IRA funds from creditors.
That’s because, in just about every case, all of your IRA (and Roth IRA) monies are off limits. Under the federal bankruptcy law, IRA assets up to a certain dollar limit cannot be reached by creditors. That dollar limit is indexed every three years based on the cost-of-living. The current dollar limit is currently $1,362,800, but on April 1 it goes up to $1,512,350 until March 31, 2025.
