Last week President Obama delivered his State of the Union address to the nation and introduced us all to a new type of retirement account, the myRA. Since then, the ins and outs of the new accounts have been minced and parsed in just about every way imaginable. Click for more detail.
This week's Slott Report Mailbag gets into the Roth IRA 5-year rules - as well as the once-per-year-rollover-rule and disclaimer planning. These topics showcase the depth of IRA distribution and retirement planning and the intricacies, detail and potential danger involved in this area.
When you first open an IRA with a financial institution (custodian), you have to sign the custodian's IRA contract. This IRA contract must contain an IRA agreement and an accompanying disclosure statement. Usually both these documents are contained in one IRA contract, with the disclosure statement attached right behind the IRA agreement.
Many IRA custodians are using cross collateralization language in the account opening agreements used in their financial services companies. What the agreement contains is language stating that if you or any of your accounts owe money to the financial service company, which you do not pay, then the company can take the amount owed out of any of the accounts that you have with them. This language is there for the sole purpose of protecting the financial service company from deadbeats.
If you are elderly, or your parents are elderly and you help them with their finances, you should consider getting a Power or Attorney (POA). A POA lets you name or appoint someone to handle important legal and financial issues for you, either now or in the future if you are unable to make decisions for yourself. A POA can also be used to manage or make decisions related to your IRAs.
This week's Slott Report Mailbag answers what we call some of the "nuts and bolts" of IRA planning. We received questions on required minimum distributions (RMDs) and inherited IRAs - two of our most popular topics, and also two of the topics where we see the most mistakes and disaster stories. Away we go with another Thursday mailbag!
An IRA rollover is when you take money out of your IRA or Roth IRA and the distribution is payable to you. You can put the funds in your bank account, spend them, invest them, do anything you want with them. Then, within 60 days, you can put all or part of the amount distributed back into your IRA or Roth IRA. There will be no tax or penalty on this transaction.But how do you know when the 60 days are up? You do NOT start counting from the date you request the distribution, the date on the check, or the date the funds left the IRA account. You start counting on the date you receive the funds if they are mailed,
October 17th is not the only important date this month for retirement account owners. This past Monday was a date circled on the calendar of many of you. For most of you, that was the final deadline to complete a timely Roth recharacterization of a 2010 Roth IRA conversion (the deadline is now October 31st for certain individuals affected by Hurricanes Irene and Lee, or the wildfires in Texas). Click to read more about why October 31st is also a key deadline to be aware of.
