Any IRA owner turning age 72 this year will have a required minimum distribution (RMD) due for 2021. But, depending on when they celebrate their 72nd birthday, the deadline for taking the 2021 RMD may be different.
Question:I am retired and turned 72 in September, 2021, so I must begin required beginning distributions (RMDs) by April, 2022. I have traditional and Roth IRAs as well as a defined contribution plan with a former employer. I understand I must withdraw my RMD before withdrawing an amount for anything else (e.g., Roth conversion) from both my traditional IRA and my defined contribution plan. But is that requirement limited to withdrawals within each type of plan (IRA and defined contribution)?
Question:Dear Ed Slott and Company,I am a longtime subscriber, having met and talked with Ed at several industry conferences, going back well over 20 years. Which, with all of Ed’s great work and active networking, puts me in a pretty big club!In any event, a CPA has turned to me with a problem.A client of his passed away earlier this year with $1.7M in her IRA. Her Estate was the beneficiary of the IRA. Her 80+ year old siblings are the beneficiaries of the estate. I know, not great facts. But, it gets worse.
Question:Good morning,I have an inherited IRA. I took a manual withdrawal from it in late August. I thought I had deleted my auto withdrawal on the custodian’s website. I just noticed today that another distribution was taken on 9/17. I have done nothing with the money in the core account that it was transferred to. Is there any way for me to reverse this error?Thank you for any assistance.
In most states the legal age for alcohol consumption is 21. And you must actually be 21. When you hand your driver’s license to the bouncer and he shines a little flashlight on your date of birth, it is not good enough to say you will be turning 21 in a couple of months. Unless today is your 21st birthday or later, the bouncer will wave you away, denying access to the premises.
When an IRA owner taking required minimum distributions (RMDs) dies before removing his annual RMD, that year-of-death RMD (or whatever portion remains) must still be withdrawn. Upon passing, the year-of-death RMD immediately becomes the responsibility of the beneficiary. If it is not withdrawn before the end of that same calendar year, it is a missed RMD and potentially subject to a 50% penalty. Even if the IRA owner dies late in the year, December 31 remains the deadline for the beneficiary to take the year-of-death RMD.
Recently, I had a conversation with an advisor who wanted a second opinion. He disagreed with how a 401(k) custodian was handling his client’s required minimum distribution (RMD). To arm himself with facts, the advisor contacted us so he could push back on that custodian.
Question:I read of a way to move money from an IRA to a Roth without incurring any taxes. You set up an IRA account and make a non-deductible contribution of $6,000, then you convert it into a Roth. Is this legal and possible?Thanks!
In the May 17, 2021 Slott Report, we discussed the rules governing required minimum distributions (RMDs) from defined benefit (DB) plans, also known as “pension plans.” We said that DB plan payments usually have no problem satisfying the RMD rules, but there are two special rules that sometimes apply.
When you contribute to a traditional IRA you make a deal with Uncle Sam. You can get a tax deduction and tax deferral on any earnings in your IRA. However, eventually the government is going to want its share and will require funds to come out of these accounts. That is when you must start required minimum distributions (RMDs). You may not need the money and you may not want the tax hit. Here are some strategies that can help reduce your RMD.
