There are many things to consider when determining how much you must take out of your retirement accounts commencing at age 70 ½. You must know how many different accounts you have and what type they are, such as IRAs, 401(k)s and/or 403(b)s. Most importantly, you’ll want to insure that your required distributions (RMDs) are properly calculated and paid in a timely manner because the tax penalty for not doing so is quite severe.
This week's Slott Report Mailbag includes questions on Roth conversion options from a company plan, spousal rollovers, and Roth recharacterizations.
We recently informed you that the recharacterization deadline for 2010 Roth IRA conversions is generally October 15th of the year following the year of conversion. This year, the deadline is October 17th because the 15th falls on a Saturday.
What is Form 5329? Its title is "Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts." You should file the form whenever you miss a required distribution, take a distribution before age 59 ½ when one of the penalty exceptions does not apply, and when you make excess contributions. Those are most of the reasons to file the form. The form calculates any additional taxes owed (what are often called penalties) for certain IRA transactions. Not filing the form could only make things much, much worse.
Click to read how spousal rollovers and the RMD for year of death should work under the IRA rules.
This is the time of the year when missed required distributions (RMDs) for the prior year surface. Do you know what needs to be done to correct the situation?
Do you have a Required Minimum Distribution in 2011? These questions come up at the beginning of each year. When do I have to take my first distribution? What age do I use? Do I have to wait until I actually turn 70 ½? Click to read the answers to these questions.
Your client is over 70 ½ and is still working. Does he have to take an RMD? The answer is, it depends.
This week's Slott Report Mailbag discusses some complex, timely issues involving RMDs and what happens if someone who takes a Roth Conversion with the intent of spreading the tax over 2011 and 2012 dies suddenly.
Before we even get to the RMDs, what exactly is a successor beneficiary? Let’s say that Great-Uncle Scott dies and leaves his IRA to his daughter Rosemary. Rosemary is the IRA beneficiary. Rosemary names her nephew James as her “successor” beneficiary. If Rosemary dies with funds remaining in her inherited IRA, then James will succeed to her remaining benefit – he becomes the successor beneficiary.
