It’s hard to keep up with the news out of Washington these days! We have been getting a ton of questions on how the new tax proposals recently passed by the House Ways and Means Committee would impact Roth conversions. Here is the rundown.
The House Ways and Means Committee has released a draft of proposed changes to retirement accounts, including adding income limits for conversions and eliminating the back-door Roth conversion strategy. These proposals are designed to raise revenue and are likely, at least in part, a response to recent headlines about large Roth IRAs held by billionaires. Unless otherwise noted, the proposals would be effective for 2022. Here is what this means for your retirement account.
President Biden has declared September to be National Preparedness Month. The goal is to encourage Americans to be more prepared for natural disasters. Unfortunately, from flooding on the east coast to fires on the west coast the news headlines seem to be full of these devastating events, and an increasing number of Americans have been affected.
Question:
Ed
I heard on a podcast that you are the number one authority on IRAs, so I want to go to the most informative source. Could you answer this question for me?
The other day an advisor called us with an issue that comes up frequently, especially in these tumultuous times. His client had made an IRA contribution for 2021 and was planning on deducting that contribution. However, his job situation changed, and he became an active participant in a retirement plan at a new job.
Question:
Ed,
My client recently passed away at the age of 86 and the beneficiaries were his twin grandchildren who are six years old. Does their 10-year clock to withdraw the funds start right away, or can they wait until they are 18 years old to start their 10-year clock to withdraw the funds?
It’s back to school time! Any parent will tell you that education can be expensive. You cannot afford to miss out on any possible option out there that may help you save. One savings tool that you might overlook is the Coverdell Education Savings Account (ESA). Here are 10 things you need to know about ESAs.
A Qualified Charitable Distribution (QCD) is a way for you to move funds out of your IRA to a qualifying charity income tax free. This can be a great strategy for those who are charitably inclined and looking to save on taxes. Here are the answers to some of the most frequently asked questions about QCDs.
How old do you have to be to take a QCD?
IRA owners who are age 70½ and over are eligible to do a QCD. Sounds easy, right? This is more complicated than it might sound. A QCD is only allowed if the distribution is made on or after the date you actually attain age 70 ½. It is not enough that you will attain that age later in the year.
Question:
If you are an employee who participates in a 401(k) who retires at age 73, do you have to take an RMD in the year you retire, or can you take your RMD by April 1 of the year following retirement? If you can take your RMD by April 1 of the following year, does that mean you have to take two RMDs in that year?
You may be familiar with Health Savings Accounts (HSAs). These accounts have been around now for a while. They work with high deductible health insurance and are known for their triple tax benefits. Contributions can be deducted. Earnings are tax deferred while in the HSA account and, if HSA funds are used for qualified medical expenses, both contributions and earnings are tax-free when distributed. While you may know the basics, here are 5 HSA benefits that may surprise you:
