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:
Question:
Hi,
I have a client who died in 2021 before taking his 2021 RMD. He designated various charities as beneficiaries of his IRA.
The IRA custodian is advising the executor to take the RMD, however according to a previous post by Mr. Slott, Revenue Ruling 2005-36 states in this scenario the RMD is to be paid to the beneficiaries. I suggested the client ask the custodian to request confirmation from their legal department. Any other steps?
Thank you,
LP
On July 15 and 16, financial advisors from around the country gathered virtually for Ed Slott and Company’s Instant IRA Success workshop. We took a deep dive into the rules governing retirement accounts and engaged in some lively discussions of issues that advisors on the front line are facing regularly as they help their clients plan for a secure retirement. Here are five takeaways to share from our recent meeting:
Question:
Ed,
I recently saw an email from you on QCDs when deductible IRA contributions are made in the same year. It discussed how these two transactions interact with each other.
I am also wondering if the offset to the QCD would also occur for a SEP IRA or SIMPLE IRA contribution?
Thank you for your help.
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.
Question:
I rolled over an IRA in March 2021 from an TD Ameritrade institutional account to a TD Ameritrade retail account. I currently would like to do a 60-day short-term rollover. Would this not be allowed because of the one rollover per 12 month period or is a 60-day short-term rollover treated differently? Thank you for your time.
