Question:
Does the SECURE Act have any implication to Roth IRA account inheritance longevity? Please let me know. Thank you.
Regards,
Vikram
Answer:
Hi Vikram,
The SECURE Act does affect inherited Roth IRAs in the same way it affects inherited traditional IRAs. Most beneficiaries who inherit a Roth IRA in 2020 or later will be subject to a 10-year payout period.
Despite the COVID-19 pandemic, or maybe even because of it, real estate markets in many areas of the country are busy right now. If you are considering jumping in, and if this is your first home purchase, coming up with a down payment can be daunting. Here is how an IRA can help a first-time homebuyer.
Exceptions to the 10% Penalty
IRAs are supposed to be for saving for retirement.
The upcoming school year for many students is going to look like nothing we have ever seen before. For many, computers and related technology will become an indispensable part of academic life. This means that having reliable equipment and internet access is more important than ever. For many families this is just another unexpected expense in a pandemic economy. Here is how an ESA could help.
Question:
In December of 2018 I did my first partial Roth IRA conversion into a new Roth IRA. I’m older than 59 ½.
In December of 2019 I did my second partial Roth IRA conversion into the same Roth IRA opened in December of 2018. The traditional and Roth IRA’s are held at the same company, so the conversions are easy. Does the 5-year waiting period apply to each conversion, or just the first one?
Answer:
We get a lot of questions about the five-year rule for Roth IRA distributions! What makes this area so confusing is that there are, in fact, two different five-year rules that may come into play.
We are in the dog days of summer and this year is a crazy and unsettling time. The last thing on your mind may be your IRA. However, you should be aware that an important deadline is quickly approaching. If you took your 2020 required minimum distribution (RMD) from your IRA and now want to repay it, your time may be running out. The deadline for these three repayment remedies is August 31.
1. Repay more than one RMD distribution. Normally, you are limited to rolling over only one IRA distribution in a one-year period. If you take multiple distributions during this period, you are typically out of luck. However, these are not normal times! In Notice 2020-51, the IRS waives the one-per-year rule for 2020 RMDs. This is good news if you took your RMD in multiple distributions, which many people do.
Last year the SECURE Act became law and eliminated the stretch IRA for millions of IRA beneficiaries. However, for some IRA beneficiaries the stretch lives on.
For most beneficiaries, the stretch is now replaced with a ten-year payout period. Beginning for deaths in 2020, the ten-year rule will apply to designated beneficiaries who are not eligible designated beneficiaries under the SECURE Act. Eligible designated beneficiaries include spouses, minor children of the IRA owner, chronically ill and disabled individuals and beneficiaries who are not more than ten years younger than the IRA owner.
Question 1:
I have a very simple ROTH IRA question. I borrowed money from my ROTH IRA with the intention of paying it all
back in 60 days. To avoid any penalty, must I make one repayment of all the money I borrowed? Or, can my repayment be made in two parts, all within the sixty days?
Question 2:
Am I allowed to convert my inherited Traditional IRA to a Roth IRA?
It happens. You have made a 2019 contribution to the wrong type of IRA. All is not lost. That contribution can be recharacterized. While recharacterization of Roth IRA conversions was eliminated by the 2017 Tax Cuts and Jobs Act, recharacterization of IRA contributions is still available and can be helpful in many situations.
Maybe you contributed to a traditional IRA and later discovered the contribution was not deductible. Or maybe you contributed to a Roth IRA, not knowing that your income was above the limits for eligibility.
The countdown to the much delayed 2019 tax filing deadline is on. The deadline is July 15, 2020, which is only a couple of days away. Time is running out. Is your IRA ready?
Making Your 2019 IRA Contribution
Due to the COVID-19 pandemic the 2019 tax-filing deadline has been extended until July 15, 2020. This means that July 15, 2020 is also the deadline for making a 2019 IRA contribution. This is true even if you have an extension to file your tax return. An extension does NOT give you extra time to make a traditional or Roth IRA contribution. So, if you are thinking about making a 2019 contribution, the clock is ticking.
Question:
Hello,
I am aware of the IRA one-rollover-per-year rule. What I can’t find is if a married couple that files jointly violates the rule if they each do a rollover from their own individual IRAs?
For example: One person has an IRA in their name and takes a distribution and rolls it over within the 60-day limit avoiding the taxable distribution. Now, can the other spouse also take a distribution from their own IRA and do the same without incurring a taxable distribution?
Thanks so much.
Maggie
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