June is Pride Month. While celebrating, same-sex couples may want to take this opportunity to consider plans for their retirement accounts. Since the SECURE Act and SECURE 2.0 have overhauled the rules, it may be time for a new strategy. Here are 5 retirement account planning tips for same-sex couples.
Question:
I inherited an IRA from my brother back in 2019. I have been taking required distributions from it each year. Can I do a qualified charitable distribution from this inherited IRA this year to satisfy the required distribution requirements from this IRA?
Probably the biggest advantage that a spouse beneficiary of an IRA has over other beneficiaries is the ability to do a spousal rollover. Only a spouse beneficiary can do a spousal rollover. Nonspouse beneficiaries do not have this option. With a spousal rollover, inherited retirement account funds become the spouse beneficiary’s own.
Question:
Hello and thank you for all the great, helpful information you continue to send out.
I am due to take my first RMD (required minimum distribution) in 2024 which would make my required beginning date April 1, 2025 if I understand correctly. My intention is to empty my traditional IRA next year and convert it to my existing Roth. My question is, if my traditional IRA shows a zero balance by my required beginning date, would that still require a RMD be taken for 2024? I’d like to know if I can convert the entire account or if I have to take an RMD and then convert the rest. I think the answer is I would have to take an RMD, but am not 100% sure.
Thanks so much,
Dana
You have likely heard of Health Savings Accounts (HSAs), and you may even understand the basics of how an HSA works. These accounts are really not too complicated. If you have a qualifying high deductible health plan, you may contribute to an HSA. Then, you can take tax-free distributions to pay for qualified medical expenses.
Do you have an IRA you are thinking about converting to a Roth IRA? There are many benefits to converting. You trade an immediate tax bill for the promise of tax-free earnings and distributions down the road. However, one benefit you may not have considered is the benefit to your beneficiaries. Inheriting a traditional IRA will have very different tax consequences than inheriting a Roth IRA. Converting your IRA to a Roth IRA is really a gift to your beneficiaries.
Question:
Greetings,
There seems to be a lot of conflicting information on Inherited Roth IRAs, for which I was hoping to get a definitive answer from the experts.
My understanding was that a non-spouse beneficiary (who is not an eligible designated beneficiary), who inherits a Roth IRA wouldn’t be subject to annual RMDs but would be subject to emptying the account within 10 years of the original account owner’s death (for account owners who died after 2019, that is). I thought this exception was predicated on the original account owner of a Roth IRA not being subject to a required beginning date (RBD).
If you recently converted your traditional IRA to a Roth IRA and you under 59 ½, you will want to know about the five-year rule for penalty-free distributions of converted funds from your Roth IRA. Many people are not aware of it. Not understanding how the rule works can result in heavy penalties when you withdraw your Roth IRA funds.
More 401(k) plans are starting to offer Roth options. If you now have this option, you may be wondering what the difference is between a Roth IRA and a Roth 401(k). Which account is right for you?
These accounts have a lot in common. Both offer the ability to make after-tax contributions now in exchange for tax-free earnings down the road if the rules are followed. However, there are some important differences between the two plans that you will want to understand.
Question:
I have been told that QCDs are not allowed from local and state government 457(b) plans. I have looked at the accountant’s IRS manual, websites etc. and I can’t find any information that prohibits QCDs from this type of plan. Can you shed some light on this?
