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**Ed Slott Resource Center** America's IRA Experts

                                                                                                                                       

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QUESTION OF THE MONTH

How Do I Make Sure My Children Can Utilize the Stretch IRA?

Q: I was going to do a stretch IRA for my children. I am 78 and my wife is 75. We started RMDs (required minimum distributions) several years ago. My wife is the primary beneficiary with the two children being secondary beneficiaries. What should I do from here? The Answer


RULING TO REMEMBER

3 Exceptions to 10% Early Distribution Penalty That Only Apply to IRAs

When you leave an employer, you have an important decision to make. If you participated in a company plan, you need to decide what to do with your money. Should you roll over your funds to an IRA? There are many things to consider. What if you need the money prior to age 59 1/2? This article lists three times when you won't have to pay the 10% early distribution penalty. Read More



QUESTION OF THE MONTH

How Do I Take My Deceased Spouse's 2016 Required Minimum Distribution?

Q: My spouse passed away in 2015. He was receiving an RMD from his 401(k). I was told by his ex-employer that for 2016, I will be required to take an RMD based on his age vs. mine. I am getting different answers from several financial advisors. Is this correct? The Answer




JUNE KEY FOCUS

The Important Ages in Retirement Plans - What They Are And What They Mean

There are two things to keep in mind when you are discussing ages and retirement plans. One is the age itself and the other is what that age means for your overall retirement planning. For example, when is age 55 not really age 55? You will understand as you read further. Read More



QUESTION OF THE MONTH

What is the Maximum I Can Contribute to a 401(k) and SEP IRA?

Q: Hi, I am contributing to 401(k) and SEP IRA. I want to make sure I am taking full advantage of my contribution potential, but I also don’t want to realize down the road that I was contributing too much. What is the maximum contribution amount? The Answer


RULING TO REMEMBER

These Roth Accounts Follow Required Minimum Distribution (RMD) Rules

Roth IRAs offer many benefits. A huge advantage, relative to other retirement accounts, is that they do not have any required minimum distributions (RMDs) during your lifetime. However, that’s not true for all Roth accounts. Failure to understand this simple fact can lead to big (50%) penalties. Make sure you know how these Roth accounts follow RMD rules. Read More



MAY KEY FOCUS

5 Things You Can Do With a 401(k) That You Can’t With an IRA

401(k)s and IRAs share a lot of similarities. They are both retirement plans. They both can help you lower your tax bill today, provide tax-deferred growth and can help provide an income source in retirement. That said, there are also many differences between the two types of retirement accounts. We explore 5 things you can do with a 401(k) that you can’t do with an IRA. Read More


RULING TO REMEMBER

What You Need to Know About the Required Beginning Date

RBD stands for required beginning date. It is the date by which an IRA owner must take their first required minimum distribution (RMD) in order to avoid a 50% penalty. Generally, an individual must take their first distribution from a retirement account in the year they turn age 70 ½. These points clarify exactly when you must take your first RMD and what rules you need to know. Read More


MARCH KEY FOCUS

Latest Update on Forthcoming Social Security Changes

In recent weeks, the Social Security Administration has released a flurry of information, including several “Emergency Messages,” aimed at clarifying some of the changes to the Social Security rules made by the Bipartisan Budget Act of 2015. We outline what you need to know from these messages to prepare for the upcoming Social Security changes. Read More

 

QUESTION OF THE MONTH

Can I Roll Over Traditional IRA Funds to a SIMPLE IRA?

Q: What are the limitations of combining Traditional IRA accounts with SIMPLE IRA accounts with a rollover? Also, what are the comparable legal advantages between a regular 401(k) account and a Roth 401(k) account? The Answer

 

QUESTION OF THE MONTH

How Do I Qualify to Take Advantage of Net Unrealized Appreciation (NUA)?

Q: I am 61 years old and have been retired for many years from a company with private stock in an ESOP plan. I want to take the stock "in kind" and hang onto it. Can I take and hold the certificates myself or do I need to open the brokerage account to receive them to qualify for NUA treatment? The Answer

 

FEBRUARY KEY FOCUS

Did You Miss Your 2015 RMD? Keep Calm and Follow These 3 Steps

The end of the year can be a busy time. Sometimes things slip through the cracks. If you missed the required minimum distribution (RMD) deadline, statistics show you are not alone. So if you missed your 2015 RMD, stay calm and follow these 3 steps right away. Read More




RULING TO REMEMBER

10 IRA Contribution Rules You Must Know

If you follow the rules, there will be no need to worry about a ruling. This month, instead of examining a court case, we realize this is the time when many IRA owners consider making IRA contributions for the prior year. Are you planning on making a 2015 contribution to your IRA? Here are 10 IRA contribution rules you need to know. Read More






RULING TO REMEMBER

BIG Increases in IRA Private Letter Ruling Fees

Starting Februray 1, 2016, IRS PLR fees for all 60-day rollover rulings and for late Roth recharacterization rulings are increasing to $10,000. Previously, these requests were given special "discounted rates" as low as $500 (for late 60-day rollover requests involving amounts less than $50,000). This is a double whammy for clients with 60-day rollover problems. Here’s why. Read More





RMD RULES TO REMEMBER

8 Things to Know About The Special Spousal Rule That Allows Smaller RMDs

If you have a traditional IRA and are age 70 ½ or older this year, you will have to take a required minimum distribution (RMD) from your IRA for 2015. If your much younger spouse is the only beneficiary listed on your IRA for 2015, you may be able to use the special spousal rule. Here are 8 things you need to know about this rule, which may allow you to take a smaller RMD. Read More

 


QUESTION OF THE MONTH

Is There a Statute of Limitations on Failing to Report an RMD on My Tax Return?

Q: My son, who is an accountant, looked over my data and found that I reported $5,000 too little on my 2009 tax return. Because this is a pension distribution, he is not sure if the statute of limitations has expired as it would in a normal error on the IRS Form 1040. Is there statute of limitations on RMDs? The Answer

 

RULING TO REMEMBER

Will Qualified Charitable Distributions Be Available for 2015?

Paul Ryan is now Speaker of the House, and the President just signed the Bipartisan Budget Act of 2015 into law. But the turmoil still stands. Congress has a packed legislative agenda at year-end, so instead of dissecting a PLR this month, we will examine if Qualified Charitable Distributions (QCDs) - a very popular topic - will return for 2015. Read More





NOVEMBER KEY FOCUS

What the New Budget Means for Your Social Security and Medicare Benefits

Retirement planning for millions of Americans changed on Monday, November 2 when President Obama signed into law the Bipartisan Budget Act of 2015, which has a significant impact on both Medicare Part B participants and those trying to employ savvy planning tactics to get the most of their Social Security benefits. Here's what you need to know. Read More


OCTOBER KEY FOCUS

10 Things You Must Know About the 10% Penalty and IRAs

IRAs are designed to be used for retirement savings. Ideally, you should not touch these funds before reaching retirement age. However, in the real world, you may need money and consider tapping your IRA earlier. You should be aware of these 10 things about the 10% early distribution penalty and IRAs. Read More




SEPTEMBER KEY FOCUS

10 Things You Must Know About a Recharacterization

October will be here before you know it. I know this because I have already seen Halloween candy in the grocery store. October 15 is the deadline for doing a Roth recharacterization. Here are 10 things you must know about the process, the pluses, the pitfalls and how to decide whether it is the best move to make for your overall retirement plan. Read More




QUESTION OF THE MONTH

Does The Five-Year Holding Pattern Apply to Each Roth Conversion?

Q: I’ve read that regardless of age, a five-year hold period applies to each Roth conversion and that the earnings portion of any distribution from a converted IRA would be subject to tax and penalty if withdrawn prior to 5 years of each conversion? Is this true? The Answer


AUGUST KEY FOCUS

How Safe From Creditors is Your 401(k) if You Roll it to an IRA?

"If I roll my 401(k) money to an IRA, how safe will it be from creditors?" This is one of the most common - and in some cases, important - questions people have when they are considering moving their 401(k) to an IRA. There is not one simple answer to that question, but we dive in to the many issues involved with this decision. Read More


RULING TO REMEMBER

Don't Be "Elroy" When Splitting an Inherited IRA After Death

In the tax court case (Morris, et ux. v. Commissioner, TC Memo 2015-82), Elroy Morris, an IRA beneficiary, lost even though he received poor advice from a law firm that helped with the settlement of his father’s estate. Elroy shared the inherited IRA funds with his siblings and was being forced to pay all of the income tax on the distribution. Here’s the full story. Read More

 

JULY KEY FOCUS

Still Working and Past Age 70.5? Here are Key Answers to 7 RMD FAQs

We get many questions from those nearing the RMD (required minimum distribution) age of 70 ½ who are still working. Below we put together a list of 7 frequently asked questions and our answers on this important IRA planning topic, including RMD delays for IRAs and 401(k)s, when an individual must take their first RMD if using the still working exception and more. Read More

 

JUNE KEY FOCUS

3 Questions to Ask When Preparing a Power of Attorney for an IRA

Giving another person the ability to make significant financial decisions and/or take actions on your behalf is not an easy thing to do. In such cases, you want to make sure someone else can act on your behalf. Typically, this is done via what’s known as a Power of Attorney (POA) document. Here are 3 questions to ask when preparing this document. Read More

 

RULING TO REMEMBER

Hardship Will NOT Get You a 60-Day IRA Rollover Extension

A taxpayer went to IRS with the plea that the 60-day IRA rollover period came and went without activity due to her financial instability during a time of employment insecurity and other stressful experiences. What was IRS’ response to the request for more time? Read More


RULING TO REMEMBER

TIGTA Addresses IRS Action on Excess IRA Contributions

A new Treasury Inspector General for Tax Administration (TIGTA) report found that IRS hasn’t done enough to address the problem of tax payers making excess contributions to IRAs. We provide the main details of the report and how IRS plans to address the problem. Read More

 

QUESTION OF THE MONTH

Should I Name a Trust as My IRA Beneficiary?

Q: How do I leave my IRA to my minor grandson? Should I appoint a custodian, a trust, or something/someone else? I am getting varying answers from lawyers. I want to make sure my 9-year-old grandson gets my IRA. The lawyer said I have a trustee to my estate in my will, but I need to be sure. The Answer

 

APRIL KEY FOCUS

3 Reasons to Use a Roth IRA Over a 529 Plan for Education Savings

For some time now, the cost of a college degree has been rising at perilously high rates, and as a result, the dream of one day going to college, for many, remains just that ... a dream. With college tuition rising so dramatically, it's not a surprise that people are looking for new and creative ways to save. Here are 3 reasons a Roth IRA is a better alternative to a 529 plan. Read More

 

RULING TO REMEMBER

IRA Contribution Limits Horror Story: An Argument with IRS That Went Nowhere

The IRS limits how much you can contribute to an IRA each year, yet some IRA holders don’t know about the IRA limits. What happened to a married couple when they exceeded them and failed to rectify the error? We examine the issue and the discussion with IRS that ensued. Read More


QUESTION OF THE MONTH

Do I Have to Take 2 Required Minimum Distributions (RMDs) in the Year I Turn Age 70 ½ ?

Q: It appears that in the first year of mandatory RMD withdrawals that one has to take two distributions, one in April of the year after you turn age 70 ½ and by December 31 of the same year. Is this true? The Answer

MARCH KEY FOCUS

Spousal IRA Contributions and Divorce: What You Need to Know

In a marriage where one spouse (Annie) has earned income and the other spouse (Bernie) has little or no income, an IRA or Roth IRA contribution can be made for Bernie based on Annie’s income. However, what happens if Bernie makes his contribution early in the year and later in the year he and Annie are divorced or separated? Read More


QUESTION OF THE MONTH

Does a Roth IRA Conversion Affect My Medicare Premiums?

Q: Are Roth conversions considered part of normal income for Medicare premium purposes? For example, if I make a large Roth conversion, can it pump up the rate I have to pay for Medicare Part B and Part D premiums going forward? The Answer

 

RULING TO REMEMBER

Consolidating IRAs: Relying on an Advisor Who Didn't Know the Tax Code

An advisor told her client to consolidate her IRAs by moving her traditional IRA into a SIMPLE IRA. Educated advisors know what the tax code thinks about that maneuver. This Private Letter Ruling (PLR) details the taxpayer's efforts to rescind the error and move the money back into the traditional IRA. Read More

 

DECEMBER KEY FOCUS

5 Steps to Eliminate a 2014 Estimated Tax Penalty with Your IRA Before the Year Ends

It's December already, and you've just realized that you haven't been withholding enough income taxes so far this year and/or you have haven't been making the proper quarterly estimated payments in 2014. Does that mean that you're going to have a penalty? Probably, unless you do something to fix the problem before the end of the year. Read More