• Question: Hello, I am a financial advisor in Dallas and appreciate all the training & education Ed has provided over the years to ML advisors like me. I have a question for Ed.  When meeting with a potential client, I uncovered a potential problem … And potential subsequent solution but am not sure if it’d work. The gentleman is 80, still working full-time and loves his [...]

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    Creating a self-directed IRA is relatively straightforward. It is not a creation of the tax code, but rather stems from the investment policies of the custodian that administers the IRA account. The agreement will allow you to diversify your IRA assets across a wide range of investments that you choose. However, when investing self-directed IRA assets, it is important that you and your advisor [...]

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    This holiday season, consider giving the gift of a big head start on lifetime financial security to the children in your family by giving them funds to contribute to Roth IRAs. There's no lower age limit on having a Roth IRA as long as a child has earned income. And an early start on saving can have a tremendous long-term payoff through the power of compound interest. Moreover, most children [...]

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    Question: Ed – I read an article from you on delaying RMDs if still working and over age 70.5. Does the code allow (or address in any way) someone who works merely one day in the next calendar year to delay the RMD from the employer plan? For example, employee turns 70.5 on April 1st, 2017. Retires on January 1, 2018. Therefore, calendar year of retirement is 2018…..so first required [...]

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    In 2014, the Tax Court ruled that an IRA owner could do only one, IRA-to-IRA or Roth IRA-to-Roth IRA, 60-day rollover in a 12 month period. This rule applies no matter how many IRA and/or Roth IRA accounts the IRA owner might have. The 12 months is a full 12 months, not a calendar year. The 12 month period will start with the date that IRA or Roth IRA funds are received. Example:  Cindy [...]

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    If you have an IRA, you should realize that what goes in must come out. In other words, your tax deferral will not last forever. Eventually, Uncle Sam will want his share. When you reach retirement age, required minimum distributions (RMDs) will kick in. Are you prepared? Take our RMD quiz and see how well you understand the basic RMD rules. Meet Laura, a baby boomer, who is about to embark on [...]

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    If you have a 401(k) account or other employer sponsored retirement plan, you probably already know that a distribution before you reach age 59½ is going to be subject to a 10% penalty. One exception to the 10% early withdrawal penalty allows participants in a qualified plan to take a distribution from the plan after leaving the job as long as they are age 55 or older. This rule, sometimes called[...]

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    Roth IRAs become 20 years old in January of 2018 and now hold more than $660 billion in retirement wealth, reports the Investment Company Institute (the source of the data in this article). Yet while Roth IRAs have become very popular among individuals who make annual contributions to IRAs, they are near totally avoided by persons who roll over big-dollar distributions from company retirement [...]

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    This week's Slott Report Mailbag looks into RMD rules and the "still-working" exception as it pertains to IRAs. As always, we recommend you work with a competent, educated financial advisor to keep your retirement nest egg safe and secure. You can find one in your area here. Question: Good Morning Mr. Slott and Colleagues, I just finish reading your book The Retirement Savings Time [...]

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    While there is a lot of focus on the proposed tax law changes that have a target effective date of 2018, there is something we can count on for 2018, the inflation adjusted retirement account limits. There are currently no proposed changes to the following limits. IRAs The IRA/Roth IRA contribution limit remains unchanged at $5,500 with a $1,000 catch-up amount for those who are age 50 or [...]

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    Tax Reform and Your Retirement Account

    House Republicans took the first shot at tax reform with the release of the Tax Cuts and Jobs Act on November 2. Now it is the Senate’s turn to weigh in. Not surprisingly, the Senate’s take on overhauling the tax code looks very different than the House version. You may wonder how your retirement account may be affected. Here are some highlights. As the details of the Senate plan are [...]

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    Are You Taking an RMD for the First Time in 2018?

    This week's Slott Report Mailbag examines inherited IRAs and retirees taking RMDs for the first time. As always, we recommend you work with a competent, educated financial advisor to keep your retirement nest egg safe and secure. Question: I have a client who has inherited a Roth IRA from her father. Unfortunately, her father did not live the full five years after rolling his IRA into a [...]

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    60-Day Rollovers and Multiple Checks

    We continuously get questions on 60-day rollovers. Many times those questions revolve around a client receiving more than one distribution or wanting to complete the 60-day rollover with more than one distribution. Here is what you need to know. As a reminder, the one-rollover-per-year rule only applies to IRA-to-IRA 60-day rollovers and to Roth IRA-to-Roth IRA 60-day rollovers. For purposes of[...]

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    10 Things to Know About the Still-Working Exception

    Are you approaching retirement age and not looking forward to being forced to take unwanted required minimum distributions (RMDs) from your retirement account? You may be looking for a way to delay those distributions. You may have heard about the “still-working” exception, which can allow RMDs to be put off. Will this exception help you? Here are 10 things you need to know. 1. The [...]

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    Tax Reform Proposal Unveiled

    November 3, 2017
    Tax Reform Proposal Unveiled

    The much anticipated Republican proposal for tax reform has been released in the form of the Tax Cuts and Jobs Act, an over-400 page long major rewrite of the Tax Code.   It is sure to be controversial and subject to political dispute, and specific provisions are likely to change.  Here's how the major provisions that most matter to helping your clients read now. Individual Retirement [...]

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    The Rules and Strategies When You Inherit an IRA From Your Spouse: This Week’s Q&A

    This week's Slott Report Mailbag looks into RMDs and spousal IRA beneficiaries. As always, we recommend you work with a competent, educated financial advisor to keep your retirement nest egg safe and secure. Question: Hello, I need to take my RMD (Required Minimum Distribution). I'm not currently working. I'd like to know if I can take my RMD and add it to my existing Roth IRA. [...]

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    IRA RMD Basics for the First Year’s Distribution

    Every year more Baby boomers move toward age 70 ½ and their first required distributions from their retirement accounts. For those boomers born between July 1, 1946 and June 30, 1947, you turned 70 ½ in 2017. You now need to take your first required minimum distribution (RMD) from your IRA accounts. Here are the basics of that first distribution. The date of the first RMD. Generally, you [...]

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    Stuck with the Five-Year Rule? Think Again

    If you inherit an IRA, especially if it is a larger one, you may be afraid of being stuck with the five-year distribution rule. If this rule applies, your IRA must be entirely emptied in five years which can be a serious tax hit. Fortunately, you are much less likely to be stuck with the five-year rule than you may think. Under the tax rules, if you were named as the beneficiary on the IRA [...]

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    RMDs to a Trust Beneficiary of an IRA

    In the past couple of weeks, I have heard the wrong answer to the question of where required minimum distributions (RMDs) must go to a trust beneficiary from both an advisor and an IRA custodian. The advisor was dealing with a special needs trust as the beneficiary of the IRA. He thought that since a trust was the beneficiary the only distribution option was a 5-year payout. The trust was one [...]

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    Is Your IRA Haunted?

    October 23, 2017
    Is Your IRA Haunted?

    It’s Halloween season! This is the time for ghosts, witches, and trick or treating. What does Halloween have to do with your IRA? You might be surprised to hear that your IRA may be haunted. How can that be? Believe it or not, actions you take, or don’t take, can haunt your beneficiaries for years down the road. Many IRA owners think that naming their estate as their IRA beneficiary is a [...]

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    How Familiar Are You with NUA Rules? This Week’s Q&A.

    This week's Slott Report Mailbag examines NUA rules and the "still working" exception. As always, we recommend you work with a competent, educated financial advisor to keep your retirement nest egg safe and secure. Question: I really enjoyed reading The Retirement Savings Time Bomb book and also your website. Thanks for all the information you share! I retired from Procter & [...]

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    Inherited IRAs – When do RMDs Begin?

    We are frequently asked when required minimum distributions (RMDs) begin when an individual inherits an IRA. As with most things related to IRAs, the answer is, it depends. Year of Death RMD If a Traditional IRA owner died after their required beginning date (RBD) and did not take their RMD for the year, the RMD will need to be paid to the beneficiary by December 31 of the year of death. The[...]

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    Rothification?

    October 16, 2017
    Rothification?

    Rothification is a term that is being tossed around a lot as tax reform takes center stage in Congress. What does Rothification mean? Proposals vary but, basically, it’s the idea of eliminating tax deductions and deferrals for retirement savings and instead mandating after-tax contributions with a payoff of tax-free earnings down the road. This is how Roth IRAs and Roth 401(k)s work so hence the[...]

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    Are You Over 70.5 Years Old and Still Working? Take Advantage of These Benefits: This Week’s Q&A

    This week's Slott Report Mailbag looks into 403(b) plans, RMDs, still-working exceptions, and trusts. As always, we recommend you work with a competent, educated financial advisor to keep your retirement nest egg safe and secure. Question: I have a question in regards to taking an RMD from a 403(b) account. My client is still working, but only part-time for 10 hours per week. Does it [...]

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    October Retirement Deadlines

    October 11, 2017
    October Retirement Deadlines

    In a post last week, we talked about the Roth recharacterization deadline which is fast approaching. October 16, 2017 is the last date to recharacterize a 2016 Roth conversion. Another important deadline that is coming up is for trusts that became the beneficiaries of retirement assets in 2016. A qualifying trust can use the life expectancy of the oldest beneficiary of the trust to calculate [...]

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    Penalty-Free Retirement Account Distributions Now Available to Hurricane Victims

    Millions of Americans were affected by Hurricanes Harvey, Irma, and Maria. You may be one of them. If you are, there is some encouraging news. On September 29, President Trump signed H.R. 3823, the “Disaster Tax Relief and Airport and Airway Extension Act of 2017” into law. The new law provides a package of tax relief for Hurricane victims, including a provision that allows penalty-free [...]

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    Are You Over 70.5 Years Old and Still Working? Understand Your Options With RMDs: This Week’s Q&A

    This week's Slott Report Mailbag examines RMDs when you are still working past 70.5 years old and inheriting multiple IRAs. As always, we recommend you work with a competent, educated financial advisor to keep your retirement nest egg safe and secure. Question: I have read some of your other articles, but I haven’t seen an answer to this question. I am 73 years old, still working, [...]

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    A Tale of 3 Cousins and Their Inherited 401(k) Plans

    This is the story of Al, Bob and Carl. Each cousin is the non-spouse beneficiary of his father’s 401(k) plan. Their fathers worked together at the local automotive factory for their entire lives and were all covered by the same plan. The default distribution option in the plan for non-spouse beneficiaries is a five-year payout. Al’s Story Al’s father named Al on the beneficiary form [...]

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    8 Things to Know Before the October 16 Recharacterization Deadline

    Did you convert your traditional IRA to a Roth IRA in 2016 and now you are reconsidering that move? Did you make a 2016 traditional IRA contribution and later discover the contribution was not deductible? Did you contribute to a Roth IRA, not knowing that your income was above the limits for eligibility? If you answered, “yes” to any of these questions, there is a deadline rapidly approaching [...]

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    Do You Know All the Rules for Rolling Over a Roth 401(k)?

    This week's Slott Report Mailbag examines 401(k)s, Roth 401(k)s, and spousal beneficiary rules. As always, we recommend you work with a competent, educated financial advisor to keep your retirement nest egg safe and secure. Question: I have been getting Ed Slott and Company’s emails for a few years now. They are very informative. I have not seen this question yet. I also looked through[...]

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    Divorce, IRAs, and a Twist

    September 27, 2017
    Divorce, IRAs, and a Twist

    Many times when individuals divorce the IRA is split between the spouses. This is done through the divorce decree or separation agreement. An IRA is never split using a qualified domestic relations order (QDRO). That is only used for splitting employer plans, such as 401(k)s. The paperwork should be very clear on the details of the split. Generally, a percentage is the best way to go. It will[...]

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    What If You Could Pay Health Care Costs in Retirement with Tax-Free Dollars?

    As medical expenses continue to increase, planning for them in retirement takes on greater importance.  One approach is to shift thinking of the Health Savings Account (HSA) as an account to defray medical expenses annually to an account with pre-tax dollars and tax-free earnings to defray medical expenses years from now in retirement. Consider this planning strategy to help insulate your [...]

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    How Your Inherited IRA is Taxed

    September 25, 2017
    How Your Inherited IRA is Taxed

    Have you inherited an IRA? What type of IRA is it? Your answer will matter a lot when it comes to your tax bill. Inheriting a traditional IRA will have very different tax consequences than inheriting a Roth IRA. Consider the following example. Let’s say Tom named his three children as beneficiaries of his three-million-dollar traditional IRA. He never made any nondeductible contributions. [...]

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    Retirement Plan Checks and 60-Day Rollovers

    Generally, when you receive a check from your IRA custodian or employer plan, you have 60 days to rollover the funds to another retirement account, either an IRA or an employer plan. As with most retirement plan rules, this rule comes with two exceptions – one good and one bad. Let’s look at what happens when Lori receives a check. Checks Payable to the New Retirement Account A check [...]

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    10 Things You Must Know about HSAs

    As the summer heats up, healthcare remains a hot topic. Will the ACA survive? Will Congressional Republicans succeed in repealing and replacing it? As we reach July these questions remain unanswered. One thing that is clear, however, is that Health Savings Accounts (HSAs) are playing a significant role in the healthcare deliberations. Proponents advocate expanding these accounts as a way to save [...]

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    When You're 70 1/2 Avoid These Disastrous Mistakes

    When You're 70 1/2 Avoid These Disastrous Mistakes This week's Slott Report Mailbag looks into RMDs, Roth IRAs, and "still working" provisions. As always, we recommend you work with a competent, educated financial advisor to keep your retirement nest egg safe and secure. Question:  Good afternoon! We have a client who said he saw a special of yours on PBS, and his understanding was [...]

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    5 Ways to Avoid the Time and Expense of Probate

    Death is inevitable. It comes for us all at one point or another. Some sooner than later, but none are able to escape its grasp. Whenever that time comes, your “stuff,” including your financial assets, generally live on, and are still essentially yours until they are legally transferred to another person or entity. That transference of assets can occur in any number of ways, but often includes[...]

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    Q&A: Significant Concerns with Inherited IRAs, International Beneficiaries & More

    This week's Slott Report Mailbag looks into international beneficiary IRAs, tax free IRA withdrawals, and inherited IRAs.  As always, we recommend you work with a competent, educated financial advisor to keep your retirement nest egg safe and secure. Question: I have a question pertaining to if a IRA owner has taken part of their RMD but then dies before year end…..does that remainder [...]

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    Year-End Retirement Account Q & A

    Question: When is the last day to make a 2016 Roth IRA conversion? Answer: In order for a Roth IRA conversion to be considered a 2016 Roth conversion, the money must leave the distributing account by December 31, 2016. So if a distribution is made from a traditional IRA on December 31, 2016 and it doesn’t get into the Roth IRA until February 15, 2017, it’s still a 2016 Roth IRA conversion.[...]

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    2016 Year in Review for Retirement Accounts

    As 2016 draws to a close, and we get ready to ring in the new year, it’s a great time to look back. Here is a roundup of six of the big stories in the world of retirement accounts for 2016. 1.Qualified Charitable Distributions Become Permanent Qualified charitable distributions (QCDs) made headlines when Congress brought them back from the dead in late 2015. A QCD allows an IRA owner or [...]

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    The Continued Battles with Inherited IRAs, PSPs, and Rollovers

    This week’s Slott Report Mailbag looks into Inherited IRAs, Defined Contribution Profit Sharing Plans, and Roth 401K rollovers. As always, we recommend you work with a competent, educated financial advisor to keep your retirement nest egg safe and secure. Question: I have a somewhat complex situation.  Cliff notes below: A 401k participant is 28 years old. He dies inSeptember [...]

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    Your 2016 H-O-L-I-D-A-Y Season Action Plan

    H – Have your financial institutions send you a copy of the beneficiary information they have on file for you. On more than a few occasions, we’ve seen financial institutions lose copies of beneficiary forms (or in some really egregious cases, destroy them). Asking for this information annually helps ensure that there are no surprises when you’re no longer here. The beneficiary form is the [...]

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