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IRA BLOG

THE TIME MACHINE

By Andy Ives, CFP®, AIF® IRA Analyst A time machine would be cool to have. Even if it only worked on financial assets, it sure would come in handy. One might jump into the future and see if an investment paid off, or you could look around to see where the smart money...

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GETTING THE CREAM OUT OF THE COFFEE

By Andy Ives, CFP®, AIF® IRA Analyst The pro-rata rule is the formula used to determine how much of a distribution is taxable when an IRA account consists of both pre-tax and after-tax (basis) dollars. The rule requires that all SEP, SIMPLE, and traditional IRAs be...

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SIMPLE IRAS AND 72(T) PAYMENTS: TODAY’S SLOTT REPORT MAILBAG

By Sarah Brenner, JD IRA Analyst Question: I am a financial advisor and want to be clear on something. If a client has a SIMPLE IRA that they are contributing to and have an IRA and are 70.5, can they aggregate the distributions for both and remove from the IRA? Wanda...

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WHICH LIFE EXPECTANCY TABLE DO I USE?

By Sarah Brenner, JD IRA Analyst When it comes time to calculate your required minimum distribution (RMD) from your IRA, you may wonder which life expectancy table to use. Last updated by the IRS back in 2002, there are three possible tables for IRA owners and...

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THE TWO-YEAR HOLDING PERIOD FOR SIMPLE IRAS

By Sarah Brenner, JD IRA Analyst SIMPLE IRAs are not so simple. One factor that makes SIMPLE IRAs tricky is that they are subject to unique rules, found nowhere else in the tax code, such as the two-year holding period. Two-Year Holding Period When does the two-year...

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72(T) & RMDS: TODAY’S SLOTT REPORT MAILBAG

By Andy Ives, CFP®, AIF® IRA Analyst Question: IRA HELP, I’ve got a client who is retiring early. He has roughly $1,000,000 in an IRA now which he could initiate a 72(t) with.  That will not generate enough cash flow to support their needs. He also has an additional...

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IRS ANNOUNCES HSA INFLATION-ADJUSTED LIMITS FOR 2020

By Sarah Brenner, JD IRA Analyst The IRS has announced the 2020 inflation-adjusted limits for Health Savings Accounts (HSAs). How an HSA Works An HSA is a tax-free account that is used to pay for qualified medical expenses that aren’t covered by insurance. It is...

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SCIENTIST MILTON IS STILL WORKING

By Andy Ives, CFP®, AIF® IRA Analyst Employer-sponsored retirement plans, like 401(k) and 403(b) plans, have some definitive benefits vs. IRA accounts. For example, company plans provide an unlimited amount of protection from bankruptcy, while IRA contributions and...

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“WRONG AIRPORT, DUDE”

By Andy Ives, CFP®, AIF® IRA Analyst After a recent Ed Slott conference in Dallas, Texas, I found myself sitting in a hotel café, surrounded by travel bags, having pizza with a few meeting attendees with later flights. “Anyone want to share an Uber to the airport?”...

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UNDERSTANDING THE SAME PROPERTY RULE FOR IRAS

By Sarah Brenner, JD IRA Analyst If you are planning on doing a 60-day rollover with your IRA funds, be sure you understand same-property rule. This is one of the lesser known rules that apply to rollovers and is one many taxpayers find confusing. For IRA-to-IRA or...

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USING A ROTH IRA TO PAY FOR HIGHER EDUCATION? BE CAREFUL!

By Sarah Brenner, JD IRA Analyst With college costs almost certain to keep increasing each year, parents need to explore every possible tool available to meet the challenge of paying for higher education. Roth IRAs are not just for retirement savings. They can play a...

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ROTH IRA: TWO CLOCKS

By Andy Ives, CFP®, AIF® IRA Analyst Roth IRAs are extremely popular, and why wouldn’t they be? Tax-free earnings over a lifetime can add up to a serious chunk of change. However, in order to receive those tax-free earnings, rules must be followed and timeframes must...

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REQUIRED MINIMUM DISTRIBUTIONS: TODAY’S SLOTT REPORT MAILBAG

By Jeremy T. Rodriguez, JD IRA Analyst Question: Good morning, We have a client that retired on 1/2/2019 and he was over 70.5.  He was not required to take his RMD in 2018 from his 401k since he was still working (he did take his 2018 RMD from his IRA).  He rolled...

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AVOIDING THE EARLY DISTRIBUTION PENALTY

By Jeremy T. Rodriguez, JD IRA Analyst To discourage early access to amounts invested in IRAs and company retirement plans, the IRS imposes a 10% early distribution penalty on withdrawals before age 59 ½. Even though Roth IRAs consist of after-tax contributions, the...

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TWO POPULAR QCD QUESTIONS

By Sarah Brenner, JD IRA Analyst In the wake of tax reform, more IRA owners are making use of the Qualified Charitable Distribution (QCD) strategy. This is a side effect of fewer people choosing to itemize and instead going with the larger standard deduction. If you...

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TWO POPULAR QCD QUESTIONS

By Sarah Brenner, JD IRA Analyst In the wake of tax reform, more IRA owners are making use of the Qualified Charitable Distribution (QCD) strategy. This is a side effect of fewer people choosing to itemize and instead going with the larger standard deduction. If you...

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CHECKING ALL THE BOXES WITH NET UNREALIZED APPRECIATION

By Jeremy T. Rodriguez, JD IRA Analyst Net Unrealized Appreciation (“NUA”) is a powerful tool that people with employer stock in company plans should be aware of. Under this tax concept, the gains on the employer stock that are distributed according to the NUA rules...

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QCDS AND ROTH CONVERSIONS: TODAY’S SLOTT REPORT MAILBAG

By Sarah Brenner, JD IRA Analyst Question: My sister is 72 years old and quite philanthropic. Much of her traditional IRA RMD she donates to various charities. Is it possible for her to instruct the IRA trustee to send the money directly from her IRA account to the...

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PAYING ATTENTION TO THE RULES IS CRUCIAL

By Jeremy T. Rodriguez, JD IRA Analyst If the dictionary had pictures next to each word, the U.S. Tax Code would fit nicely next to the definition of “esoteric.” But as we all know, this complex web of rules and regulations cannot be ignored. Mistakes cost money, in...

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TAX DAY IS HERE! – 2 IRA LESSONS WE LEARNED THIS TAX SEASON

By Sarah Brenner, JD IRA Analyst Today is April 15, 2019. This is deadline for filing your 2018 federal income tax return, unless you have an extension. This tax season was the first one where we saw the impact of the Tax Cuts and Jobs Act. Wholesale changes to the...

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SUNK BY A ROLLOVER

By Andy Ives, CFP®, AIF® IRA Analyst Unfortunately, it happened again. Another person dove into the IRA rollover pool before checking the depth, temperature, or if the pool was even open for swimming. In this scenario, $125,000 was rolled from an IRA at Bank A to Bank...

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KEEPING THE RMD RULES STRAIGHT

By Jeremy T. Rodriguez, JD IRA Analyst Most people are aware of the tax concept, Required Minimum Distributions or “RMDs.” These are the tax rules that force you to take a distribution from your IRA or qualified plan, even when you don’t want to. Moreover, that...

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4 SEP IRA PLAN RULES THAT MAY SURPRISE YOU

By Sarah Brenner, JD IRA Analyst Are you a small business owner or a sole proprietor? If so, you may use a Simplified Employee Pension (SEP) IRA plan to save for retirement. These plans are a popular choice for small businesses because they are inexpensive and easier...

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THE HOUSE WITH TWO FRONT DOORS

By Andy Ives, CFP®, AIF® IRA Analyst A little house on Easy Street has one front door. It is a traditional IRA. There is a sign above the lone entry point the reads, “To All Those That Enter, Thy Earnings Will be Taxable.” It does not matter if the money that enters...

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ROLLING OVER YOUR PLAN? PAY SPECIAL ATTENTION TO YOUR RMD

By Sarah Brenner, JD IRA Analyst Whether by choice or necessity, many Americans are still working long beyond what has traditionally been retirement age. If you are a member of this group, you may be keeping funds in your employer plan well into your seventies and...

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IRA CONTRIBUTIONS, ROLLOVERS & UPDATED BANKRUPTCY CAP

By Andy Ives, CFP®, AIF® IRA Analyst Edward was born in 1950. Traditional IRA accounts would not be established until the Employee Retirement Income Security Act of 1974 (ERISA). In 1975, Edward and many other Americans took full advantage of this tax-deferred savings...

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DIRECT TRANSFER (OR ROLLOVER) – THE BEST WAY TO GO!

By Jeremy Rodriguez, JD IRA Analyst I’m sure you’ve heard countless advisors mention that a direct transfer (or direct rollover) is the best way to move funds between IRAs or qualified retirement plans. But do you understand why? There are a number of reasons, and in...

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REQUIRED MINIMUM DISTRIBUTIONS: TODAY’S SLOTT REPORT MAILBAG

By Sarah Brenner, JD IRA Analyst Question: I have a question about avoiding RMDs for a still-working 72 year old in a 401k plan.  Suppose they don’t have to take 401k RMDs due to the still-working exemption from RMDs.  Let’s say the person knows they will retire next...

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5 IRA CONTRIBUTION RULES THAT MAY SURPRISE YOU

By Sarah Brenner, JD IRA Analyst It’s that time of year again. Tax season is upon us. This is now the time when many individuals consider funding their IRAs. Contributing to an IRA may seem pretty straight forward and in many ways it is! But there can be twists. Here...

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THE DISCLAIMER

By Andy Ives, CFP®, AIF® IRA Analyst A disclaimer is an interesting tool. It is a denial or disavowal of legal claim, or a formal refusal to accept an interest in something. “Release” and “waiver” are good synonyms. Oftentimes a disclaimer statement is used by a...

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OPTIONS AND PITFALLS FOR NON-SPOUSE BENEFICIARIES

By Sarah Brenner, JD IRA Analyst Much attention is paid to the favorable options available when spouses are named as IRA beneficiaries. However, a significant portion of IRA assets will end up being inherited by individuals who are not a spouse of the decedent. Many...

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IVAN SEEKS ADVICE

By Andy Ives, CFP®, AIF® IRA Analyst Ivan is an inventor at heart, but he is stuck in an office at a job he does not particularly care for. Ivan constantly daydreams about starting his own company and improving everyday life with his inventions. For 20 years Ivan...

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“GAP ANALYSIS”

By Andy Ives, CFP®, AIF® IRA Analyst There are many gaps. Generation gap, stop-gap, The Gap Band. In baseball you can hit into the gap. Football linemen have an A-gap, B-gap and C-gap to concern themselves with. Of course, there is the Cumberland Gap. And there is a...

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NUA AND EMPLOYER 401(K) PLANS: TODAY’S SLOTT REPORT MAILBAG

By Sarah Brenner, JD IRA Analyst Question: If I convert Trad IRA funds to a Roth IRA, does the ratio of After-Tax Contribution to Total IRA holdings include 401k holdings or only IRA holdings. I am a recently retired pilot and want to make Trad to Roth IRA conversions...

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10 THINGS TO KNOW ABOUT THE REQUIRED BEGINNING DATE FOR IRAS

By Sarah Brenner, JD IRA Analyst If you have an IRA, you may have heard the term “required beginning date” or “RBD.” This is an important date that every IRA owner should understand. The significance of the RBD is not limited to IRA owners. It is a critical date for...

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RMDS AND SPOUSAL BENEFICIARIES: TODAY’S SLOTT REPORT MAILBAG

By Jeremy Rodriguez, JD IRA Analyst Question: Hello Ed, I have an elderly client in his 80’s, not in the best of health. He has named his spouse (also in her 80’s) along with his 4 children as primary beneficiaries of his IRA. That said, I know the 4 children will...

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SO YOU WANT TO THROW A 401(K) HOUSE PARTY?

By Andy Ives, CFP®, AIF® IRA Analyst When it comes to 401(k) plans, I feel like the Johnny Cash lyric…“I’ve been everywhere, man.” I’ve wholesaled record keeping platforms to financial advisors and sold direct to business owners. I’ve taught novice investors about...

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INVESTING IRA MONEY IN REAL ESTATE

By Jeremy T. Rodriguez, JD IRA Analyst So, you want to invest your IRA money in real estate? Every so often we get this question from advisors wondering what they should look out for. Under the tax code, real estate is a permissible investment for IRAs. However, that...

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RMDS & QCDS: TODAY’S SLOTT REPORT MAILBAG

By Andy Ives, CFP®, AIF® IRA Analyst Question: Client passed in the middle of December 2018, but did not take her RMD.  We are setting up beneficiary IRA accounts.  We will be moving assets over to the beneficiary IRA accounts and then the beneficiary will take the...

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CORRECTING EXCESS IRA CONTRIBUTIONS WITHOUT PENALTY

By Sarah Brenner, JD IRA Analyst Not all contributions to IRAs belong there. When a contribution is not permitted in an IRA, it is an excess contribution and needs to be fixed. The bad news is that excess contributions happen easily and often. The good news is that if...

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DISABILITY – A HIGH HURDLE

By Andy Ives, CFP®, AIF® IRA Analyst There are a number of ways an individual can avoid the 10% early withdrawal penalty from their IRA or employer work plan. Some exceptions apply specifically to IRAs (i.e. higher education; first-time home buyer, etc.) and others...

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SO, YOU MISSED A REQUIRED MINIMUM DISTRIBUTION…

By Jeremy T. Rodriguez, JD IRA Analyst Mistakes happen, and when dealing with complicated rules like the U.S. tax code, they aren’t exactly uncommon. Thankfully, the IRS has numerous ways various mistakes can be corrected, and one of the most lenient processes is for...

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KONMARI YOUR IRA

By Sarah Brenner, JD IRA Analyst Marie Kondo is a decluttering and tidying expert from Japan. She has a new show on Netflix, Tidying Up with Marie Kondo, that is a huge hit. Thrift shops around the country are reporting a large influx of donations as Americans...

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PROHIBITED TRANSACTIONS

By Andy Ives, CFP®, AIF® IRA Analyst If I decide to climb on the roof of my house and try to ride a unicycle while blindfolded, it is not illegal. Dangerous, yes, but not in violation of any laws. If I elect to randomly jump off a bridge under the guidance of the...

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DEEMED

By Andy Ives, CFP®, AIF® IRA Analyst A word we don’t see much in daily conversation is “deem.” I imagine a sweeping proclamation made by an authority figure from an ivory tower: “It is deemed that the third day of the standard workweek shall henceforth be called...

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6 RULES FOR TAX-FREE ROTH IRA DISTRIBUTIONS

By Sarah Brenner, JD IRA Analyst Roth IRAs offer a trade-off. You decide to pay taxes now on your contribution (or conversion) in exchange for tax-free earnings down the road. Don’t miss out on Roth IRA benefits by making mistakes when you take a distribution. Here...

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RMDS & ROTH CONVERSIONS: TODAY’S SLOTT REPORT MAILBAG

By Andy Ives, CFP®, AIF® IRA Analyst Question: Hi Mr. Slott: I turn 70 ½ years old this year (D.O.B. 5-28-49) and must commence RMDs for an IRA total asset value as of 12/31/2018.  When do I have to report this RMD on my tax return - before or no later than...

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EASY NEW YEAR’S RESOLUTIONS FOR YOUR RETIREMENT

By Jeremy T. Rodriguez, JD IRA Analyst When it comes to tax law and retirement planning, there are two things I like to talk about at the beginning of a new year: (1) some of most important rulings issued and laws passed in the prior year; and (2) the steps you can...

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ROTH IRAS AND RMDS: TODAY’S SLOTT REPORT MAILBAG

By Beverly DeVeny IRA Analyst Question: I am 64 and opened my only Roth IRA over 5 yrs ago. I originally contributed $32.5K ($6.5K for 5 yrs) to this Roth IRA but now find it at $22.5K in value. Can I close this account and take a $10K capital loss? Kaptain Kurt...

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HAPPY HOLIDAYS!

By Sarah Brenner, JD IRA Analyst Happy holidays from Slott Report! We would like to wish all of our readers and their families a joyous holiday season and a Happy New Year! Thank you for taking your valuable time to read the Slott Report in 2018. Throughout the year...

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HSA CONTRIBUTIONS AND RMDS: TODAY’S SLOTT REPORT MAILBAG

By Sarah Brenner, JD IRA Analyst Question: Hello IRAHelp, I have a copy of Your Complete Retirement Planning Road Map and find it to be an extremely useful resource.  I have uncertainty regarding optimum means for funding a Health Savings Account (HSA).  I am 61.  In...

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IRS EASES SOME OF THE RESTRICTIONS ON HARDSHIP DISTRIBUTIONS

By Jeremy T. Rodriguez, JD IRA Analyst In mid-November 2018, the IRS issued proposed regulations altering some of the rules governing hardship distributions from 401(k) and 403(b) plans. Most of the rules weren’t new; instead the IRS adopted changes that were issued...

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WIDGET JERRY MEETS THE PRO-RATA RULE

By Andy Ives, CFP®, AIF® IRA Analyst Jerry sells widgets for the ACME Widget Company. Jerry is a hard-working employee who participates in the ACME Widget Company 401(k) Plan. Jerry also contributes annually to an IRA account at a local bank. The widget business is a...

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ILLIQUID ASSETS AND IRA RMDS

By Beverly DeVeny IRA Analyst I get the same question every year at year end. “My client has an illiquid IRA and can’t take his RMD. Can we just write a note to IRS explaining the problem?” Every year my answer is the same. “NO.” What is an RMD? It is...

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IRA CONTRIBUTIONS & QCDS: TODAY’S SLOTT REPORT MAILBAG

By Andy Ives, CFP®, AIF® IRA Analyst Question: Mr. Slott, My spouse turned 70 on June 27th, 2018, so in December 2018 she will be 70 ½. She would like to complete a Qualified Charitable Distribution (QCD). Does the QCD need to be dated from December 27 to December 31,...

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POST DEATH PLANNING FOR IRAS WITH MULTIPLE BENEFICIARIES

By Jeremy T. Rodriguez, JD IRA Analyst One piece of advice we commonly reiterate is, when you inherit an IRA or other retirement plan asset, touch nothing! That’s because many transactions cannot be undone, and the IRS rarely grants relief simply because the taxpayer...

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THE GRINCH RECOMMENDS 3 IRA TAX SCHEMES…THAT DON’T WORK!

By Andy Ives, CFP®, AIF® IRA Analyst It turns out the Grinch stirs up a blizzard of trouble beyond stealing Christmas trees and presents from the innocent Whos down in Whoville. That candy cane he slipped out of Cindy Lou’s fingers? Child’s play. The breadcrumb he...

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REVOCATION-ON-DIVORCE – IT MATTERS WHERE YOU LIVE

By Andy Ives, CFP®, AIF® IRA Analyst Twenty-six states have adopted revocation-on-divorce statutes similar to each other, and these statutes are impacting court decisions. Example #1: The U.S. Supreme Court, in an 8 – 1 ruling just this past June, concluded that life...

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TRADITIONAL AND ROTH – RELATED, BUT NOT TWINS

By Andy Ives, CFP®, AIF® IRA Analyst Tim and Robert are identical twins. They wear the same clothes. They have similar hair styles. They have similar jobs and similar incomes. Tim and Robert are both concerned about taxes, and they agree that saving money for the...

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HAPPY THANKSGIVING! WE ARE THANKFUL FOR THESE 5 IRA RULES

By Sarah Brenner, JD IRA Analyst Thanksgiving is only a few days away. This is a time when we gather together and express our gratitude for all the good things in our lives. When it comes to our retirement accounts, we too often complain about the negatives, such as...

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401(K) AND IRA RMDS: TODAY’S SLOTT REPORT MAILBAG

By Andy Ives, CFP®, AIF® IRA Analyst Question: I am 70 ½ and still working in 2018.  If I work part time (still employed) in 2019, can I delay my 401K RMD until 2020? Best regards, Will Answer: Will, If you are still employed by the company that is offering the 401(k)...

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RETIREMENT ENHANCEMENT AND SAVINGS ACT OF 2018 – RESA

By Andy Ives, CFP®, AIF® IRA Analyst There is a 131-page bill currently working its way through the U.S. legislature. The proposal would amend the Internal Revenue Code and encourage retirement savings. While the “Retirement Enhancement and Savings Act of 2018,” or...

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ROLLING OVER YOUR IRA? BE CAREFUL WITH YOUR RMD

By Sarah Brenner, JD IRA Analyst The road to retirement is long. Along the way you may need to move the funds in your IRA. When that time comes, you will want to be sure that everything is done correctly. Moving your retirement funds can be tricky and the consequences...

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TAKING DISASTER RECOVERY FUNDS FROM RETIREMENT PLANS

By Beverly DeVeny IRA Analyst After Hurricanes Harvey, Irma and Maria in 2017, Congress passed special legislation allowing expanded access to retirement plan funds for individuals affected by those storms.  Congress also previously enacted that sort of legislation...

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A NOT SO SIMPLE DISCUSSION ON SIMPLE IRAS

By Jeremy T. Rodriguez, JD IRA Analyst SIMPLE IRAs are popular retirement vehicles for small businesses. They are relatively cheap to adopt and are easy to understand and administer. However, that doesn’t mean problems do not arise. Routinely, we see issues involving...

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COMBINING INHERITED IRAS AND THEIR RMDS

By Beverly DeVeny IRA Analyst IRA owners can clearly combine the accounts they own and they can combine the required minimum distributions (RMDs) from multiple IRAs and take them from any one or combination of their IRAs. But what are the rules for inherited IRAs? An...

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SIMPLE INHERITED IRA SCREW-UP RESULTS IN A $9,000 TAX BILL

By Jeremy T. Rodriguez, JD IRA Analyst Legal training is less about memorization and more about understanding how to break down complex problems. With that mind, I often suggest that people understand the law and not try to memorize it. Why was it enacted and what is...

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WHY IRA BENEFICIARIES SHOULD NAME THEIR OWN BENEFICIARIES

By Beverly DeVeny IRA Analyst I just had a call from an advisor with a “complicated” scenario. “Ralph” died and left his IRA to his spouse “Alice.” Ralph was 62 in the year he died. Alice did nothing with the IRA. It remained an inherited IRA and there were no...

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ARE CHANGES COMING TO THE IRA RULES?

By Sarah Brenner, JD IRA Analyst After last year’s passage of the Tax Cuts and Jobs Act, which overhauled the tax code, you might think Congress would be done with tax legislation for a while. That is not the case. While Republican efforts to unleash as second round...

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ROTH IRAS AND THE 5-YEAR RULES

By Jeremy T. Rodriguez, JD IRA Analyst We constantly see questions regarding the distribution rules for Roth IRAs. Personally, I’ve always thought that the failure to understand these rules prevents many from truly appreciating the benefits of these accounts....

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TRUSTS AND BENEFICIARIES: TODAY’S SLOTT REPORT MAILBAG

By Jeremy T. Rodriguez, JD IRA Analyst Question: Hi Read your column in the Chicago Tribune and have learned a lot.  I have a question I don't think you have addressed. I have multiple Roth IRA's that I converted years ago, paid the taxes and they are continuing to...

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