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....

By Sarah Brenner, JD IRA Analyst A recharacterization is a tax-free transfer of funds from one kind of IRA to another. If you converted a traditional IRA to a Roth IRA and now are reconsidering, recharacterization allows you to undo the transaction and move the funds...

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...

By Jeremy T. Rodriguez, JD IRA Analyst Every so often, the IRS or the courts remind us that the exceptions to the 10% early distribution penalty are narrowly interpreted. That means if your situation doesn’t fit the letter of the law to a “t,” then the exception will...

By Sarah Brenner, JD IRA Analyst You may understand the basics of how an HSA works. The fundamental premise is not so 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...

By Beverly DeVeny IRA Analyst Question: Hello, I met Ed Slott at an FPA function where he spoke in Independence Ohio, several years ago. I have purchased books written by him, however I am not presently a subscriber to your service. I would appreciate your response to...

By Jim Glass, JD IRA Analyst As summer ends and fall approaches, so does the season for taking required minimum distributions (RMDs). There is a 50% penalty for failing to take an RMD, so don't miss one. But don't just take an RMD, plan ahead now to make it work for...

By Sarah Brenner, JD IRA Analyst You may ask if you should leave your IRA to a trust. This can be a complicated question. Trusts can be complex and retirement accounts are not like other assets. How a Trust Beneficiary Can Get the Stretch If you are thinking a trust...

By Sarah Brenner, JD IRA Analyst Question: To whom it may concern, Quick question.  Client’s daughter died at age 41. Client is age 71.  Can she combo her daughter’s 401k into her current Traditional IRA since she has to take RMD’s on the traditional and a...

By Beverly DeVeny IRA Analyst For years we saw and heard the commercials – rollover your 401(k) to an IRA. They suggested that this was the only option – and the best option – for you. But it was not the only option; and it might not be the best option for you. Here...

By Jeremy T. Rodriguez, JD IRA Analyst One of the most important things you learn in law school is how the law is structured. You are better able to analyze the rule (and predict outcomes) when you understand how it is was created and how is has been treated ever...

By Jim Glass, JD IRA Analyst Question: Mr. Slott, My 45 year old daughter’s financial advisor has recommended for her NOT to put retirement contributions into a Roth IRA! His reason being that by paying taxes up front for a Roth, there is less money to grow!  Also,...

By Jim Glass, JD IRA Analyst IRAs have beneficiaries and "designated beneficiaries," and it is important to know the difference. If you wish your heirs to have the opportunity to take full advantage of "stretch" IRAs, and to avoid other possibly costly mistakes, be...

By Sarah Brenner, JD IRA Analyst Follow Us on Twitter: @theslottreport Even rock stars get older. Although it may seem hard to believe, both Steven Tyler of Aerosmith fame and rock legend and reality tv star Ozzy Osborne celebrate their 70th birthdays in 2018. Steven...

By Beverly DeVeny IRA Analyst Follow Us on Twitter: @theslottreport Both my husband and I turn 70 this year but only one of us has a required minimum distribution (RMD) from our retirement accounts. Here is why. RMDs begin in the year you turn 70 ½, not 70. He turned...

By Jeremy T. Rodriguez, JD IRA Analyst Follow Us on Twitter: @theslottreport As you accumulate money in an employer retirement plan, somewhere along the line you are going to be faced with one question: should I leave it in the plan or roll it out? For many, that...

There has been talk in Congress about indexing capital gains for inflation. This has largely been under the radar… until this week when the story hit the front page of the New York Times, where the story states that the White House might try to do this on its own...

IRA distributions and Roth IRA conversions can affect the size the Medicare premiums you pay. Here's how, and what to do about it. Means Testing Medicare Medicare consists of four "parts."  Part A, which covers hospital costs, is paid for by the government. But the...

Do you have after-tax dollars in your IRA? This could be from making nondeductible contributions to your IRA or rolling over after-tax funds from your company plan to your IRA. If so, you will want to know about the pro-rata rule. The pro-rata rule is a rule that...

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. Some excess contributions are easy to understand. Others may be a bit trickier to grasp. Here are 7 ways an excess IRA...

Question: Hi, I have a friend, 45 years old, who has both an individual Roth IRA and an individual rollover IRA. The Roth is over 5 years old. He would like to know if he can use either to pay off a debt he incurred several years ago. He is aware that a straight...

Contributing to a Roth IRA is generally considered to be a good idea. But not everyone is eligible to make an annual contribution. We have seen several cases recently of individuals who contributed for many years until they discovered they were not eligible to make...

As Americans live longer, more are eventually coming to need long-term nursing home care.  The cost of this can be devastating to a family. Nursing home care now costs an average of over $85,000 per year, and much more than that in some parts of the country. Medicaid...

Question: Can you do trustee-to-trustee transfer from an Annuity Trad IRA to Mutual Fund Trad IRA? Answer: Yes. If you own a traditional IRA that has invested in an annuity, you can make a transfer from it to another traditional IRA to be invested in mutual funds. And...

Every retirement plan custodian has an interactive website that participants can visit, if their employer offers that feature. While all are a little different, the websites all contain access to vital information about your account under the plan. You can review your...

Change can be good. Is your IRA ready for a change? Maybe you are looking for a new type of investment or maybe a new IRA custodian. To change it up with your IRA, you may need to move your IRA funds. Here are 10 things everyone should know before they move their IRA....

Question: My husband passed away this April at 83. I’m 68 and sole beneficiary of his traditional IRA.  I was advised that it didn’t matter if I rolled his IRA into mine and then took his RMD for the year as long as I do so by 12/31/2018.  I rolled his IRA into mine...

When someone keeps telling you not to worry about them doing a certain thing, you know they are thinking about doing that very thing. That’s what Congress is doing with so called “Rothification.” As a review, “Rothification” – as it has become known –  is a way to...

After retiring, your taxable income may consist entirely of IRA distributions and investment returns. You'll have two ways to remit the tax owed on this income to the IRS: (1) make quarterly estimated tax payments, (2) have tax withheld from the distributions. Which...

Question: Client is over 70 1/2 and passed away in 2018 and did not take their 2018 RMD yet. There are 4 non-spouse beneficiaries who are opening new inherited IRA accounts for their share.  Does the 2018 RMD for the deceased client need to be paid prior to the...

An inherited IRA can be a great thing for the beneficiaries. It is almost like winning the lottery or the Reader’s Digest sweepstakes. You get income for life, or do you? It is all too easy to miss out on this opportunity. The following apply to beneficiaries who are...

In the recent case of Sveen v. Melin, the Supreme Court ruled that life insurance proceeds would not go to an ex-spouse, even though her name remained on the beneficiary form after the divorce. Instead, the Court said the Minnesota state statute removing an ex-spouse...

Question: Roll over all but $4000 of nondeductible IRA in my Traditional IRA into my SEP IRA, then rollover the $4K basis into my Roth IRA? Can I do that? Can I do both rollovers in quick succession in the same day so that the Traditional left with the $4K does not...

Many individuals who open IRAs choose to invest in traditional asset classes, such as stocks, bonds, or mutual funds. But for a growing number of people, these options are not enough. Instead, they look to invest in other non-traditional assets. The tax code actually...

When you own multiple IRAs and take an IRA distribution, the IRS treats all your non-Roth IRAs as one. This helps you when you reach age 70 ½ and must begin taking annual required minimum distributions (RMDs). Instead of taking a separate RMD from each IRA, you can...

Question:  Is this a question you can help me with? Client’s husband & Wife had a living trust. Attorney suggested that all holdings be put into the trust or make the Trust the beneficiary. Husband died several years ago, in January, 2018 the wife died. There are...

A lot has changed in the last six months for certain federally declared disaster areas. The Bipartisan Budget Act of 2018 added relief for the California wildfires and mudslides of late 2017. The Disaster Tax Relief and Airport and Airway Extension Act of 2017...

Did you know your IRA could be escheated to the state as abandoned property? Not many IRA owners are aware of this possibility, but more and more are facing it. Escheatment - Bigger and Badder than Ever The legal theory of escheatment dates way back. It originally...

Question: Hello, I am retired and have done a Roth in plan rollover within my work 401K. Am I able to do a Roth rollover within a Fidelity IRA to a Fidelity Roth IRA? Is there a rule that limits the number of Roth IRA Rollovers you can do in a year or period of time?...

Most people know that, generally speaking, you cannot access traditional IRA money penalty-free until you reach age 59 ½. Early distributions are subject to a 10% early withdrawal penalty. Of course, like virtually every other retirement rule ever written, there are...

Suppose you unexpectedly incur a major liability, from a lawsuit or some other unforeseen cause. Will the funds in your IRA be protected from your creditors? Maybe … or maybe not. Here are the rules: Federal Law Protection If you own an IRA that you’ve funded yourself...

Question: I wondered if it’s possible to convert my traditional IRA to a Roth for 2017 and prior years, and then file an amended return? At least I could offset the higher taxes paid going forward, knowing I will have a tax-free Roth? Thanks very much for your help...

There is a lot of paperwork involved when you open an IRA account. You have to prove to the bank who you are and that your funds are legitimate. There is an account opening form and a beneficiary form to be completed. After you do all of that, then you get a...

Question: Ed, great article on reasons for taking RMDs early in the year, but here's the other side of the argument, at least for me (which is why I am responding via email rather than online). My wife and I are both retired.  We have a pension, social security and...

Using Deferred Income to Fund Your Startup Business Could ROB Your Future One of the most difficult aspects of starting a business is obtaining proper funding. While banks have begun lending again, loans for startup businesses are still difficult to obtain. They...

Having just one IRA instead of several may simplify paperwork and minimize fees. But when you begin to think about leaving IRA funds to heirs, consider using more than one IRA to do so. Here are reasons why:   Preserve Funds for Bequests in a Roth IRA Statistics...

Question: Dear Mr. Slott, In 2013, my husband was offered a buyout from his employer, Ford Motor Co.  He had been retired since 1999 and so was already receiving a monthly pension check. (My husband had been diagnosed with Alzheimer’s Disease in 2011 and then passed...

It now appears that the new fiduciary rules proposed by the Department of Labor (DOL) back in June of 2016 are all but dead. Late last week, the Fifth Circuit Court of Appeals rejected a last-minute appeal of its March 15th decision to toss the DOL rules. The appeal...

Let’s say you wish to contribute to an IRA in 2018, but have too much income to make a either a deductible contribution to a traditional IRA or a contribution to a Roth IRA. You still have the option to make a nondeductible contribution to a traditional IRA. Might...

If you have a Health Savings Account (HSA) with family coverage, determining your 2018 contribution limit has been an adventure. This in one of the many unintended consequences of the Tax Cuts and Jobs Act (TCJA). Many of the HSA limits are indexed annually for...

Question: Can you please advise regarding the following: I’m 63 years old and am required to take a yearly RMD [required minimum distribution] from my deceased Mom’s IRA (BDA).  In order to save on taxes, am I allowed to have my financial institution send the RMD...

Beware of making these 3 mistakes with your IRA… 1. Late Investments  If, like so many people, you made your IRA contribution for 2017 only recently in 2018, just before the 2017 tax return filing deadline, you missed earning up to 15 months of pre-tax investment...