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 In This Update:
  • Q of the Month:
    Must I Take My RMD as Cash?
     
  • Key Focus:
    2012 Retirement Plan Cost-of-Living Increases
     
  • Ruling to Remember:
    The Housing Market Causes More Blues
     


 Resources  Expert
 Professional
 Assistance


 
 
 
 
 
 
 

?? Question of the Month: Must I take my required minimum distribution as cash?


Q: Is it mandatory that my required minimum distribution (RMD) be taken as cash or can a specific stock the value of my RMD be moved from the IRA account to a regular taxable account? How about a specific stock used as an RMD to a Roth conversion account? Would this be taxed as a conversion and an RMD?

A: An RMD can be satisfied by distributing an asset in-kind or in cash. If you are distributing an asset to satisfy an RMD, it will be based on the fair market value of that asset upon distribution. You will have to check with your IRA custodian to determine if they will allow an in-kind distribution to satisfy an RMD.

An RMD in cash or in-kind cannot be rolled over to a Roth IRA. You can, however, use the cash to make a contribution to a Roth IRA - if you are eligible to make a contribution.


 

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Inherited IRAs, Year-End IRA Alerts Highlight December Newsletter


The December issue of Ed Slott's IRA Advisor Newsletter goes through an unusual private letter ruling (PLR), in which IRS allowed a 13-year-old beneficiary of her fatherís company plan assets to largely undo a previously taxed lump-sum distribution and transfer the distributed plan funds to an inherited IRA for the childís benefit.

What were the facts of the case? What went into the IRSí ruling? What can you take away from this PLR?

FIND THOSE ANSWERS IN DECEMBERíS ISSUE OF ED SLOTTíS IRA ADVISOR NEWSLETTER

Inside Ed Slott's IRA Advisor Newsletter

IRS Allows a Childís Inherited IRA to be Created After Motherís Missappropriation

  • PLR 201139011
  • Facts of the Case
  • IRSí Ruling
  • An Unanswered Question
  • Advisorsí Takeaway

Guest IRA Expert
Leo K. Casper, CPA/PFS
Owner, Leo K. Casper, CPA
Moorestown, New Jersey

Practical Guidelines for Establishing a Non-Spouse Inherited Stretch IRA
 

2011 Index of Articles

2011 IRA Experts

Acknowledgments

Year-End IRA Alert: Qualified Charitable Distributions from IRAs

  • QCD Basics

If you are not already an Ed Slott's IRA Advisor Newsletter subscriber, you can preview past issues before subscribing.

December Key Focus


2012 Retirement Plan Cost-of-Living Increases

The Internal Revenue Code sets dollar limitations on benefits and contributions applicable to qualified retirement plans and IRAs. Code Sec. 415 provides for incremental adjustments to these limits based on annual cost-of-living (COLA) increases measured by the US Consumer Price Index (CPI).

On October 20, 2011 the IRS announced COLA adjustments applicable to dollar limitations for pension plans and other retirement-related items for the 2012 tax year. Many limitations will change since the CPI increase met the statutory threshold that triggers their upward adjustment. Listed below are a few of the items that are scheduled to increase in 2012.

IRA Deduction Phase-Out (for Modified Adjustment Gross Income starting at):

for individuals covered by an employer plan:
-$92,000 for joint filers (up from $90,000 in 2011)
-$58,000 for single/head of household filer (up from $56,000 in 2011)

for individuals not covered by an employer plan but spouse is covered:
-$173,000 (up from $169,000 in 2011)

Defined Contribution Plan Annual Additions Limitation:
-$50,000 (up from $49,000 in 2011)

Defined Contribution Plan Maximum Compensation (including SEPs):
-$250,000 (up from $245,000 in 2011)

Elective Salary Deferrals for 401(k) & 403(b) Plans:
-$17,000 (up from $16,500 in 2011)

CLICK HERE to read the entire article on all 2012 retirement plan limitations.


HAPPY HOLIDAYS
FROM AMERICA'S IRA EXPERTS

We wish all of you a happy and healthy holiday season and a prosperous New Year. Cherish your time spent with friends and family!

Happy holidays,

Ed Slott and Company

Ruling to Remember


Private Letter Ruling 201146024

A taxpayer we will call ďMeredithĒ received a distribution from her IRA. Since she suffers from dementia, her daughter has power of attorney on her behalf. She withdrew an amount of money and intended to use it to pay for an assisted living facility for her mother. The daughter asserted that she intended to later use the proceeds from the sale of her motherís home to replace the distribution and rollover the funds into another IRA within the prescribed 60-day period.

However, as we are all well aware in this housing market, the daughter had a difficult time selling the residence, which kept her from accomplishing the rollover within the 60-day window. She requested a private letter ruling allowing her more time to complete the rollover.

The IRS declined her request without elaborating further.

LESSON TO LEARN:
There is no true need to elaborate. This message is a reminder that IRS will usually not grant waivers (even in dire circumstances) of the 60-day rollover rule if the funds are used while they are out of the IRA.





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