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Ed Slott’s Free IRA Update

January  2008

Volume 1, Number 1

In This Issue

·         Ed Slott’s Free Monthly IRA Update

·         Make a List- Marketing Tips

·         Question of the Month

·         Ed Slott’s IRA Advisor- January’s issue




Introducing Ed Slott’s Free Monthly IRA Update

For many financial professionals, January is the month to make a fresh start, weed out deterrents to success, and resolve to make improvements that will benefit themselves and their clients.  January also presents an opportunity to meet with clients and plan for the year.  Fittingly, this January issue is the first of our Free Monthly IRA Update, in which we bring you IRA information and helpful tips that can be used to make a smooth start for the year.



Make a List and Check it Twice

Christmas is not the only time for list-making. In fact, January is one of the best months to make lists for financial and estate planning. If you do not already schedule annual meetings with your clients, you may want to consider doing so. Be sure to include a 2007 financial and estate planning review on the meeting agenda. Use this as an opportunity to:


§         Review beneficiary designation forms, and make changes where necessary

§         Review contributions made throughout the year. If IRA contributions were not maximized, additional contributions can be made up to April 15, for 2007

§         Discuss retirement planning with small business clients. Small business owners can shelter up to $45,000 from taxes, by contributing that amount to an employer-plan. While it is too late to establish a qualified plan, such as profit sharing or 401(k) plan for the 2007 calendar year, SEP IRAs can still be established. Business owners have up to their tax filing deadline, including extensions, to establish and fund a SEP IRA. Note: Contributions to SEP IRAs are limited to the lesser of $45,000 or 25% of compensation (20% of modified net profit for unincorporated business owners)


These meetings should be conducted before clients file their tax returns, so that it is not necessary to make changes to their tax returns if tax relation transactions are conducted as a result of the meeting.


More marketing tips, including strategies for getting more assets under management are available in Ed Slott’s Instant IRA Success Multimedia Kit.

Expert Professional Assistance



Set yourself apart from the competition, and bring in millions in new IRA rollover business by subscribing to Ed Slott’s IRA Advisor Newsletter and attending Ed Slott’s IRA Workshops. Click here to see a schedule of upcoming workshops.



Rollovers Trends (Qualified Plans to IRAs)

According to the Employee Benefit Research Institute (EBRI), IRA assets reached a record $4.23 trillion in 2006, a growth rate of 16.5 percent from 2005. The EBRI also explained that IRA growth continues to be fueled by rollovers from employment-based tax-qualified retirement plans, amounting to about $200 billion annually. One related question we often receive from financial advisors who want to capture their share of this rollover market is “How do I  help clients initiate rollovers to IRAs?” The answer often lies with the plan administrator, and/or within the plan document. If you are one of these financial advisors who want to work with your clients to complete rollovers from qualified plans to IRAs, bear the following in mind:


§         An individual cannot make withdrawals from his qualified plan account unless he satisfies the triggering event requirements of the plan. Triggering events include: reaching the age of retirement (as defined under the plan), separating from service with the employer, or termination of the plan. Individuals who want to make withdrawals should check their summary plan description (SPD), or check with the plan administrator.

§         The clients account-statement should be reviewed to determine if the account balance includes assets that may receive more favorable tax treatment if they are not rolled over

§         Mistakes can kill a rollover, either through loss of tax-efficient strategies, or IRS assessed penalties for mistakes.


One of the best ways to ensure rollovers are completed correctly and smoothly, is to have the client work with the plan administrator. The plan administrator can help to ensure that the proper paperwork is completed. A large number of rollover requests are rejected because of improper paperwork.


Bear in mind that even your most intelligent clients may not be ‘rollover savvy’, and will likely need your help to ensure the rollover is completed properly. Providing them with a check-list, or step-by-step procedures can help.


Question of the Month

Question: Due to an error made by his financial institution, my client’s substantially equal periodic payment (SEPP) for December was not processed until January. I understand that this could disqualify his SEPP and subject him to retroactive early distribution penalties, plus interest for the amounts already taken under the SEPP. Is there any way this can be avoided?


Answer: Possibly. You may want to look at private letter ruling (PLR) 200503036, which addressed a similar fact pattern. In this PLR, the IRS ruled that ‘the failure to distribute the entire required annual payment from the IRA for the calendar year and the subsequent "make-up" distribution for the calendar year made will not be considered a modification of a series of substantially equal periodic payments under Code section 72(t)(2)(A)(iv) and, therefore will not be subject to the 10 percent additional tax imposed on premature distributions under section 72(t)(1) of Code.’

Bear in mind that PLRs cannot be used as legal reference nor cited as precedence. However, they give a good idea of how the IRS may address issues with similar fact patterns. If the balance involved is significant, it may make sense for the client to get his own PLR. For information on PLR fees, see IRS Super-Sizes Fees for IRA and Plan Private Letter Rulings.



Highlights from Ed Slott’s IRA Advisor Newsletter- January 2008  Issue

Top IRA Rulings from 2007


Review some of the top rulings for 2007, and consider how they may impact your business. An overview of these rulings are provided in the January issue of Ed Slott’s IRA Advisor, available here. The following topics are highlighted:

·        Plan Transfers to Non-Spouse Beneficiaries IRS Notice 2007-7

§         The “Special Rule”

§         IRS Changes from Voluntary to Mandatory

·         IRS Approves a Combined IRA, Charity and Life Insurance Strategy PLR 200741016

§         Ruling Requests Approved

§         Potential Benefits of the Ruling

§         Negatives of the Ruling

§         Planning Opportunities

·         Post-Death Beneficiary Designation Correction Denied PLR 200742026

·         Spousal Rollover Through a Trust PLR 200705032

·         Non-Profit Plans - New 403(b) Regulations

§         No More 90-24 Transfers

§         Death Benefit Impact

If you do not already subscribe to Ed Slott’s IRA Advisor Newsletter, you may do so by clicking here and providing the required information, or by calling 800-663-1340. Each issue is 8 full pages of must-have tax information. Individuals who subscribe to the online version of the Ed Slott’s IRA Advisor Newsletter, receive access to back issues at no additional cost.




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