The Slott Report | Ed Slott and Company, LLC

The Slott Report

Roth IRA Distributions and the 10-Year Rule: Today's Slott Report Mailbag

Question: If I did a Roth conversion in 2022, do I have to wait 5 years before I can touch the amount $16,500 (the amount I converted) penalty free? The Roth has been open since 2003 and I'm over 59 ½. Answer: The five-year rules for Roth IRA distributions can be very confusing. In your case, because you are over age 59 ½, you will have immediate tax and penalty free access to any converted funds in your Roth IRA. You will also have tax and penalty free distributions of any earnings in your Roth IRA since those distributions are qualified. They are qualified because you are over age 59 ½ and you have had a Roth IRA for at least five years.

SECURE 2.0 Modifies Rules for Special Needs Trusts

The SECURE Act changed the game for inherited IRAs. For most beneficiaries, the stretch IRA is gone and has been replaced by the 10-year payout rule. However, the SECURE Act carved out some rules for special needs trusts for disabled or chronically ill beneficiaries that allow the stretch to continue for these beneficiaries.

IRA RMD Age Made Easy

A ton of questions on this topic have come across our desks, and we have seen swirling, hypnotizing spirals in the eyes of many an advisor. I can only imagine what the general public is thinking about the changes to the required minimum distribution (RMD) age. Since 1986, the RMD age was planted at 70 ½. In the past three years it has increased to 72, to 73, and will eventually jump to 75.

LIFETIME AND INHERITED IRA RMD RULES: TODAY’S SLOTT REPORT MAILBAG

Question: If a person turned 72 in 2022, and died before starting her traditional IRA RMDs (required minimum distributions), must her three children take an RMD (based on their ages) in 2022 and for the next 9 years?

SECURE 2.0 Changes Already in Effect

The SECURE 2.0 Act, enacted into law on December 29, 2022, makes over 90 changes to the IRA and employer plan tax rules. If that isn’t enough, many of these provisions aren’t immediately effective and (one isn’t effective until 2033). This article will focus on the key provisions in effect right now in 2023:

Roth-O-Mania!

SECURE 2.0 is now the law of the land and one thing is very clear. Roth-O-Mania is here! In their quest for more revenue, Congress has created more options to save with Roth accounts. These accounts bring in the immediate revenue that Congress desperately needs. For retirement savers, these Roth options offer the promise of potential tax-free earnings and withdrawals down the road.

529 Plans and Roth IRAs: Today's Slott Report Mailbag

Question: Hello Ed, I have a question concerning Secure 2.0 pertaining to transferring “leftover” 529 plan account balances into a Roth IRA, beginning 2024. If I have no income in 2024, can I still transfer/contribute leftover 529 plan funds into a Roth IRA? Thank you! Mark

SECURE 2.0 Eliminates RMDs on Roth Plan Dollars in 2024

By Andy Ives, CFP®, AIF®
IRA Analyst
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If a person has a Traditional IRA and is of the age when lifetime required minimum distributions (RMDs) apply, then that person must withdraw a portion of that account annually. The amount to be withdrawn is based on the year-end balance from the previous year and a life expectancy factor as determined by one of the life expectancy tables. The rationale for RMDs is, the IRS permitted the account owner to delay paying taxes on the IRA dollars for potentially decades. Now it is time for the account owner to keep his end of the bargain and pay up. This is all straightforward enough.

SECURE 2.0 Allows Rollovers of 529 Funds to Roth IRAs

We’re getting a lot of questions about the SECURE 2.0 provision allowing tax-free rollovers from 529 plans to Roth IRAs. Although this new rollover opportunity sounds exciting, there are a number of restrictions that may limit its appeal. Section 529 plans offer a great opportunity to pay for college, K-12 tuition and student loan repayments. Nearly every state offers at least one plan. The most popular type of 529 plans are college savings plans, in which you make after-tax contributions that are invested in mutual funds or ETFs offered under the plan.

QCDs and 60-Day Rollovers: Today's Slott Report Mailbag

Question: I am confused regarding the requirements for making a qualified charitable distribution. Is it necessary for the donation to be sent directly from the financial company to the charity, or can the check be made out to the charity but sent to me and then sent to the charity? Thank you, John
 

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