12 Things You Can’t Do With Your Retirement Account

Wednesday, May 02, 2012

By Jeffery Levine, IRA Technical Expert
Follow Me on Twitter: @IRAGuru4EdSlott

Can you believe that we are already in May? And in 2012 no less? In the spirit, somehow fast forwarding into the future and being in May of 2012, here are 12 things you may not do with your retirement account.

1) You may not convert or rollover a required minimum distribution (RMD). A year’s RMD must be taken prior to making any such transaction.

2) You may not claim “hardship” as an exception to the 10% early distribution penalty. No such exception exists!!

3) You may not name your estate as your IRA beneficiary if you want your beneficiaries to stretch your IRA.

4) You may not make a Roth contribution for 2012 if your income is above certain thresholds. Click here to see those thresholds.

5) You may not make a deductible IRA contribution if you actively participate in a company plan AND your income is above certain thresholds. Click here to see those thresholds.

6) You may not make a 60-day rollover of inherited IRA or inherited Roth IRA funds if you are a non-spouse beneficiary.

7) You may not rollover after-tax funds into a company plan.

8) You may not take a partial distribution from a company plan and still use any of the special lump sum distribution tax breaks.

9) You may not use the uniform life table to calculate RMDs if you are a beneficiary (spouse or non-spouse).

10) You may not take a qualified distribution of Roth IRA funds unless you have had any Roth IRA for more than five years AND are over 59 ½ (or the distribution is made pursuant to death, disability or for the first-time purchase of a home up to $10,000).

11) You may not convert only the after-tax funds from an IRA if you have both pre-tax and after-tax funds IRA funds. Such a conversion would be taxable according to the pro-rata formula.

12) You may not have the right financial advisor and/or CPA if they don’t know these rules!


 

 

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