Ian berger | Ed Slott and Company, LLC

Ian berger

FIRST-YEAR RMDS AND IRA SURVIVING SPOUSE OPTIONS – TODAY’S SLOTT REPORT MAILBAG

Question: I am retired and turned 72 in September, 2021, so I must begin required beginning distributions (RMDs) by April, 2022. I have traditional and Roth IRAs as well as a defined contribution plan with a former employer. I understand I must withdraw my RMD before withdrawing an amount for anything else (e.g., Roth conversion) from both my traditional IRA and my defined contribution plan. But is that requirement limited to withdrawals within each type of plan (IRA and defined contribution)?

A Possible Solution to the “Mega IRA” Restrictions

By Ian Berger, JD
IRA Analyst
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The Build Back Better Act of 2021, recently passed by the House Ways and Means Committee, includes a number of retirement plan provisions.  They were summarized in the September 22, 2021 Slott Report.

Restrictions on 401(k) In-Service Withdrawals

Congress designed 401(k) plans as retirement savings vehicles – not as checking accounts. So, there are restrictions on when employees can make “in-service withdrawals” (i.e., withdrawals while still working). It’s important to remember that while 401(k) plans must abide by these withdrawal rules, plans are free to impose even more restrictive rules. So, you’ll need to check your plan summary or ask your plan administrator or HR rep for the particular withdrawal rules that apply to you.

ELIGIBILITY RULES FOR ROTH IRA CONTRIBUTIONS AND DEDUCTIBLE TRADITIONAL IRA CONTRIBUTIONS: TODAY’S SLOTT REPORT MAILBAG

Question: If your employer contributes to either a SEP IRA or a SIMPLE IRA, can you (the employee) also contribute to a Roth IRA? Regards, Alfred

Fixing a 60-Day Rollover Error

Are you moving assets between IRAs or from a company plan to an IRA (or vice-versa)? You should know that using a direct transfer is a much better idea than doing a 60-day rollover. Direct transfers avoid all of the possible issues which can occur with 60-day rollovers:

How Do Revocation-on-Divorce Laws Work with ERISA Plans?

By Ian Berger, JD
IRA Analyst
Follow Us on Twitter: 
@theslottreport


What if you have an IRA with your spouse as primary beneficiary, get divorced without changing your beneficiary and then die? Who inherits your IRA benefits.

If you live in one of the 26 states (as of June 2018) that have “revocation-on-divorce” (ROD) laws, your ex-spouse would automatically be removed as beneficiary upon divorce. Instead, your IRA would go your contingent beneficiary or, if none, to the default beneficiary under your IRA agreement.

ROTH IRA CONTRIBUTIONS AND QCDs: TODAY’S SLOTT REPORT MAILBAG

Question: I am 72 years old and have a Roth IRA. I have some extra cash in a bank account. Can I put that into my Roth IRA and how much can I contribute for 2021?

The Mega Backdoor Roth IRA Strategy and Solo 401(k) Plans

In the August 16, 2021 Slott Report, we showed that someone participating in a 401(k) plan through a “regular” job could also establish a solo 401(k) plan through a side job and potentially contribute up to $58,000 this year in after-tax contributions to the solo plan. However, this only works if the company sponsoring the regular 401(k) plan and the entity sponsoring the solo 401(k) (e.g., a sole proprietor) are considered unrelated under IRS rules.

Making Sense of the 401(k) Multiple Plan Limits

We continue to get lots of questions about the company savings plan contribution limits. There are actually two different contribution limits – the “deferral limit” and the “overall limit.” This makes things very confusing, especially if you’re in multiple plans at the same time or you change jobs in the middle of the year.

ROTH IRAS FOR CHILDREN AND ROLLOVERS OF RMDS: TODAY’S SLOTT REPORT MAILBAG

Question: Can you put funds into a Roth IRA for a 14 year old using money you have paid the child for doing chores? Client was told all he needed to do was keep a record of what was paid by to the child. I have always enjoyed your presentations. Thank you, Cathy

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