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Ian berger

THE RULE-OF-55 AND RMD CONVERSIONS: TODAY’S SLOTT REPORT MAILBAG

Question: Hi, I am age 50 and am targeting retirement at age 55. My current employer is selling the division I work for, and I see the potential that I could be laid off at, say, 52. If this were to happen, could I join a new employer with a 401(k) plan, roll my old 401(k) over to the new plan, and then take a distribution (both the rolled-over funds and the new 401(k) funds) under the rule of 55? The statute suggests that I could do this, but I have seen comments that the rollover funds wouldn't count.

How the Vesting Rules Work for Company Retirement Plans

Employees leaving their jobs are often surprised to discover they aren’t entitled to the full balance of their company plan account. The reason is that some plans impose a vesting rule on certain types of contributions. What do the vesting rules mean? They tell you how much of your plan benefit you actually own and cannot be taken away from you. If you’re fully vested, you’re entitled to your entire benefit. If partially vested, you only get a portion of your benefit.

401(k), 403(b), 457(b): Does it Really Matter?

There are three types of company savings plans: 401(k) plans if you work for a for-profit company; 403(b) plans if you work for a tax-exempt employer, a public school or a church; and 457(b) plans if you work for a state or local government.

401(k) PARTIAL ROTH CONVERSIONS AND USING QCDs TO OFFSET RMDs: Today's Slott Report Mailbag

Question: Hello, I’m learning a lot from Ed Slott’s latest book, “The New Retirement Savings Time Bomb,” but I do have a question on 401(k) Roth IRA conversions. I’m recently retired with a company 401(k). I’m leaning towards keeping the 401(k) (rather than rolling it into my IRA). Is it possible to do an annual direct conversion (partial) from my 401(k) to my Roth IRA, keep the remaining funds in the 401(k), and repeat the process every year until reaching RMD age? Thank you,

TAKE ADVANTAGE OF CATCH-UP CONTRIBUTIONS!

Tax Day 2022 seems like an appropriate time to review a sometimes-overlooked way to get extra dollars into your IRA or company savings plan. Folks age 50 or older are allowed to make “catch-up” contributions with no strings attached. These extra contributions allow you to build up your savings while enjoying an immediate tax break (if making pre-tax contributions) or a tax break down the road (if making Roth contributions).

House Passes SECURE 2.0 Bill, But It’s Not Law Yet

A bill designed to increase savings in IRAs and company plans has passed the House of Representatives, but it’s not yet law. The bill is officially called the “Securing a Strong Retirement Act of 2022,” but many are calling it “SECURE 2.0” since it’s seen as an expansion of the original SECURE Act from 2019.

$1,512,350 is the New $1,362,800

When you file for bankruptcy, one thing you usually don’t have to worry about is protecting your IRA funds from creditors. That’s because, in just about every case, all of your IRA (and Roth IRA) monies are off limits. Under the federal bankruptcy law, IRA assets up to a certain dollar limit cannot be reached by creditors. That dollar limit is indexed every three years based on the cost-of-living. The current dollar limit is currently $1,362,800, but on April 1 it goes up to $1,512,350 until March 31, 2025.

Deciphering Your 401(k) Statement

With many 401(k) (and 403(b) and 457(b) plans) offering multiple participant accounts, your plan statement is probably more complicated than ever. Here’s a brief primer to help you understand what each account represents: Pre-tax deferral account. All retirement savings plans allow for pre-tax deferrals. You make these contributions from before-tax pay. Both the contributions and earnings are taxable when paid out.

New IRS SECURE Act Regulations and Missed RMDs: Today’s Slott Report Mailbag

Question: Ed, I read your 2/28/22 Slott Report on the updated SECURE Act information for non-eligible designated beneficiaries (non-EDBs) that requires annual RMDs to continue if the original owner was taking them prior to his death and also requires the account to be emptied by the end of year 10.

The Most Controversial Part of the New IRS Regulations

The part of the new IRS SECURE Act regulations causing the most reaction is the one requiring annual required minimum distributions (RMDs) for some IRA or workplace plan beneficiaries subject to the 10-year payment rule. Under the SECURE Act, IRA or plan beneficiaries who are not “eligible designated beneficiaries” (EDBs) are subject to the 10-year rule. (EDBs are surviving spouses; children of the IRA owner or plan participant who are under age 21; disabled or chronically ill individuals; and anyone not more than 10 years younger than the owner/participant.)

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