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IRA distribution

Rolling Over a 2020 Distribution in 2021

The rules for rolling over IRA distributions can be complicated at any time of the year. They are especially challenging at the end of the calendar year. Surprisingly, sometimes IRA owners have doubts as to whether a distribution taken in one calendar year can even be rolled over in the next. There is no problem with this! Nothing prevents you from taking an IRA distribution in December, 2020 and rolling it over in January, 2021, as long as you follow all the usual rollover rules that always apply.

IRA Distributions and Roth Recharacterizations: Today's Slott Report Mailbag

Question: I recently retired and I plan to relocate to Tennessee. I would like to purchase a new home. Can I pull funds from my IRA to do so, and what would be the implications? Thank you. Edna Answer: Edna, If you are over 59 ½, you have full access to your IRA dollars with no strings attached – other than having to pay taxes on the distribution. If you want to withdraw some dollars to buy a new home, then go for it. However, if you are under age 59 ½, then there would be a 10% penalty on any early IRA distribution (plus taxes due) unless an exception existed.

Be Careful About Using Your IRA for a Short-Term Loan

Thinking of using your IRA as a “short-term loan” to raise some extra cash for the holidays? What could go wrong? Well, actually, two major things could go wrong. And either could lead to serious tax headaches. Let’s say Chloe started her holiday shopping early this year and, as usual, spent more than she had budgeted.

The Ghost Rule

As Halloween approaches and the leaves change color, families gather ‘round weekend campfires, roast marshmallows, and share spooky stories. Watchful owls hoot in the dark. In the distance, a wolf howls at the moon. A rustle in the bushes. A twig snaps. What was that?!? A dad in a flannel shirt shines a flashlight under his chin, his features glowing red. He scans the anxious little faces, awash in flickering firelight, and tells a tale about the Ghost Rule. Once upon a time, a kindly little man had an IRA account. He did not care much for tax or estate planning. He did not care to fill out forms, as he did not care much for details. He cared only to sit on his front porch and rock in his chair and watch the world go by.

Penalty-Free IRA Distributions for First-Home Purchase

Despite the COVID-19 pandemic, or maybe even because of it, real estate markets in many areas of the country are busy right now. If you are considering jumping in, and if this is your first home purchase, coming up with a down payment can be daunting. Here is how an IRA can help a first-time homebuyer. Exceptions to the 10% Penalty IRAs are supposed to be for saving for retirement.

60-Day Rollovers: Today's Slott Report Mailbag

Question: Thank you for all the great resources you provide. I have been looking for an answer to my specific situation and have not been able to find a clear answer to what I think is a pretty straight forward situation/fact pattern. I take my RMDs spread over a monthly basis on the 6th of each month. (I have taken four in 2020 - Jan, Feb, Mar, Apr). Under the new legislation that extends the "60-day rollover window" for distributions taken on or after February 1, 2020 to July 15, 2020, am I able to roll back all three distributions (Feb, Mar and Apr) in one contribution (rollover) into my IRA, or am I limited to only being able to roll back one month's worth of distributions? Thanks for your help and all you do. Dale

Exceptions to the Pro-Rata Rule for IRA Distributions

Have you ever made non-deductible IRA contributions? Or, rolled over after-tax funds from your company plan to your IRA? If so, you will want to know about the pro-rata rule. The pro-rata rule is a rule that almost always determines the taxation of an IRA distribution when the IRA owner has any IRA containing after-tax amounts. However, some IRA distributions are not subject to the pro-rata rule. These exceptions may provide an opportunity for you to lower the tax bill that comes with an IRA distribution or conversion.

You Are Never Too Old to Convert

There is a lot of information out there about how converting to a Roth IRA is a great move for younger people. This is no surprise. A younger person who converts may pay taxes on a smaller IRA balance and have years to accrue tax-free earnings in their Roth IRA. But what about older people? Older individuals should not overlook the potential tax benefits of converting later in life.

Can My Sister Take the Inherited IRA RMD For Both of Us?

This week's Slott Report Mailbag answers a popular required minimum distribution (RMDs) question - can my sister take the inherited IRA RMD for both of us? - and another consumer's inquiry on Roth conversion tax reporting.

Want to Fund Your HSA with Your IRA? Here's How

Did you know that you can use your IRA to fund your Health Savings Account (HSA)? You may be able to take advantage of a little known part of the tax code that allows a transaction called a Qualified HSA Funding Distribution (QHFD). Here's how.

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