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SIMPLE IRA RMDs AND YEAR-OF-DEATH RMDs: TODAY’s SLOTT REPORT MAILBAG

Thursday, June 01, 2023

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


Question:

If a 76-year-old is working full time and has a SIMPLE IRA and she does not own any of the company that sponsors the SIMPLE IRA, does she still have to take a RMD (required minimum distribution) from her SIMPLE IRA?


Answer:

Yes. SIMPLE IRA owners can’t use the “still-working exception” to delay RMDs until they retire. That exception is only available to certain employees in 401(k), 403(b) or 457(b) plans. Instead, SIMPLE IRA owners must start RMDs in the year they turn age 73.


Question:

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IRS Delays Effective Date of IRA Self-Correction Program

Wednesday, May 31, 2023
It looks like IRA owners will probably have to wait awhile to take advantage of a new program that allows them to self-correct IRA errors that previously couldn’t be fixed. In Notice 2023-43, the IRS said that self-correction for IRAs can’t be used until the IRS issues rules for the new program. And those rules aren’t required to be issued until the end of December 2024.
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Poison Ivy: IRA Scenarios to Avoid

Wednesday, May 24, 2023
I got into some poison ivy and am suffering the consequences. It takes a few days for the welts to appear, but they are in full bloom. While I did take precautions before starting my yardwork (gloves, long sleeve shirt, etc.), in retrospect I could have been more careful. The frustrating part is, there isn’t a whole lot you can do once the swelling appears. Ice, some anti-itch spray, try not to scratch too much, and just methodically work through this incredibly uncomfortable irritation.
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A Better Way of Understanding the Once-Per-Year Rollover Rule

Monday, May 22, 2023
The “once-per-year” rollover rule is one of those IRA rules that has serious tax consequences and cannot be fixed if violated. Breaking the rule results in a taxable distribution and a 10% early distribution penalty if you’re under age 59 ½. Plus, any rolled over funds are considered excess IRA contributions that are subject to a 6% annual penalty unless timely corrected.
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Required Minimum Distributions: Today's Slott Report Mailbag

Thursday, May 18, 2023
Question: Hello and thank you for all the great, helpful information you continue to send out. I am due to take my first RMD (required minimum distribution) in 2024 which would make my required beginning date April 1, 2025 if I understand correctly. My intention is to empty my traditional IRA next year and convert it to my existing Roth. My question is, if my traditional IRA shows a zero balance by my required beginning date, would that still require a RMD be taken for 2024? I’d like to know if I can convert the entire account or if I have to take an RMD and then convert the rest. I think the answer is I would have to take an RMD, but am not 100% sure. Thanks so much, Dana
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Inherited Roth IRA: RMDs or No?

Monday, May 15, 2023
QUESTION: Do required minimum distributions (RMDs) apply to inherited Roth IRAs? ANSWER: It depends on who the beneficiary is. Owners of traditional IRAs must start taking RMDs when they reach their required beginning date (RBD). That date is generally April 1 of the year after a person turns 73 (or 72 prior to SECURE 2.0, or 70 ½ prior to the original SECURE Act).
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INHERITED ROTH IRA RMDS AND MERGING IRAS: TODAY’S SLOTT REPORT MAILBAG

Thursday, May 11, 2023
Question: Hello, Are you required to take out RMDs (required minimum distributions) on an inherited Roth IRA? The original owner was 82 when he passed away. The funds were left to his nephew, so I understand the 10-year rule will apply. Thanks for your help, David
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Mandatory Roth Catch-up Contributions Required for 2024

Wednesday, May 10, 2023
One of the more controversial provisions of the new SECURE 2.0 law concerns 401(k) catch-up contributions. Most 401(k) plans – as well as 403(b) and governmental 457(b) plans – permit employees who are age 50 or older to make catch-up contributions. The limit for catch-ups in 2023 is $7,500, allowing for total elective deferrals of up to $30,000.
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Conversion as a Gift to Your Beneficiaries

Monday, May 08, 2023
Do you have an IRA you are thinking about converting to a Roth IRA? There are many benefits to converting. You trade an immediate tax bill for the promise of tax-free earnings and distributions down the road. However, one benefit you may not have considered is the benefit to your beneficiaries. Inheriting a traditional IRA will have very different tax consequences than inheriting a Roth IRA. Converting your IRA to a Roth IRA is really a gift to your beneficiaries.
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The 3 IRA Beneficiary Categories – Again and Again and Again

Wednesday, May 03, 2023
This past week the Ed Slott team hosted another successful conference for our Elite IRA Advisor Group members. Well over 300 advisors from across the country descended on Washington D.C. for two days of intense IRA training. In addition to discussing all the newest SECURE 2.0 rules, we made sure to cover the foundational beneficiary principles created by the original SECURE Act, which went into effect in 2020. It is our steadfast belief – and our member advisors agree – the best way to learn new concepts is through repetition and reinforcement.
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