You may not be familiar with the tax code’s “same-property rule” that applies to IRA-to-IRA (and Roth IRA-to-Roth IRA) rollovers. The rule requires that the property received in an IRA distribution must be the same property that is rolled over. If you receive cash, you have to roll over cash.
Question:
Hi,
Thank you for all the helpful insight on retirement. I wish I heard about your website earlier. I turned 72 last year and followed your advice on QCDs (qualified charitable distributions) but don't know how to claim it.
My RMD (required minimum distribution) was $50k in 2022. I did a QCD of $10k and then withdrew $40k by the end of 2022. My taxable amount should be $40k and not $50k as listed on the 1099-R. How do I reflect that in my tax filing?
Thank you for your assistance.
By Sarah Brenner, JDDirector of Retirement EducationFollow Us on Twitter: @theslottreport Question: Can an IRA to Roth IRA rollover be spread...
The IRS has recently added a new reason for self-certification of late rollovers to its list. Revenue Procedure 2020-46 modifies the list of reasons to include an IRA or company plan distribution made to a state unclaimed property fund and later claimed by an IRA owner or plan participant. Rev. Proc. 2020-46 is effective as of October 16.
A financial advisor contacted me about her client who had recently passed away. The advisor was legitimately concerned about a rollover check received by the now-deceased individual. It had not been deposited into his IRA prior to death. Was her client’s estate stuck with a taxable distribution? Could the financial institution refuse the rollover because the person was no longer of this earth?
Question:
I set up a Roth outside my employee retirement plan. I retired on 10-01-2018. I set up an automatic contribution to my Roth IRA from my checking account and, up to this day, still continue to contribute to the Roth IRA . Shall I opt out since I’m retired now? Your advice is deeply appreciated.
Thank you very much.
Sincerely,
Ester
Answer:
Hi Ester,
Contributing to a Roth IRA in addition to your employer plan is a great way to increase your retirement savings.
Question:
I am a financial advisor and want to be clear on something. If a client has a SIMPLE IRA that they are contributing to and have an IRA and are 70.5, can they aggregate the distributions for both and remove from the IRA?
Wanda
Answer:
Aggregation of RMDs is a tricky area and we see lots of mistakes. SIMPLE IRAs can be confusing as well because sometimes these accounts follow the IRA rules, and sometimes they follow plan rules.
SIMPLE IRAs are not so simple. One factor that makes SIMPLE IRAs tricky is that they are subject to unique rules, found nowhere else in the tax code, such as the two-year holding period.
Two-Year Holding Period
When does the two-year holding period begin? This is a question that often creates confusion. The two-year holding period begins with the date the employee’s first contribution is deposited to the SIMPLE IRA. It is not the date employment begins or even the date you become eligible to participate in the SIMPLE IRA plan.
25% Early Distribution Penalty
Distributions taken from a SIMPLE IRA before age 59 ½ are subject to an early withdrawal penalty of 25% when withdrawn during the two-year holding period.
If you want to move your retirement account from one institution to another, you can do it one of two ways; directly or indirectly. Moving your account directly is the preferred way because it avoids a lot of headaches, but for various reasons, sometimes people choose to use the indirect method.
This week's Slott Report Mailbag looks into IRA rollovers, IRA transfers, and back-door Roth IRAs.
