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Rollovers From a Company Plan & Inherited IRAs: Today's Slott Report Mailbag

By Sarah Brenner, JD
Director of Retirement Education
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Question:

I am 75 years old and am planning to retire this year.  I have a 401(k) plan with my employer and, I assume, need to roll it over into an IRA.  In this case do I need to take a 2021 RMD?  If so, how is it calculated?  I have taken RMDs on my other IRA accounts so I know how to use the factor according to my age, but what should the basis be?  Is it the value of my 401(k) on Dec. 31, 2020?

Thank you in advance.

John


Answer:

Hi John,

Roth IRA Contributions and Your Tax Return

Have you contributed to a Roth IRA for 2020? If you have not, you still have some time. The deadline for making a prior year contribution is the tax-filing deadline, not including any extensions you might have. For 2020, that deadline is April 15, 2021.

The Government is NOT Planning to Confiscate your IRA

Whenever there is a new administration there is a lot of uncertainty about what the change will mean for retirement accounts. In 2021, this change is happening in the middle of a pandemic that has upended the lives of most Americans and created enormous economic and psychological stress. The result has been more speculation about the future of retirement accounts than usual.

Roth IRA Rollovers and the 5-Year Rule: Today's Slott Report Mailbag

Question: Hi! I am over 60 and have had a self-directed Roth IRA for the past 15 years. I would like to roll some of it over to another self-directed Roth where I could invest in crypto-currency. Is this possible?

3 Tips to Avoid Tax Problems with Your SEP

A Simplified Employee Pension (SEP) is a popular choice for many small employers. Although these plans are in fact designed to be less complex than other types of retirement plans, there are many ways to go wrong and make errors. Here are three tips to avoid tax problems with your SEP.

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.

Inherited IRAs and SEP IRA Contributions: Today's Slott Report Mailbag

Question: We had a client who died with no beneficiaries on his $500k 401(k). He wasn’t married and only 45 years old. His parents are disclaiming rights to the inheritance, so it’s going to his siblings. Is there any way these two siblings can stretch the retirement account into an inherited IRA? If so, what does that look like? Thanks, Patrick Answer: Hi Patrick, The siblings may still be able to use the stretch even after the SECURE Act eliminated it for most beneficiaries.

The Answer to this Question on Eligible Designated Beneficiaries Under the SECURE Act May Surprise You

The SECURE Act made many changes to the rules for beneficiaries who inherit retirement accounts. One of the most significant ones is the end of the stretch IRA for most beneficiaries. However, there are some beneficiaries called “eligible designated beneficiaries” (EDBs) who can still use the stretch. How well do you understand this new class of beneficiaries? Take our quick quiz. The answer may surprise you.

2021 New Year’s Resolutions for Your IRA

A new year brings a fresh start, and after 2020, we need that more than ever. You probably have a few resolutions for 2021. When making your list of goals for the new year, don’t overlook your IRA. Here are a few suggestions for your IRA for 2021.

Roth IRAs and the 10-Year Rule: Today's Slott Report Mailbag

Question: Can a retired person not working contribute to a Roth IRA? Answer: There are no age limits for Roth IRA contributions. This allows older people to contribute. However, the rules do require earned income. For example, income from a part time job would work.

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