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IRS Adds New Reason for Self-Certification of Late Rollovers

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.

QCDs and RMDs Under the CARES Act: Today's Slott Report Mailbag

Question: Is there any problem with someone who is self-employed and has an active SEP making a deductible SEP contribution and an IRA QCD after age 70 1/2? In this case, the QCD would come from the IRA while the SEP continues to be funded. Does any offset apply? Bill Answer: Hi Bill, This is an interesting question!

6 Ways That Roth IRAs and Roth 401(k)s Are Different

Both Roth 401(k)s and Roth IRAs offer the ability to make after-tax contributions now in exchange for tax-free earnings down the road if the rules are followed. However, there are some important differences between the two retirement accounts that you will want to understand. 1. Contributions limits are higher for Roth 401(k)s One major difference is in the amount that you may contribute. Your Roth IRA contribution is limited to a maximum of $6,000 for 2020 if you are under age 50.

CRDs Are Still Available

The year 2020 has been a challenging one. With coronavirus cases rising in most of the country and economic relief stalled in Congress, many individuals may be looking to find funds to pay urgent bills. One possibility is a coronavirus-related distribution (CRD). While the first phase of the pandemic may be gone, the economic turmoil is still with us and so are CRDs. CRDs are still available through December 30, 2020. These are distributions, up to $100,000, from a company plan or IRA made anytime during 2020 (through December 30) to affected individuals.

IRA Rollovers and Deductions: Today's Slott Report Mailbag

Question: Hello, If an individual has a solo 401(k), is this considered a "retirement plan at work" that would limit the deductibility of IRA contributions? Thanks! Susan Answer: Hi Susan, Being an active participant in a retirement plan for the year can limit your ability to deduct your traditional IRA contribution, depending on your income. Participating in a solo 401(k) would count as active participation for this purpose.

Now is the Time to Consider NUA

For many people, 2020 has meant leaving a job. Some jobs have disappeared. Some workers are taking early retirement. This means that many workers are receiving distributions from employer plans. Many individuals may assume that the right move is to roll over those retirement funds to an IRA. Not so fast! For many people, a rollover will be a smart decision. However, don’t assume that is always the way to go. In some cases, as strange as it may sound, taking a lump sum distribution and paying taxes is a smart choice. You may be wondering how that could be possible. Well, a tax break called Net Unrealized Appreciation (NUA) may make taking that lump sum distribution a good choice in 2020.

Important Trust Deadline Approaches

For trusts that inherited an IRA in 2019, an important deadline is approaching. October 31, 2020 is the due date to provide required trust documentation to the IRA custodian to ensure that the longest payout period possible is available for the inherited IRA. Generally, only individuals who are named on an IRA beneficiary form can be designated beneficiaries. A trust is not an individual but if the trust qualifies as a "look through" or "see-through" trust, then each individual beneficiary of the trust can qualify as a designated beneficiary for IRA distribution purposes. For trusts that inherited in 2019, prior to the enactment of the SECURE Act in 2020, this would allow each trust beneficiary to stretch payments over the life expectancy of the oldest beneficiary.

RMDs Under the Secure Act & Roth Conversions: Today's Slott Report Mailbag

Question: Would you kindly clarify the rule that governs the withdrawal period and the tax implication (if any) of RMDs from an inherited IRA? The SECURE Act and the IRS document 590B are not clear. Here is the situation: I have a traditional IRA with my granddaughter as the sole beneficiary. My understanding is that before the SECURE Act, inherited IRA's had to issue annual RMD's if the original owner was taking them. The SECURE Act seems to say that annual RMD's are no longer required to be taken by a non-spouse beneficiary, just as long as the account is fully distributed in the 10-year period.

3 Reasons Why You May Want to Think Twice About a 72(t) Payment Plan

Times are tough. Unemployment is high and bills are piling up for many. These realities have forced a lot of people to look for sources of extra cash. For many Americans, their IRA is their biggest, or maybe only, savings available. It may be tempting to consider tapping into it in these challenging times. Distributions taken before age 59 ½ are subject to a 10% early distribution penalty.

8 Things You Need To Know About Your Inherited IRA

A significant percentage of IRA assets will ultimately go to nonspouse beneficiaries. When these beneficiaries inherit the funds, special rules kick in. Inherited IRAs are not like other IRA accounts. Here is what you need to know if you inherited an IRA from someone who is not your spouse: 1. You should consider all your options before doing anything with your inherited IRA. If you inherit an IRA, you need to move cautiously. You have time to make decisions, so don’t rush. You will want to notify the IRA custodian of the death of the IRA owner if that has not already happened.

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