The Slott Report

If you want to leave your IRA to an adult, you simply name that person on the IRA beneficiary form. Unfortunately, when it comes to minors, it is not that easy. When a minor inherits retirement dollars, the child is not legally able to make financial decisions. A guardian may be needed. Guardians could be named in a parent’s will, and some IRA beneficiary designation forms allow nomination of a guardian. The court can also appoint a guardian, but this can be a long and expensive process.

Question: Can an Education Savings Account (ESA) be rolled into a Roth IRA under the recently enacted SECURE 2.0? 529 plans clearly can - beginning in 2024 - but I have found no reference to ESAs. Can you kindly clarify this and direct me to any literature? Thank you,

Last week the Ed Slott team hosted another highly successful and sold-out 2-day advisor training program at Caesar’s Palace in Las Vegas. Over 250 financial professionals from across the country attended, and we plowed through our 400-page manual. During the two day event we discussed IRA beneficiary rules, trusts as beneficiary, net unrealized appreciation, backdoor Roth IRAs, SECURE 2.0 changes, QCDs, the pro-rata rule, gifting strategies, etc.

The new SECURE 2.0 law fixes a glitch that has made it difficult for new solo 401(k) plans to be opened up retroactively for a prior year. A solo 401(k) plan is a great retirement savings vehicle for self-employed business owners with no employees (other than their spouse). In a solo 401(k), the sole proprietor (or other business owner) is considered to wear two hats – as an employee and as an employer. This allows both elective deferrals and employer contributions. The 2023 elective deferral limit is $22,500, or $30,000 if age 50 or older, while the employer contributions maximum is 20% of adjusted net earnings (or 25% of compensation if the business is incorporated). There’s also an overall limit for combined deferrals and employer contributions; in 2023, it’s $66,000 or $73,500 if the $7,500 age-50-or-older deferrals are made.

I am interested in your interpretation of the RMD (required minimum distribution) rules using the following facts: Original IRA owner’s DOB is 1/21/29 Original IRA owner’s date of death is 12/29/21

SECURE 2.0 is a mammoth piece of legislation that contains over 90 provisions that affect retirement accounts. While many of these provisions are not game changers, they still can be very helpful to specific groups of retirement savers. One of these is the provision that eliminates the 10% early distribution penalty that applies to net income attributable (NIA) when an excess IRA contribution is corrected by withdrawal.

By now, most are aware the SECURE Act created a new class of beneficiaries called “eligible designated beneficiaries” (EDBs). This group includes surviving spouses, minor children of the account owner (until age 21), disabled individuals, chronically ill individuals, and people who are not more than 10 years younger than the IRA owner. (Those older than the IRA owner also qualify.)

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.

How much can you contribute when you’re in two different retirement plans at the same time or at different times in the same year (e.g., after changing jobs)? The answer is complicated because there’re actually two different contribution limits – the “elective deferral limit” and the “overall contribution limit.”

Tax season is upon us. This is the time when you might be thinking about contributing to a retirement account. You may be interested in the Roth IRA, which offers the promise of tax-free withdrawals in retirement if you follow the rules. If you are making a 2022 Roth IRA contribution, here are 5 things you need to know: