The Slott Report | Ed Slott and Company, LLC

The Slott Report

Don't Recharacterize Too Soon

Some taxpayers who did Roth conversions earlier this year have seen their account values drop. As a result, they are considering doing a recharacterization of their Roth back to an IRA. But maybe they should wait a while. Why? Maybe, if they wait long enough, the Roth account will recover and not need to be recharacterized. The better answer, however, lies in the rules for reconverting assets once they have been recharacterized.

SEP IRA Confusion

This week the Ed Slott and Company IRA Discussion Forum featured a question on whether or not a trust as a SEP IRA beneficiary should be any different than it would be with a traditional IRA account. The answer to that question is not really, but the relationship between SEP IRAs and traditional IRAs can be a confusing one. Want to see how?

3.8% Surtax: What You Need To Know

This week the Ed Slott IRA Discussion Forum featured a question on the recent Health Care Legislation. The new laws will impact IRAs in a number of ways, including a new 3.8% surtax. Curious as to how this new surtax could impact your IRA planning?

Question of the Week: Illiquid IRA Investments

This week the Ed Slott and Company IRA Discussion Forum featured a question about the illiquid investments in an IRA and how they may affect RMDs. Do you have these types of investments in you IRA? Read on to find out some of the major items for which you need to be aware.

Required Minimum Distributions and Roth Conversions

If you are doing a Roth conversion this year and you are age 70 ½ or older, the RMD must be taken before you do the conversion. The conversion is considered a distribution and RMD funds are considered to be the first funds distributed from the account. RMDs cannot be moved into the Roth IRA.

Required Minimum Distributions and Age 70 1/2

Required minimum distributions (RMDs) begin in the year you turn 70 ½. Not age 70 and not age 71 but age 70 ½. So who is age 70 ½ in 2010? If you were born from July 1, 1939 up through June 30, 1940 you will be 70 ½ this year. How do you know what age to use for calculating your RMD?

Recharacterization Tax Reporting

So you did your recharacterization from the Roth IRA back to the traditional IRA and now you are wondering how you put this on your tax return so you don’t have to pay tax on the conversion.You can find some guidance from IRS on the instructions for Form 8606 - which in most cases you don’t have to file when you do a recharacterization. You can find these instructions at

Is Your IRA Safe in Bankruptcy?

The bankruptcy reform act passed in 2006 gave all IRAs a $1,000,000 exemption if you are using the federal bankruptcy rules. In addition, funds from employer plans were 100% exempted, even if they were rolled over to an IRA. So, your IRA funds should be exempt, right? The answer is a definite maybe.

Senate Passes Extenders Bill

By a vote of 62-36, the Senate on March 10, 2010 passed the American Workers, State & Business Relief Act of 2010. The bill includes a combination of tax-extenders (items that expired in a previous year but are up for renewal in 2010), energy provisions and incentives for businesses.

The Wrong Beneficiary -- Can a Disclaimer Help?

The IRA owner has died. Only one individual is named on the beneficiary form, let’s call him David. He wants to do the right thing and share the IRA with his siblings or the other individuals who should have had a share of the IRA. I know, it is hard to believe but some beneficiaries do want to do the right thing! So, what can David do?

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