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The Slott Report

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?

Qualified Charitable Distributions (QCDs) Ended 12/31/09

As you may recall from previous articles appearing here, a provision in the Pension Protection Act of 2006 (PPA 06) allowed IRA owners and beneficiaries age 70 1/2 and older to make tax-free distributions of otherwise taxable dollars from traditional IRAs and Roth IRAs to qualified charitable organizations. Such distributions were also allowed to be made from SEP IRAs and SIMPLE IRAs provided no employer contributions were made for the same tax year.

An Unwanted 2009 Required Minimum Distribution

Required minimum distributions were waived for 2009, but the legislation wasn't passed until late in 2008. This led to some confusion earlier this year for plan administrators, IRA custodians, and retirement account owners just like you. In some cases, automatic distributions were made to taxpayers before they could be shut off. Not all RMD recipients realized that they could simply roll those distributions back to an eligible retirement account within 60 days.

Dicussion Forum Topic: 5-Year Clock

For years now, Financial Advisors, CPAs and taxpayers just like you have realized the incredible benefit that Roth IRAs can provide. After-tax money (money you did not take a deduction on) can be invested and can grow tax deferred for years. Later, that money, along with all the earnings, can be withdrawn tax-free! Of course, like most benefits afforded to you by the tax code, Roth IRAs are subject to a variety of rules and restrictions.

Need to Know: Roth Conversions and Pro-Rata Rule

One of the main things to consider when thinking about making a Roth conversion is the pro-rata rule. When an IRA contains both non-deductible and deductible funds then each dollar withdrawn from the IRA will contain a percentage of tax-free and taxable funds.

Pros & Cons of Roth Conversion

There has been a lot written about converting from a traditional IRA to a Roth IRA particularly in light of the law change taking effect on January 1st, 2010 which will permanently eliminate the conversion restrictions and allow everyone to convert. You have likely read about this in past articles at The Slott Report.We thought we would provide some simple pros and cons for you to consider.

Discussion Forum Topic: Taxable Account vs. Inherited IRA (Part 2)

There is no step-up in basis for inherited IRAs. This is always the case, regardless of the IRA's investments. If, though, the IRA owner had made after-tax contributions to the account during their life, there can be existing basis that would pass to you.

Discussion Forum Topic: Taxable Account vs. Inherited IRA (Part 1)

This week the Ed Slott IRA Discussion Forum featured a question about how inherited assets are taxed and treated. But are all inherited items the same? Does an IRA receive the same tax treatment as a taxable account? Keep reading to find out.

20% Withholding

Generally, when rollover eligible assets are distributed from a qualified retirement plan, 403(b), 401(k) or 457(b), to the participant, instead of a direct rollover to an eligible retirement plan, the payer must withhold 20% for federal income tax. And if applicable, any state withholding tax.

Discussion Forum Topic: Form 8606

This week, the Ed Slott IRA Discussion Forum featured multiple questions about IRS Form 8606. But what is this form and why is it so important? Read on to find out the Who, What, When, Where, Why and How of form 8606.

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