The Slott Report

What is Form 5329? Its title is "Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts." You should file the form whenever you miss a required distribution, take a distribution before age 59 ½ when one of the penalty exceptions does not apply, and when you make excess contributions. Those are most of the reasons to file the form. The form calculates any additional taxes owed (what are often called penalties) for certain IRA transactions. Not filing the form could only make things much, much worse.

You are not yet 59 1/2 and have become disabled. You want to take funds out of your IRA. Can you escape the 10% early distribution penalty?

There is often a lot of confusion when it comes to the post-death IRA distribution rules. Frequently, beneficiaries and/or their advisors believe they are subject to what is called the 5-year rule – meaning they have to empty the inherited account within 5 years after the date of death - when in fact, they may actually have much longer to do so.

The big issue in the news these days is how to resolve the "debt ceiling" issue. In essence, our legislators are just trying to figure out how much of a loan, as a nation, we can take. As the events of the recent past have taught us, borrowing can be a dangerous game, but when it comes to IRAs, borrowing can be more than just dangerous. It can be a fatal error that can decimate a lifetime of savings.

The main perk of retirement is freedom. The freedom to sleep in late. The freedom to play golf five days a week. The freedom to talk about the laughs and tears of the last 30 years. This comic illustrates one of the great benefits of retirement...well, along with a safe and secure stack of money to afford you a comfortable, enjoyable trip through your golden years.

Retirement is sometimes, especially in this economic climate, NOT planned. That is why proactive planning at a young age (when you start working) is so important.

Taxpayers believe that because they have already paid the income tax on Roth IRAs that the Roth IRA balance will not be included in the estate for estate tax purposes. As the title indicates, your IRA or Roth IRA will be included as part of your taxable estate at your death. Click to read more about where it says this.

A provision in the tax code allows use of a special formula called “ten year income averaging” by qualifying individuals or their beneficiaries to determine the tax liability with respect to a lump sum distribution they may receive from an employer-sponsored qualified plan or annuity. To qualify for 10 year income averaging, the following six tests must be met.

Click to read how spousal rollovers and the RMD for year of death should work under the IRA rules.

When does the beneficiary form not trump all? IRA Technical Consultant Jeffrey Levine wrote an article this week for Producer's eSource about a court case (Cajun Industries, LLC vs. Korbert Kidder, et al.) in which a plan participant's second marriage inadvertently disinherited the children from receiving all of the retirement account savings.