The Slott Report

Question: Ed, I started reading your newsletter and I wondered what you thought of IRS Notice 2022-53. It made sense to me to the point where it said that "the beneficiary of an employee who died after the employee's required beginning date must take the RMD beginning in the first calendar year after the calendar year of the employee's death." But then in the end they lost me when it says it applies only if the employee died in 2020 or 2021. Seems like it should say 2022 as well.

As you may have read, Congress is considering passage of a $1.65 trillion spending bill that contains a number of retirement savings plan provisions. As of this morning (December 21), the bill has not been passed, and both houses of Congress only have until this Friday (December 23) to do so. If passed, President Biden is expected to sign the bill immediately.

It is important to do your due diligence when hiring anyone who claims to be an expert. The same holds true for financial professionals. Before dumping your entire piggy bank in the lap of a random advisor, be sure he or she has the skills and experience necessary to manage such a responsibility. Regarding IRAs, here are 10 good questions to ask your advisor:

Question: Do adult children who inherited a parent’s Roth IRA in 2020 need to take an RMD each year during the 10-year payout rule or may they leave it alone and deplete the account at the end of the 10th year? I’ve heard it both ways and would like to know which is correct. Thank you. Pam

The year 2022 is coming to a close. The holidays season is upon us. That means that the clock is ticking on year-end IRA deadlines. Be sure to get the following four IRA-related tasks done before we ring in the new year. Take an RMD from your retirement account. If you have a traditional IRA and you are age 73 or older you will need to take a 2022 required minimum distribution (RMD) by the end of the year. If you are 72 in 2022, you will have a little extra time to take your first RMD. Your deadline will be April 1, 2023.

The IRS has announced the retirement contribution limits for 2023. Because many of these limits are tied to inflation, it shouldn’t come as a surprise that some of the limits had a big jump. Here’s a summary:

QUESTION: Hello Mr. Slott, I have been doing Roth conversions this year from two small accounts (one a rollover IRA, the other a SEP-IRA) to consolidate into fewer accounts. The small SEP-IRA has been drained this year (2022) by converting the balance to my Roth. The rollover IRA was reduced by one third this year, and the rest should be converted to the Roth in early 2023.

At this time of year, financial articles typically cover festive topics with creative holiday metaphors. “Stuff Your Stocking with These Year-End Retirement Tips” or, “Stay Off Santa’s Naughty List by Implementing These Great Planning Ideas.” Lighthearted and fun – albeit corny – such commentary is usually bright, cheerful and easy to read. As the year comes to a close, I’m sure I will include similar language in one of my upcoming articles.

If you have an IRA, you should know that the funds that are in the account can’t stay there forever. The rules say that you must begin to take required minimum distributions (RMDs) from your IRA once you reach your golden years. How well do you know the RMD rules? Take our RMD Quiz and find out!

Question: Hi, I have read with interest, Ian Berger's article titled "IRS Waives 50% Penalty for Missed 2021 and 2022 RMDs within the 10-Year Period." I am glad that this is starting to be clarified by the IRS. Has any guidance been provided yet on how to calculate the future RMDs?