Life is Unexpected. The IRS Has Got Your Back?

Life can be unpredictable. What might seems like a good idea today can become a bad idea tomorrow. Thus, it can be hard to truly plan for the future when you don’t know what it holds. It’s also what makes life so unpredictable. Luckily (or should that be surprisingly), the IRS realizes this and has allowed some flexibility with what you can do with your IRA(s). For example, they know that there may be times when you need more money than your annual required minimum distribution (RMD). Therefore, they allow for you to take about more than your RMD amount. Continue reading Life is Unexpected. The IRS Has Got Your Back?

The Stretch IRA is Dead. Does That Mean More Freedom?

If you’ve been staying on top of retirement news over the past 12 months, then you’ve probably read about the passage of the SECURE Act and it’s termination of the stretch IRA as an estate planning tool. Just a quick refresher, but a stretch IRA was an IRA inherited by a beneficiary in which the beneficiary then took required minimum distributions (RMDs) according to his/her life expectancy and not that of the original IRA owner. If the IRA was inherited by a young beneficiary, that meant the funds could grow, possibly over decades, before the inheriting beneficiary reaches 72 and Continue reading The Stretch IRA is Dead. Does That Mean More Freedom?

Retirement Accounts and Government Coronavirus Relief

The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was signed into law on March 27. It’s a massive relief package designed to help Americans get through these difficult economic and financial times. Yes, this is the legislation that also includes the one-time payments from the government for those below a certain annual salary. While most of the reporting on the CARES Act tends to focus on helping those of working age who find themselves without a job, it does have some advantages for retirees. First off, many retirees will be eligible to receive the highlight of the legislation–those Continue reading Retirement Accounts and Government Coronavirus Relief

The SECURE Act and Successor Beneficiaries

Now that the SECURE Act has been signed into law, you will want to know how it might affect aspects of your retirement, retirement planning, and your estate. While I’ve talked here about how the SECURE Act will expand retirement benefits for many workers, I haven’t talked much about how the legislation can impact your beneficiaries and their beneficiaries, also known as a successor beneficiary. A successor beneficiary might end up being someone such as the offspring of a beneficiary or one that the original beneficiary listed on proper documentation associated with the inherited account. The old rules–pre-SECURE Act–allowed a Continue reading The SECURE Act and Successor Beneficiaries

Understanding RMDs Under the SECURE Act

As many of you may be aware, the SECURE Act that was recently signed into law made some big changes to retirement for many Americans. Along with opening up opportunities for small businesses to band to together to offer retirement benefits, it raised the age for required minimum distributions (RMDs) to 72. However, that new age for taking RMDs doesn’t go into effect immediately or retroactively. If you turned 70 1/2 in 2019 and thought you could wait a year an a half to take your first RMD, well, that’s not the case. The option to wait until you are Continue reading Understanding RMDs Under the SECURE Act

Be Sure to Keep Inherited IRAs and Your Own IRAs Separated

If you have more than one IRA, you can aggregate the required minimum distributions (RMDs) and take them from one IRA. Most IRA owners are familiar with this allowance. However, not everyone is aware of that fact that you cannot include inherited IRAs as part of that aggregation. It can be easy to overlook. It should be noted though, that if you inherited multiple IRAs of the same type (Roth vs. traditional) from the same person, you can aggregate the RMDs from those. In short, if you have multiple IRAs, one of which is an inherited IRA, you will need Continue reading Be Sure to Keep Inherited IRAs and Your Own IRAs Separated

Miss an RMD? Don’t Panic, But Don’t Brush It Off, Either.

It can be easy to forget about required minimum distributions (RMDs), especially as you move into retirement or if you inherit an IRA. Now, forgetting to take an RMD isn’t the absolute end of the world, but it should not be taken lightly. The penalty to missing an RMD is half the amount that was to be distributed, which is quite harsh and can be a substantial amount of money depending on the size of your retirement savings. So, what should you do if you forgot to take an RMD or you learned that you needed to take one from Continue reading Miss an RMD? Don’t Panic, But Don’t Brush It Off, Either.

Will You Really Need RMDs at 70 1/2?

I’ve written about the SECURE Act here many times in recent months as it is legislation that could open up a lot of retirement saving opportunities for a wide swath of Americans. Officially titled as “The Setting Every Community Up for Retirement Enhancement Act of 2019,” this bill could allow for small businesses to band together to offer retirement savings plan benefits, increase the age for required minimum distributions (RMDs), and allow IRA and 401(k) plan holders to purchase annuities with money in the accounts. While all those a good things, this post is really going to focus on the Continue reading Will You Really Need RMDs at 70 1/2?

Don’t Forget About RMDs Before a Rollover

Just because you are taking advantage of your employer plan’s “still working” exception doesn’t mean you won’t eventually want to tap into your nest egg. Sure, you may delay it for a few years, but that doesn’t mean you won’t still want to take distributions–or roll it over to an IRA–while you are still working. If you decide to do a rollover, you need to be careful that you do not have to take a required minimum distribution (RMD) for the year. If you do have an RMD, you will have to take that RMD before you do the rollover. Continue reading Don’t Forget About RMDs Before a Rollover

You Know RMDs, But Do You Know RBDs?

You’re probably familiar with what a required minimum distribution (RMD) is, but do you know what a required beginning date (RBD) is? If you guessed that it’s the date that you begin taking your RMDs, then you are spot on. Knowing your RBD–and any associated options–can be almost as important as knowing how much you need to take out for your RMD. If you have an IRA, your RBD is April 1 of the year following the year in which you turn 70 1/2. There are no exceptions to that rule, unfortunately. However, if you have an employer plan (i.e. Continue reading You Know RMDs, But Do You Know RBDs?