• Roth IRAs have been around for 20 years now. Lots of taxpayers have taken advantage of the tax-free benefits of these accounts by converting their traditional IRAs or employer plans to Roth IRAs. But many have hesitated. Maybe you are among those who held back. The year 2018 may be the year to [...]

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    Question: I have a client who has some after-tax contributions in an IRA, along with pre-tax contributions.  They also have another IRA and 401(k)s.  My question is: Can we convert just the after-tax contributions to a Roth IRA or is it pro-rated as a % of the overall retirement assets? [...]

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    What is the simplest mistake you can make to cause major harm to your intended estate plan - and to the people you wish to provide for through that plan?   It is having outdated (or missing entirely) beneficiary designation forms for your IRAs, employer-provided retirement savings plans, life [...]

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    On Friday February 9, 2018, President Trump signed into law the Bipartisan Budget Act of 2018 (the “Act”). While the Act is best known for ending the nine-hour government shut down that took place on February 9, 2018, it also contained some tax-related provisions. One of the provisions [...]

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    A few weeks ago, I discussed the seemingly unintended impact the Tax Cut and Jobs Act (TCJA) had on the repayment of overpayments from employer plans. In essence, by eliminating the deduction of itemized miscellaneous expenses subject to 2% of adjusted gross income (AGI), the new law negatively [...]

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    Question: Hi, I recently purchased your newsletter and I had an IRA question.  If a client dies before taking his required RMD for the year, does the estate need to take the RMD and pay the taxes before the account is transferred to the non-spouse beneficiary?  If not does the beneficiary [...]

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    You may be interested in contributing to a Roth IRA but think your income is too high. You are probably aware that there are income limits that apply to Roth IRA contributions. For 2018, if you are married, your ability to make Roth IRA contributions phases out when your Modified Adjusted Gross [...]

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    Question: Hello, I was forced, due to health reasons, to retire at age 58 on December 8. I had been with my company for 34 years. I need to cash in my IRA fund for money to pay bills and insurance. What is the best way to avoid having to pay the IRS the 10% penalty before age 59½?  Thank [...]

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    The U.S. Tax Code is a 74,000-page document with interrelating laws and regulations. Therefore, any time Congress enacts a piece of legislation as massive as the Tax Cuts and Jobs Act (TCJA), there are going to be unintended consequences, or as I like to call it, collateral damage. After passage, [...]

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    As you prepare your 2017 tax return, use the information you collect both to make the best IRA contribution choices for 2017 and plan IRA strategies for 2018. Six ways to consider: 1. Maximize IRA Contributions for 2017  2017 IRA contributions can be made until April 17, 2018, the due date for [...]

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    Question: IRA Expert, I have a client that has $3M in a profit sharing plan (PSP). He is rolling over $1.5M of it to an IRA with me. He plans to take his RMD ($54,744) on that $1.5M after he turns 70½  on 4/3/2018 and give it directly to charities. He wants to wait until 2019 to take his [...]

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    It has been widely reported that the Tax Cuts and Jobs Act eliminated the ability to recharacterize Roth IRA conversions as of January 1, 2018. On the other hand, it kept the ability to recharacterize IRA and Roth IRA contributions. Despite all the above, an unanswered question on Roth IRA [...]

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    The Tax Cuts and Jobs Act made sweeping changes to the tax laws. Brackets have been changed, deductions have been eliminated, and retirement plans have been affected. You may be wondering what the new law means for your IRA. Here are 5 things you need to know: 1. Recharacterization of Roth IRA [...]

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    Question: I would like to ask a personal question about withdrawing funds from my traditional IRA account. How can I use part of it for a down payment when buying a new home as a first-time home buyer, without paying much in taxes on the withdrawn amount? I appreciate your help. I am 70+ [...]

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    529 Educational Plans Should Be Gaining in Popularity  Now that the dust has settled and the tax code has been “reformed,” it’s time to unpack those changes and analyze how best they can help you and your clients. One of the changes was the expansion of 529 educational plans. Under the Tax[...]

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    The IRS says it will start accepting and processing 2017 tax returns on January 29 and expects to issue nine of 10 refunds within 21 days. To get the fastest refund possible, file electronically and request direct deposit of the refund amount. The IRS says it won't start processing paper returns [...]

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    Question: Single - W-2 worker making $ 500 a week.  Few if any deductions. Contributes to employer 401K 3% of salary for a Traditional IRA. Is it legal to open up a separate Roth account say in Scottrade with $ 5500? Thank you for your help! -Mike Answer: Hi Mike, To make a [...]

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    In many households, married couples divvy up the responsibilities; one will handle the bills and banking while the other cooks and does the grocery shopping, or one will do the laundry while the other manages the yardwork and house. This split often extends to annual income tax responsibilities, [...]

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    The year 1998 seems like a long time ago. In January 1998, Bill Clinton was in the White House and about to be impeached. The Unabomber was in the news and the Spice Girls were winning music awards. January 1, 1998 also brought us the launch of Roth IRA. However, unlike other ‘90’s memories, the[...]

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    Question: Greetings, No one seems to know the answer to this. Figured I would try you. Client has a 600k IRA. Doing a SEPP of 24k/yr. Has to give 400k to her ex-husband from her IRA. How to adjust SEPP? She is 57 and he is 65. Do we pro-rate the SEPP so she takes 8k/yr now and he takes 16k[...]

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    One of the greatest benefits offered under ERISA are the anti-alienation provisions, which provide that benefits under a pension plan cannot be assigned or alienated. While there are some statutory exceptions, ERISA essentially prevents retirement assets from being joined in any legal process to [...]

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    An early start on tax planning is always good, but this year it is essential. The Tax Cuts and Jobs Act fully rewrites the tax code effective January 1, 2018. To get the most benefit from the changes, while avoiding mistakes under them, update your tax and financial strategies right away. Here are [...]

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    Question: Hello IRA Expert, I qualify for QCD (Qualified Charitable Distribution) as I am over 72 years old. I had recently read one of your articles on QCD and the 60-day rollover rule. I have automatic withdrawals of my RMD every quarter. The last automatic withdrawal was on Oct. 15, 2017 [...]

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    2018 is right around the corner. We will be dealing with massive changes to the tax code due to the enactment into law of the Tax Cuts and Jobs Act. Some of those changes are going to apply to you and some of those changes will affect your retirement and assets that you hope will go to your [...]

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    Happy Holidays

    December 26, 2017

    We at the Slott Report would like to wish all our readers and their families a very happy holiday season! We thank all of you for taking your valuable time to read the Slott Report over the past year. We have heard from many of you and welcome your comments and feedback. Keep it coming! 2017 [...]

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    Question: Good Afternoon Mr. Slott, Based on the Path Act of 2015, which made the QCD permanent, and the information from Checkpoint “2017 Tax Reform: Special Study on Individual Tax Changes in the ‘Tax Cuts and Jobs Act’”, it appears the Path Act of 2015 was not repealed regarding [...]

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    Now that it looks like they’ve been spared from elimination in the most recent version of tax reform, it’s worth taking a look at nonqualified deferred compensation plans (“NQDC plans”). NQDC plans take different forms, including salary reduction arrangements, bonus deferral plans, excess [...]

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    This is the season for charitable giving. And this year, it is especially so for those who want to get the most tax benefit from charity deductions before the new Tax Cuts and Jobs Act becomes law. The Act effectively reduces the tax-saving value of the charitable contribution deduction for many.[...]

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    Question: ED, I have attended 3 of your 2 day past boot camps and plan to attend in Orlando in Feb. 2018. I NEED YOUR HELP BADLY NOW!!!! I think my broker dealer is not reporting RMD’s to charities properly on the 1099R’s they issue. They are putting the same number in Box 1 and Box 2a [...]

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    Recharacterization is currently one of the few “do-overs” allowed under the tax code. Its days may now be numbered. The tax reform legislation currently pending in Congress would do away with recharacterization at the end of 2017. How Recharacterization Works Currently, if you do a Roth [...]

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    Question: Hello, I am a financial advisor in Dallas and appreciate all the training & education Ed has provided over the years to ML advisors like me. I have a question for Ed.  When meeting with a potential client, I uncovered a potential problem … And potential subsequent solution [...]

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    10 Things You Must Know about HSAs

    As the summer heats up, healthcare remains a hot topic. Will the ACA survive? Will Congressional Republicans succeed in repealing and replacing it? As we reach July these questions remain unanswered. One thing that is clear, however, is that Health Savings Accounts (HSAs) are playing a significant [...]

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    Over 59 1/2? You Must Know these Roth IRA and 401K Answers

    Over 59 1/2? You Must Know these Roth IRA and 401K Answers This week's Slott Report Mailbag looks into Roth IRAs, 401Ks, contributions, tax-free options, and more. As always, we recommend you work with a competent, educated financial advisor to keep your retirement nest egg safe and secure. [...]

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    Avoid This Costly Mistake At Death

    Avoid This Costly Mistake At Death It’s not exactly a fun thing to think about, but death is an absolute inevitability. When that time comes or more aptly, sometime before that time comes, there are a number of planning strategies that you can implement to make sure that you preserve tax benefits[...]

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    Need to Withdraw From an IRA Before Turning 70 1/2 Years Old? This Weeks Q&A Mailbag and More.

    Need to Withdraw From an IRA Before Turning 70 1/2 Years Old? This Weeks Q&A Mailbag and More. This week's Slott Report Mailbag looks into RMDs, QCDs, and IRA withdrawals prior to turning 70 1/2 years old. As always, we recommend you work with a competent, educated financial advisor to keep [...]

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    What's New and How Does it Impact You? Retirement Plan Contribution Limits for 2017.

    What's New and How Does it Impact You? Retirement Plan Contribution Limits for 2017. There were few changes to the retirement contribution limits for 2017. IRA and Roth IRA limits remain the same. The maximum an individual with earned income can contribute is $5,500 split any way they want [...]

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    7 Resolutions for Your IRA for 2017

    7 Resolutions for Your IRA for 2017 A new year brings a fresh start and a chance to do things better. You probably have a few resolutions for 2017. You may be planning to eat healthier, get more exercise, or stick to a budget. As you are making your resolutions for the new year, don’t overlook [...]

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    When You're 70 1/2 Avoid These Disastrous Mistakes

    When You're 70 1/2 Avoid These Disastrous Mistakes This week's Slott Report Mailbag looks into RMDs, Roth IRAs, and "still working" provisions. As always, we recommend you work with a competent, educated financial advisor to keep your retirement nest egg safe and secure. Question:  [...]

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    5 Ways to Avoid the Time and Expense of Probate

    Death is inevitable. It comes for us all at one point or another. Some sooner than later, but none are able to escape its grasp. Whenever that time comes, your “stuff,” including your financial assets, generally live on, and are still essentially yours until they are legally transferred to [...]

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    Q&A: Significant Concerns with Inherited IRAs, International Beneficiaries & More

    This week's Slott Report Mailbag looks into international beneficiary IRAs, tax free IRA withdrawals, and inherited IRAs.  As always, we recommend you work with a competent, educated financial advisor to keep your retirement nest egg safe and secure. Question: I have a question pertaining to[...]

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    Year-End Retirement Account Q & A

    Question: When is the last day to make a 2016 Roth IRA conversion? Answer: In order for a Roth IRA conversion to be considered a 2016 Roth conversion, the money must leave the distributing account by December 31, 2016. So if a distribution is made from a traditional IRA on December 31, 2016 and [...]

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    2016 Year in Review for Retirement Accounts

    As 2016 draws to a close, and we get ready to ring in the new year, it’s a great time to look back. Here is a roundup of six of the big stories in the world of retirement accounts for 2016. 1.Qualified Charitable Distributions Become Permanent Qualified charitable distributions (QCDs) made [...]

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    The Continued Battles with Inherited IRAs, PSPs, and Rollovers

    This week’s Slott Report Mailbag looks into Inherited IRAs, Defined Contribution Profit Sharing Plans, and Roth 401K rollovers. As always, we recommend you work with a competent, educated financial advisor to keep your retirement nest egg safe and secure. Question: I have a somewhat [...]

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    Your 2016 H-O-L-I-D-A-Y Season Action Plan

    H – Have your financial institutions send you a copy of the beneficiary information they have on file for you. On more than a few occasions, we’ve seen financial institutions lose copies of beneficiary forms (or in some really egregious cases, destroy them). Asking for this information annually[...]

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