A Safer Retirement and Environment – What We’re Implementing to Help Keep You Safe: READ MORE

Here at Senior Tax & Insurance Advisors, PLLC, we are adhering to state and local guidelines in order to protect both the health and safety of clients and staff. Keeping our clients and staff safe is our highest priority and we’re taking all appropriate measures to ensure a safe environment. Should you prefer to not meet face-to-face, we are continuing to serve our clients through virtual settings such as Zoom or phone calls.

We look forward to continuing to help individuals and families achieve their ideal retirements.

Senior Tax & Insurance Advisors, PLLC
(512) 833-6557

CLOSE

MOVING NON-IRA ACCOUNTS AND THE PROPOSED RMD REGULATIONS: TODAY’S SLOTT REPORT MAILBAG

By Sarah Brenner, JD
Director of Retirement Education

Question:

I am 79 and make SEP-IRA withdrawals annually as required.

I also have several regular (non-IRA) accounts. One fund I own throws off tremendous taxable capital gains every year. Is there any way I can move it into an IRA account without selling it first in a taxable transaction?

Thanks.

Answer:

There are several roadblocks to moving your non-IRA account to an IRA. The only way that funds can go into an IRA is if they are being rolled over from another IRA or from a qualified employer plan or if they are an IRA contribution. The account you are describing is not an IRA or a plan, so a rollover is off the table. IRA contributions must be based on earned income and must be made in cash. Therefore, even if you have earned income, you would not be able to contribute the non-IRA account, since it is considered property.

Question:

I heard Ed Slott speak a while ago at a webinar on the recent interpretation by the IRS of the 10-year rule, but wanted to make sure that I understood correctly as it pertains to a client of mine.

Client inherited a traditional IRA from his mother in 2020. She was already taking RMDs when she died in 2020 as she was in her 80’s.  My understanding is that our client needs to take ANNUAL RMDs since his mother had already started taking them.  In addition to the annual RMDs, he needs to make sure that the ENTIRE IRA is distributed by the end of the 10th year. Is this correct – annual RMDs required IN ADDITION TO complete distribution within ten years?

Also, assuming he does need to continue with her RMDs each year, which life expectancy table does he use to calculate his annual RMD each year?

Thank you in advance for any input you can provide on these questions.

Christie

Answer:

Hi Christie,

Your understanding is correct. The IRS really threw us a curveball here! Unexpectedly, the new proposed regulations are requiring annual required minimum distributions (RMDs) during the 10-year payout when the account owner dies after her required beginning date. The RMDs are calculated using the IRS Single Life Expectancy Table and are based on the beneficiary’s life expectancy.

https://www.irahelp.com/slottreport/moving-non-ira-accounts-and-proposed-rmd-regulations-todays-slott-report-mailbag

Ready To Take

THE NEXT STEP?

For more information about any of our products and services, schedule a meeting today.

Or give us a call at (512) 833-6557