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2015 IRA Distribution Being Rolled Over in 2016? Facts You Must Know
"Nothing prevents you from taking an IRA distribution in December of 2015 and rolling it over in January of 2016 as long as you follow the rollover rules that always apply. You will want to be especially careful of the 60-day rule for rollovers during this busy time of year.... Report the rollover for 2015.... Apply the one rollover-per-year rule correctly.... Add in the rollover when calculating your 2016 RMD." (Slott Report)
[Guidance Overview] IRS Regulatory Agenda, Fall 2015
IRS items in the Proposed Rule stage include: [1] Determination of Governmental Plan Status; [2] Deferred Compensation Plans of State and Local Governments and Tax-Exempt Entities; [3] Indian Tribal Governmental Plans; [4] Additional Rules Regarding Pension Plan Funding and Benefit Restrictions; [5] Requirements Relating to Pickup Arrangements Under Section 414(h)(2); [6] Eligible Combined Plan (under Code section 414(x) as added by the Pension Protection Act of 2006); [7] Section 280A Deduction Limitation Regulations; [8] Update to Minimum Present Value Requirements for Defined Benefit Plan Distributions; [9] Contributions of an Employer Under a Plan That Does Not Meet the Requirements of Section 401(a), including Application of Section 404(a)(5); [10] Guidance With Respect to FATCA Coordination; [11] Application of Section 409A to Nonqualified Deferred Compensation Plans; [12] Collectively Bargained Welfare Benefit Funds; [13] Guidance Under Section 125; [14] Spousal IRAs, SEPs and IRA Technical Changes; [15] Implementation of Windsor; [16] Reporting and Notice Requirements for Deferred Vested Benefits Under Section 6057; [17] Application of Normal Retirement Age Regulations to Governmental Plans; [18] Requirements for Employee Stock Ownership Plans; [19] Extension of Time to File Certain Information Returns; [20] Nondiscrimination Relief for Closed Defined Benefit Plans; [21] Election to Include in Income in Year of Transfer; [22] Updated Mortality Tables for Determining Present Value; [23] Minimum Value of Eligible Employer-Sponsored Health Plans; [24] Administration of Multiemployer Plan Participant Vote on an Approved Suspension of Benefits Under MPRA; and [25] Section 72(t) 10% Additional Tax Regulations.

IRS items in the Final Rule state include: [1] Accrual Rules for Defined Benefit Plans; [2] Determination of Minimum Required Pension Contributions; [3] Notice to Participants of Consequences of Failing to Defer Receipt of Qualified Retirement Plan Distributions, including Expansions of Applicable Election Period and Period for Notices; [4] Reporting and Notice Requirements for Deferred Vested Benefits Under Section 6057; [5] Modifications to Minimum Present Value Requirements for Defined Benefit Plan Distributions; [6] Regulations Explaining How to Compute Unrelated Business Taxable Income (UBTI) of Voluntary Employees' Beneficiary Associations (VEBAs); [7] Removal of Rollover Allocation Rule From Designated ROTH Regulations; [8] Minimum Value of Employer Sponsored Coverage; [9] Transition Rules Relating to the Market Rate of Return Requirements for Statutory Hybrid Plans; [10] Health Insurance Premium Tax Credit Additional Issues; [11] Health Insurance Provider's Fee; [12] Summary of Benefits and Coverage; [13] Suspensions of Benefits Under the Multiemployer Pension Reform Act of 2014; [14] Suspensions of Benefits Under the Multiemployer Pension Reform Act of 2014 (Temporary); and [15] Regulations Governing Organization of the Joint Board for the Enrollment of Actuaries.

An OCC item in the Proposed Rule stage is: "Incentive-Based Compensation Arrangements."

(Internal Revenue Service [IRS])
Creditors Can Reach Inherited IRA Under Kansas Law
"The court rejected [the IRA owner's] argument that the inherited IRA was originally a qualifying 'retirement plan,' finding that 'such a backward-looking interpretation would render meaningless the requirement that the funds presently be in a "retirement plan" (and not merely that they be in an account qualified under the particular sections of the tax code).' " [Mosby v. Clark, No. 15-915 (D. Kans. Oct. 30, 2015)] (Bloomberg BNA)
[Guidance Overview] U.S. Treasury Launches myRA (My Retirement Account) to Help Bridge America's Retirement Savings Gap
"People can get information about myRA and sign up for an account at myRA is now available nationwide with multiple ways for people to start saving: [1] Paycheck. Set up automatic direct deposit contributions to myRA through an employer. [2] NEW: Checking or savings account. Now savers can fund a myRA account directly by setting up recurring or one-time contributions from a checking or savings account. [3] NEW: Federal tax refund. At tax time, direct all or a portion of a federal tax refund to myRA." (U.S. Department of the Treasury)
[Official Guidance] Fact Sheet: Key Facts About myRA (PDF)
"Many people want to save, but haven't found an easy way to get started. According to a 2015 Federal Reserve Report, 31 percent of non-retired people said they have no retirement savings or pension whatsoever. The U.S. Department of the Treasury developed myRA to make it easy for people to start saving for the future.... myRA is a Roth IRA that could be a good fit for people who: [1] Don't have access to a retirement savings plan at work or lack other options to save; [2] Want to save but haven't found an easy way to get started; [3] Earn an annual income below $131,000 if single, or $193,000, if married filing jointly." (U.S. Department of the Treasury)
Whose Trust Should Be Named as Your IRA Beneficiary?
"One of the tax code requirements to allow a trust to use stretch distributions is that the trust be irrevocable or become irrevocable at death. If Peggy is the first to die, her trust will become irrevocable but Tom is still alive. His trust remains revocable. His trust will not be able to utilize stretch provisions. The reverse situation works out the same way.... Tom should name his trust as the beneficiary of his retirement accounts and Peggy should name her trust as the beneficiary of her retirement accounts." (Slott Report)
[Opinion] Associations Submit Comments to the Treasury on the Process for Transferring myRA Account Balances to Private Sector Roth IRAs (PDF)
"From a service provider perspective, there are inherent risks to having account balances defaulted when an account holder fails to provide instructions for a rollover, and there are certain factors that may make a Roth IRA provider unwilling to be selected to receive automatically transferred my RA account balances. Given these potential challenges, SIFMA, ABA, and FSR believe there are a number of issues Treasury should take into account before considering any default arrangement[.]" (Securities Industry and Financial Markets Association [SIFMA], American Bankers Association, and Financial Services Roundtable)
[Guidance Overview] 2016 COLA Adjustment Slightly Affects Limits for Certain IRAs and the Savers Credit
"Only some of the limits were changed from those that were in effect for 2015.... Individuals who are active participants are eligible to deduct their Traditional IRA contributions, only if their modified adjusted gross income (MAGI) amounts do not exceed certain limits ... Individuals may contribute to a Roth IRA only if their MAGIs do not exceed a certain amount ... A nonrefundable savers tax credit is available to eligible individuals who make contributions to their Traditional IRAs and/or Roth IRAs, as well as to those who make salary deferral contributions to an employer sponsored retirement plan." (Appleby Retirement Dictionary)
[Official Guidance] Text of IRS News Release IR-15-118: 2016 Pension Plan Limitations (PDF)
"In general, the pension plan limitations will not change for 2016 because the increase in the cost-of-living index did not meet the statutory thresholds that trigger their adjustment. However, other limitations will change because the increase in the index did meet the statutory thresholds. The highlights of limitations that changed from 2015 to 2016 include the following:

[1] For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the deduction is phased out if the couple's income is between $184,000 and $194,000, up from $183,000 and $193,000.

[2] The AGI phase-out range for taxpayers making contributions to a Roth IRA is $184,000 to $194,000 for married couples filing jointly, up from $183,000 to $193,000. For singles and heads of household, the income phase-out range is $117,000 to $132,000, up from $116,000 to $131,000.

[3] The AGI limit for the saver's credit (also known as the retirement savings contribution credit) for low- and moderate-income workers is $61,500 for married couples filing jointly, up from $61,000; $46,125 for heads of household, up from $45,750; and $30,750 for married individuals filing separately and for singles, up from $30,500."

[Full details of all tax-related cost-of-living adjustments for 2016 are available in Rev. Proc. 2015-53.]

(Internal Revenue Service [IRS])
Proposal Should Help States Duck ERISA, Borzi Says
"Proposed rules expected by the end of the year should help states that want to take an 'avoid ERISA' approach in developing and implementing their initiatives for expanding retirement coverage to private-sector workers, said Phyllis C. Borzi, assistant secretary for [EBSA].... The proposal will include a provision allowing certain types of payroll deductions for automatic enrollment individual retirement accounts -- or a safe harbor -- that 'more directly addresses some of the issues the states have raised with us,' because the current safe harbor in DOL regulations calls into question some of the things states have been doing, Borzi said." (Bloomberg BNA)
Required Minimum Distributions and the Roth Recharacterization Issue
"When you have an IRA required minimum distribution (RMD) for the year, you generally use the prior year-end IRA account balance to calculate the RMD. There are a couple of exceptions to this rule and Roth recharacterizations are one of them." (Slott Report)
The Right Way to Take IRA Withdrawals
"There is no tax advantage to taking your required minimum distribution (RMD) in one lump sum annually vs. installments throughout the year. But the timing of your distribution is important[.]" (Money)
Auto-Enroll IRAs Likely to Be Best for State-Run Retirement Plans
"The auto-enrollment IRAs are likely to be more successful with fewer potential challenges under [ERISA] ... MEPs, on the other hand, are ERISA-regulated, and can be 401(k) plans or accounts with features similar to 401(k)s that allow for employer contributions. However, if the states are allowed to offer MEPs, it's uncertain whether they could also require small businesses to offer their employees such plans, because the federal benefits law appears to prohibit states from mandating employers to offer an ERISA plan[.]" (Bloomberg BNA)
Roth IRA, Roth 401(k), Roth Solo K -- What's the Difference?
"Because investment gains in Roth accounts are tax-free, it can make sense to use one to hold assets that have the potential for significant increases in value. Younger investors can also benefit from Roth accounts because they have more time for their investments to grow in this tax-free environment. That said, there are some key differences among the various types of Roth accounts that retirement savers should understand[.]" (nerdwallet)
[Guidance Overview] IRA Aggregation Rule and Pro-Rata IRA Taxation
"Fortunately, ... the IRA aggregation rules do not apply when calculating substantially equal periodic payments (SEPP) under Section 72(t), reducing the danger that a withdrawal from one IRA could constitute a 'modification' of the ongoing 72(t) distributions from another that would trigger a retroactive penalty. However, even in the case of SEPPs, the IRA aggregation rules will still apply in determining how much of a 72(t) payment constitutes a tax-free return of non-deductible contributions!" (Michael Kitces in Nerd's Eye View)
[Opinion] The American Retirement System Needs a Plumber
"Everything is built so the pipes don't connect.... It took visits to three websites and two phone calls -- which were only answered during business hours -- before a letter and check were mailed from the 401(k) plan. Yes, that's a paper letter and check, sent through the U.S. Postal Service. Then, when the money finally arrived at the IRA provider, it took two more calls, totaling 23 minutes, before the firm was able to invest my money. The whole process took two full weeks, which happened to be an unlucky time to have my money out of the stock market. I missed a 6 percent rise in the Standard & Poor's 500 index and a 10 percent jump in emerging markets." (Bloomberg)
Sidestep a Tax Hit by Reconstructing IRA Basis
"Although Morles did not properly report his nondeductible IRA contribution, the court said he could prove that he had basis (after-tax funds) through other means. Furthermore, it indicated that there is nothing in the tax code that explicitly prevents an IRA owner from claiming basis that was not initially reported correctly. The court noted that Morles did not take a deduction for his IRA contribution at the time it was made. Accordingly, his $1,000 contribution for 2008 was a nondeductible IRA contribution that created basis." [Morles v. Comm., No. 2015-13, (T.C. Summary Opinion Feb. 23, 2015)] (On Wall Street)
Tread Very Carefully When Using Your IRA to Buy a Business
"Is it possible to thread the needle and set-up a complaint arrangement to fund a private business through a retirement plan? It is possible, but you have to be very, very careful not only with the initial set up but also with the continued operation of the business." (Benefits Law Group of Chicago)
The Most Important Piece of Information IRA Beneficiaries Must Know
"When you inherit an IRA, don't immediately take a distribution! By doing so, you may lose an important tax break, the ability to stretch required minimum distributions (RMDs) from the inherited IRA over your life expectancy and even have the RMDs continue to a successor beneficiary after your death. While there has been legislation proposed to eliminate the 'stretch' tax break for IRA beneficiaries, currently it still remains available and beneficiaries will want to know how to take advantage of it." (Slott Report)
Employee Asset Protection and State Auto-IRA Programs
"Any payroll based deposit program is subject to the vagaries of an employer's cash flow, and this will be a particularly acute problem in the small employer marketplace ... [Will] auto-IRA participants then would be left unprotected if ERISA doesn't apply? ... There is a variety of state law criminal and civil causes of actions which can be taken against bad acting employers who don't make timely deposit of auto-IRA [contributions]. But, almost surprisingly, there is the possibility that the DOL and the IRS still may have jurisdiction over these deposits under (of all things) the Tax Code's prohibited transaction rules-even if ERISA does not apply." (Business of Benefits)
IRA Asset Allocation in 2013, and Longitudinal Results from 2010 to 2013 (PDF)
"54.7 percent of the assets were in equities, 10.1 percent in balanced funds, 15.3 percent in bonds, 11.6 percent in money, and 8.4 percent in other assets ... When combining the equity share of balanced funds to the equity allocation, the total equity exposure of IRA owners was 60.7 percent of the assets.... For IRAs owned by those ages 25 or older, the percentage allocated to bonds increased with the age of the owner ... The percentage of IRA assets in equities had no clear pattern across the ages of the owners." (Employee Benefit Research Institute [EBRI])
The Smartest Reason to Max Out Your 401(k) and IRA Contributions
"Even if you're found liable for a multi-million dollar legal claim, the opposing party can't touch your 401(k) -- except, that is, when the creditor is either a former spouse or the IRS. Individual Retirement Accounts, or IRAs, don't offer the same level of protection, but they, too, provide some shelter from creditors." (The Motley Fool, via USA Today)
Evaluate a Potential IRA Trustee Using These 15 Questions
"In most cases, an IRA owner who names a trust as the beneficiary of their IRA names either the spouse or a child as the trustee of the trust. This may not be the best option, especially if they cannot answer the 15 questions [in this article]." (Slott Report)
What Goes In Your IRA? None of Your Small Business!
"For many years, optimistic promoters have helped IRA owners establish businesses inside their IRAs and averred that such businesses could pay the IRA owner 'reasonable compensation' without causing any problem. ERISA and the prohibited transaction rules were enacted in 1974. Why did it take 39 years to find out that this assertion was erroneous, at least according to the Tax Court?" (Morningstar Advisor)
[Opinion] Testimony of ICI to House Subcommittee Hearing: 'Preserving Retirement Security and Investment Choices for All Americans'
"[S]upporters of the proposal claim that retirement savers are suffering $17 billion a year in harm due to broker-provided advice. This claim is false -- an exercise in storytelling.... [T]he Department ignores the significant societal harm that its proposed rule would cause. Its economic analysis takes no account of the costs the rule would impose on investors by forcing them to move from commission-based advice to fee-based accounts.... The Department also ignores the harm that investors with small accounts will suffer when they lose access to advice.... [T]he Department's overly expansive and ambiguous fiduciary definition will impede commonplace interactions that retirement savers now take for granted.... [T]he Department's 'Best Interest Contract' exemption will not mitigate the harm caused by this expansive and ambiguous fiduciary definition." [Also available: ICI written statement.] (Investment Company Institute [ICI])
[Guidance Overview] DOL Q&As on 'Small IRA Savers' and the Proposed Conflict of Interest Rule (PDF)
"Who are small IRA savers? ... How do conflicts of interest impact low- and middle-income small savers? ... How do low- and middle-income small savers receive advice in the existing IRA market? ... Will small savers still be able to receive retirement and investment education under the new rule? ... Will the new rule prevent advisers from providing financial advice to small savers? ... How will small savers benefit from the new rule?" (Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL])
Fewer People Pay IRA Early Withdrawal Penalty
"The number of people paying the penalty for early withdrawals from their retirement account has declined significantly over the past five years from 1.2 million in 2009 to 690,780 in 2013. And the amount paid in penalties has been cut in half from $456 million in 2012 to $221 million in 2013 ... People whose adjusted gross income is between $50,000 and $75,000 and those earning from $100,000 to $200,000 were the most likely to take early withdrawals from their retirement accounts[.]" (U.S. News & World Report)
[Guidance Overview] Proposed IRS Regs Would Update and Clarify the Penalty for Nondisclosure of Reportable Transactions
"The proposed regulations ... clarify the phrase 'decrease in tax' [1] as reflecting the difference between the amount of tax reported on the filed return and a hypothetical return without the reportable transaction, taking into account 'adjustments that result mechanically from backing out the reportable transaction' and [2] as including 'any other tax that results from participation in the reportable transaction but was not reported on the taxpayer's return,' such as an excise tax on excess individual retirement account contributions." (The Tax Adviser)
Some Variable Annuities Could Disappear From IRAs
"Variable annuities (VAs) with no income guarantees will 'probably be eliminated' from [IRAs] under the [DOL's] proposed conflict of interest rule, [Ryan Krueger, head of U.S. life insurance research for Keefe, Bruyette & Woods] said.... 'We'll take a look at it, we'll adjust, we'll adapt, we'll find a path forward and ... I really believe that what's going to continue to happen is market share is going to continue to move from second- and third-tier providers to first-tier providers,' said Larry D. Zimpleman, chairman and CEO of Principal Financial." (
[Official Guidance] Text of IRS Proposed Regs: Reportable Transactions Penalties under Section 6707A
"This document contains proposed regulations that provide guidance regarding the amount of the penalty under section 6707A ... for failure to include on any return or statement any information required to be disclosed under section 6011 with respect to a reportable transaction. The proposed regulations are necessary to clarify the amount of the penalty under section 6707A, as amended by the Small Business Jobs Act of 2010. The proposed regulations would affect any taxpayer who fails to properly disclose participation in a reportable transaction." (Internal Revenue Service [IRS])
Roth Conversion in Market Downturn: Heads You Win, Tails The Government Loses!
"When you execute a Roth IRA conversion, you pay tax on the fair market value of the assets that you convert. A few weeks ago, your IRA may have been worth $100,000, so converting it completely would have added another $100,000 to your income tax bill. Now, however, that account may be worth only $80,000. As a result, converting now as opposed to two weeks ago could save you about 20% on your tax bill." (Slott Report)
Post-Employment 401(k) Rollovers: Questions HR Should Ask
"Before the DOL issues its final rule, now may be an ideal time for plan sponsors to more formally review their position regarding terminated plan participants.... [T]here are three questions in particular that sponsors may want to address ... [1] What currently happens when a plan participant terminates from service? ... [2] What is the plan sponsor's preference regarding whether terminated participants leave their money behind in the plan or roll their balances to a new plan or IRA? ... [3] Are the plan design and employee education offerings currently aligned with the company's goals?" (Society for Human Resource Management [SHRM])
[Guidance Overview] Recent IRS Guidance on Plan (and IRA) Distributions (PDF)
"Participants and plan sponsors should be aware that the IRS recently issued several pieces of guidance affecting qualified plans and IRA distributions. First, the IRS issued Notice 2014-54, which provides favorable guidance on plan distributions to multiple destinations. It allows a participant to directly roll over pre-tax funds to a traditional IRA, while taking the after-tax or Roth amounts in cash (or rolling to a Roth IRA). Second, the IRS issued Notice 2014-74, which replaces the existing safe harbor rollover notices set forth in Notice 2009-68. Third, the IRS issued Announcement 2014-32, that imposes an aggregate one-per-year rule for all indirect rollovers between IRAs following the surprising Tax Court decision in Bobrow v. Comm'r. [This article takes] a closer look at each in turn[.]" (Groom Law Group)
How Rolling Over Your 401(k) to an IRA Can Increase Your Tax Bill
"[O]ne trap you can step into with regards to the Back-Door Roth IRA strategy -- or any Roth IRA conversion for that matter -- is when you 'cross streams' by rolling plan money into an IRA in the same year you make a Roth IRA conversion.... If you convert the entire IRA, you will not owe any tax, since the plan assets are excluded from the IRA pro-rata formula, and your IRA was all after-tax money.... [L]et's say you change jobs mid-year. Believing you'd be better off in an IRA than with your 401(k), you roll your 401(k) to an IRA. Bang! You just increased your tax bill for the year by several thousand dollars." (Slott Report)
IRA Required Minimum Distribution Worksheet: Younger Spouse as Beneficiary (PDF)
"If your spouse is the sole beneficiary of your IRA and he or she is more than 10 years younger than you, use this worksheet to calculate this year's required withdrawal for your traditional IRA." (Internal Revenue Service [IRS])
IRA Required Minimum Distribution Worksheet (PDF)
"IRA Required Minimum Distribution Worksheet: Use this worksheet to figure this year's required withdrawal for your traditional IRA unless your spouse is the sole beneficiary of your IRA and he or she is more than 10 years younger than you." (Internal Revenue Service [IRS])
Making a 'Backdoor' Roth IRA Contribution While Avoiding the IRA Aggregation Rule and the Step Transaction Doctrine
"Perhaps the greatest caveat to the backdoor Roth contribution strategy, though, is the so-called 'step transaction doctrine', which allows the Tax Court to recognize that even if the individual contribution-and-conversion steps are legal, doing them all together in an integrated transaction is still an impermissible Roth contribution for high-income individuals to which the 6% excess contribution penalty tax may apply. Fortunately, though, the step transaction doctrine can be navigated, by allowing time to pass between the contribution and subsequent conversion ... But perhaps the easiest way to avoid the step transaction doctrine is also the simplest ... stop calling it a backdoor Roth contribution in the first place!" (Michael Kitces in Nerd's Eye View)
How NOT to Invest in an Alternative Investment in Your IRA
"The IRA owner wanted to invest his IRA funds in a note, the debt of an unrelated party.... [He] took distributions from two of his IRAs and threw in $100,000 of his own money and closed on the note.... [He] ends up with only one note ... titled in the name of his IRA.... What are his problems? ... [1] Titling an asset in the name of your IRA does not make it an IRA asset. Only an IRA custodian can hold an IRA asset. He cannot move the note into an IRA. [2] When you take a distribution of cash from an IRA it can only be replaced with cash. You must rollover what you took out. [3] Because of the IRA one-rollover-per-year rule, he can only rollover one of his distributions." (Slott Report)
[Guidance Overview] Salvaging the Benefits of a Spousal Rollover When the Beneficiary Designation Is Wrong
"Two recent private rulings confirm ... that a spousal rollover often can be salvaged even when the decedent did not properly designate the spouse as beneficiary. The IRS will still allow a rollover if the spouse can dictate all the actions necessary to cause the account to be paid to him or her." (Schiff Hardin)
Hearings on Proposed Conflict of Interest Regs Kick Off in Washington
"There is perhaps no better venue than a marathon Labor Department hearing to show what practices and beliefs most divide an industry.... Marilyn Mohrman-Gillis, CFP Board managing director of public policy and communications ... argued against the common industry conjecture that the new fiduciary rule, as written, would severely challenge the commissioned-based broker/dealer business model and force advisers into fee-based models that will be may be more expensive for consumers.... Citing figures from the U.K., where related conflict of interest rulemaking was debated and adopted, [Nick Lane, chairman of the board of directors for the Insured Retirement Institute] predicted up to 25% of advisers 'could leave the industry within the first year of implementation of this rule.' " (PLANSPONSOR)
An Analysis of Variable Annuity Surrender Fees (PDF)
"For this sample of contracts, the average surrender fee paid on any withdrawal is less than 1% of the surrendered amount. The median surrender fee paid as a percentage of the amount withdrawn was zero. The account at the 75th percentile also paid zero surrender fees. The average surrender charge on any surrender (partial or full) is 0.8%.... Of the accounts with surrenders, approximately ... 70% are IRA accounts." (American Council of Life Insurers [ACLI])
Even Casual Conversations Might Trigger Application of Fiduciary Rule to Fixed Annuity Advisors
"When agents talk to clients about fixed annuities, it's a bit like a first or second date. The conversation, filled with highs and lows and fast and slows and ebbs and flows, sometimes moves quickly and at other times lurches to a halt. But now the DOL is asking agents to sign the equivalent of a prenup outlining the parameters of the fiduciary responsibility and where commissions are coming from. For sellers of fixed annuities ... this isn't how annuity conversations take place. Agents don't sit across the table and robotically run through their clients' 'financial Miranda' rights." (
New ACL Program to Improve Education and Financial Literacy Regarding Rollover of Retirement Accounts
"ACL's National Resource Center on Women and Retirement Planning -- operated by the Women's Institute for Secure Retirement (WISER) -- is partnering with the Retirement Clearinghouse (RCH) on a pilot to effectively reach and educate low- and moderate-income workers about the importance of rolling over their retirement savings in order to prevent adverse consequences common in today's mobile workforce. RCH has the means and technology to automatically transfer small plan balances from a worker's current plan into their next employer plan.... If fully taken to scale, it is estimated to keep over $1 trillion in retirement accounts for American workers over the next ten years." (Administration for Community Living)
Market Gains Drive Retirement Balances Higher But Too Much Stock Could Put Savings at Risk
"While a rising stock market is one reason the average 401(k) balance is up 50 percent in the last five years, this has led to an increased percentage of equities within many 401(k) accounts, which can add increased exposure to the negative impact of a market downturn.... 18 percent of people 50-54 had a stock allocation at least 10 percentage points or higher than recommended, and for people ages 55-59, that figure increased to 27 percent. An additional 11 percent of people ages 50-54 had 100 percent of their 401(k) assets in stocks, while 10 percent of people ages 55-59 had all of their 401(k) assets in stocks." (Fidelity)
How Safe from Creditors Is Your 401(k) Money If You Roll It to an IRA?
"What happens ... if you move those ERISA-protected 401(k) funds to an IRA? Does the protection you had in your 401(k) follow along? Here's where it can start to get a little complicated, because we actually have to split out your creditor protection into two distinct categories: creditor protection in bankruptcy and creditor protection in a non-bankruptcy event." (Slott Report)
Roth IRA Investors' Activity, 2007-2013 (PDF)
88 pages. "First available in 1998, Roth individual retirement accounts (IRAs) had accumulated more than $500 billion in assets by year-end 2014.... Forty-five percent of consistent Roth IRA investors aged 24 or older in 2013 contributed to their Roth IRAs between tax year 2008 and tax year 2013, and more than three-quarters of them contributed in multiple year ... Roth IRA investors tend to be younger than traditional IRA investors. At year-end 2013, 31 percent of Roth IRA investors were younger than 40, compared with 15 percent of traditional IRA investors. Only 24 percent of Roth IRA investors were 60 or older, compared with 38 percent of traditional IRA investors. This younger age distribution reflects the rules governing access to Roth IRAs, including income limits on contributions and (until 2010) on conversions, as well as the historically limited scope for rollover activity." (Investment Company Institute [ICI])
What to Do If You Discover You Weren't Eligible to Make That 2015 Roth IRA Contribution
"First and foremost, you will have to remove the funds from the Roth IRA. You have three options. Recharacterization ... Excess contribution ... Carry forward." (Slott Report)
[Guidance Overview] Reminder: One-Rollover-Per-Year Rule for IRAs Began in 2015
"[B]eginning this year, you can make only one rollover from an IRA to another (or the same) IRA in any 12-month period, regardless of the number of IRAs you own.... The one-rollover-per-year limitation is applied by aggregating all of an individual's IRAs, including SEP and SIMPLE IRAs, as well as traditional and Roth IRAs, effectively treating them as one IRA for purposes of the limit." (EisnerAmper)
Dealing with Foreign Persons and Retirement Accounts in the Global Economy
"[F]oreign beneficiaries have the same options as any other beneficiary. They can stretch distributions or take a distribution in full. Spouse beneficiaries can move inherited funds into an IRA in their own name. What account owners and beneficiaries cannot do is move foreign retirement accounts to U.S. retirement accounts and vice versa." (Slott Report)
Deathbed Roth Conversions and the IRD Deduction
"[W]hile the [income in respect of a decedent (IRD)] deduction does shelter against Federal estate taxes, deathbed Roth conversions can still be relevant to protect against state estate taxes. Though in either case, the greatest driver of the outcome is not actually the IRD deduction or minimizing state estate taxes at all, but trying to shift the timing of when the IRA is recognized for tax purposes, so that the income taxes are paid at whichever rate is lower -- either the IRA owner now, or the rate the beneficiaries would pay by simply inheriting the pre-tax IRA and stretching it out in the future!" (Michael Kitces in Nerd's Eye View)
IRA Withdrawals in 2013 and Longitudinal Results, 2010-2013 (PDF)
"Just over 22 percent of individuals who owned a Traditional or Roth [IRA] took a withdrawal in 2013. The overall IRA withdrawal percentage was largely driven by activity among individuals ages 70-1/2 or older owning a Traditional IRA ... [A]mong individuals under age 60, 10 percent or fewer had a withdrawal. For those at the RMD age, the withdrawal rates at the median appeared close to the amount that was required to be withdrawn, though some were significantly more.... Among those ages 70 or older, withdrawal rates over a four-year period showed that most individuals were withdrawing at a rate that was likely to be able to sustain some level of post-retirement income from IRAs as the individual continued to age." (Employee Benefit Research Institute [EBRI])
Treasury Inspector General Report: IRS Should Notify and Educate Taxpayers About Required Minimum Distributions from IRAs
"TIGTA recommended ... [1] directly communicating with taxpayers required to take a distribution and informing them about the distribution rules, using easily understood language; and [2] if the notice program is expanded, modifying the methodology for the required minimum distribution notices to identify additional noncompliant individuals.... IRS officials partially agreed ... However, due to budget limitations, the IRS is not expanding its use of notices. In addition, the IRS agreed that direct communication with taxpayers reaching the age of 70-1/2 would be helpful, but it is not implementing this program due to budget constraints. The IRS did not agree to inform estates of distribution rules associated with IRA inheritances." [Dated May 29, 2015; released July 15, 2015.] (Treasury Inspector General for Tax Administration [TIGTA])
Investor Activity in Traditional IRAs, 2007-2013 (PDF)
76 pages. "Despite dramatic declines in stock values between October 2007 and March 2009, a recession (December 2007 to June 2009), and rising unemployment rates, traditional IRA investors with accounts from year-end 2007 through year-end 2013 showed little reaction to the financial events.... Traditional IRA investors' allocation to equity holdings fell, on average, although some of the change merely reflects market movement rather than investors' rebalancing.... Although account balances fell considerably following the stock market decline in 2008, the average traditional IRA balance for traditional IRA investors aged 25 to 69 with account balances in all years between 2007 and 2013 was significantly higher at year-end 2013 than at year-end 2007." (Investment Company Institute [ICI])
Nibbling at Roth Conversions
"Since few want to swallow the elephant all at once, yet ownership of a Roth IRA is highly desirable, we must help clients look for ways to take small bites: ... Here are examples of the types of planning opportunities we should keep an eye out for: The 'backdoor' Roth conversion.... Use up temporary losses, deductions, AMT brackets.... Direct aftertax plan distributions to a Roth IRA.... Contribute to a Roth rather than a deductible traditional IRA.... Convert enough to reach, but not exceed, the next income tax bracket.... Convert to avoid expected future higher tax rates.... Don't forget state taxes! ... What else are you going to spend the money on?" (Morningstar Advisor)
[Guidance Overview] IRS Retirement News for Employers, September 30, 2015
Includes links to IRS information: [1] Set up a retirement plan; [2] IRS video on low-cost, low-maintenance, SEP, SIMPLEs and Payroll Deduction IRAs; [3] Deadlines for adopting 401(k), profit-sharing or other defined contribution pre-approved retirement plans; [4] Required minimum distributions; [5] Fix your 403(b) plan mistakes; [6] Form 5500-EZ Instructions; [7] Upcoming retirement plan deadlines; and [8] 401(k) plan loans. (Internal Revenue Service [IRS])
The Threat to Small Business Retirement Savings
Infographic. "Stretching its current regulatory authority over employer-provided retirement plans, the [DOL has] proposed ... a new regulatory package that would put DOL in charge of financial advice provided to all [IRAs] as well as to all private-sector, employer-provided retirement plans. This regulatory expansion would change the rules governing how financial advice is provided to roughly $15 trillion in retirement savings ... Unsurprisingly, this kind of sweeping change would result in a lot of unintended consequences." (U.S. Chamber of Commerce)
[Guidance Overview] Fiduciary Advice Proposal Signals a Fundamental Shift in DOL's Regulatory Method (PDF)
"The DOL's fiduciary proposal represents a fundamental shift in the Department's approach to regulating the retirement services industry... [T]he Department has chosen to reformulate the definition of fiduciary to encompass numerous types of sales activities that are clearly non-fiduciary in nature under current law.... The 'principles-based' approach utilized in [the best-interests contract] exemption may be a model for how the DOL sees the 'next generation' of class exemptions... And finally, the proposal represents a dramatic shift by the Department toward the regulation of the IRA rollover marketplace." (Groom Law Group)
Retirement Assets Total $24.9 Trillion in First Quarter 2015
"Retirement assets accounted for 36 percent of all household financial assets in the United States at the end of the first quarter of 2015.... Assets in individual retirement accounts (IRAs) totaled $7.6 trillion at the end of the first quarter of 2015, an increase of 2.1 percent from the end of the fourth quarter. Defined contribution (DC) plan assets rose 1.8 percent in the first quarter to $6.8 trillion. Government defined benefit (DB) plans-- including federal, state, and local government plans -- held $5.1 trillion in assets as of the end of March, a 0.5 percent decrease from the end of December. Private-sector DB plans held $3.2 trillion in assets at the end of the first quarter of 2015[.]" (Investment Company Institute [ICI])
[Guidance Overview] Summary of DOL Regulatory Package Redefining Fiduciary Advice and Proposing or Amending Prohibited Transaction Class Exemptions (PDF)
6 pages. "There is still a considerable amount of debate over the meaning and impact of the Proposal, and a key area of uncertainty is exactly how the rollover provisions in the proposal are intended to operate. As a high-level summary, this [article] does not address all of the literally hundreds of issues being discussed, but it does provide a general overview of the expanded definition and the key prohibited transaction class exemption, the Best Interest Contract Exemption (BICE)." (U.S. Chamber of Commerce)
[Guidance Overview] Beneficiaries Need to Understand the 'Income in Respect of a Decedent' Deduction
"[T]he Internal Revenue Code allows for an 'Income in Respect of a Decedent' (IRD) deduction under Section 691(c). Claimed by the beneficiary of an inherited IRA to the extent of any estate taxes that were caused by the account, the deduction can be material -- as much as 40% of the value of the account! Yet despite its size, beneficiaries in practice often 'miss' the IRD deduction ... And notably, in the end the IRD deduction applies not only to inherited IRA accounts, but also other employer retirement plans, inherited non-qualified annuities, employer non-qualified stock options, deferred compensation, employer NUA stock, and more!" (Michael Kitces in Nerd's Eye View)

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