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Summary of President's FY2017 Budget Proposal
"[T]he proposals provide some indication of what could be on the chopping block, should any legislation happen to be going through Congress that needs a 'revenue offset' to cover its cost. Key provisions that could be changed in the future include: [1] Elimination of back door Roth IRA contributions ... [2] Introduce Required Minimum Distribution obligations for Roth IRAs ... [3] Elimination of Stretch IRA rules for non-spouse beneficiaries ... [4] Limit new IRA contributions for large retirement accounts (over $3.4M) ... [5] Repeal of net unrealized appreciation rules for employer stock in an employer retirement plan." (Michael Kitces in Nerd's Eye View)
Navigating the Rollover as Business Start-Up (ROBS) Strategy
"The lack of ERISA attention, along with the IRS's retirement plan concern that people are possibly throwing their career-long savings away to a businesses that fails ... appear to make these [qualified employer securities (QES)] transactions somewhat risky. It should be noted however that, while the IRS has expressed concern over the QES financings as recently as late 2015, the agency does not find the transaction as non-compliant." (Jackson Lewis P.C. via Lexology)
[Opinion] The Fiduciary's Duty of Care for QRP Rollovers to IRAs
"The IRA rollover decision is a complex one, and it deserves the scrutiny of an expert adviser operating under the fiduciary standard of conduct. Instead of the representative of a mutual fund company, brokerage firm, or insurance company, automatically stating: 'Yes, rollover that IRA with us,' the reply should be: 'Let's examine your circumstances, so that we may advise you to undertake the actions that are most prudent for you.' " (Ron Rhoades)
Working with a Financial Advisor Doubles Retirement Preparedness
"70 percent of those who work with a financial advisor are on track or ahead in saving for retirement, versus 33 percent of those not working with an advisor. Among people who have an advisor, more than a third had determined how much to save for retirement and half had contributed to an IRA; for people without an advisor, only 14 percent knew how much they'd need for retirement and 16 percent had contributed to an IRA[.]" (John Hancock)
Roth IRA Conversions and the Pro-Rata Rule
"The pro-rata calculation is not based on the balances in your IRAs on the date of the conversion. The account balance used is as of year-end of the year of the transaction. This means that you generally should not roll over employer retirement plan balances in the same year you do a Roth conversion. They will be included in the pro-rata calculation and will skew the results." (Slott Report)
To Roth, or Not to Roth? (PDF)
"Many alleged mathematical analyses have been published ... which incorrectly claim Roth 401(k)s to be superior. It's easy to see why we were fooled. In 20 years the Roth accumulates to an amount over 10% higher than the traditional.... This analysis is flawed because the creators erroneously assume that the two options have equal financial outlays. They do not! ... Because the Roth starts with almost 10% more value, voila it ends up that way." (Ekon Benefits)
New IRA Private Letter Ruling Fee: $10,000
"[F]or many years the IRS has offered 'bargain' PLR rates for certain requests; namely, requests for late 60-day rollovers and late recharacterization requests. For years, late recharacterization requests were 'just' $4,000, while late 60-day rollover requests were as low as $500 in some cases. But all of that is going to change on February 1, 2016, when these bargain rates go away and the PLR fee for all IRA-related rulings becomes $10,000." (Slott Report)
[Official Guidance] Text of 2016 IRS Instructions for Forms 1099-R and 5498: Distributions from Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, Etc., and IRA Contribution Information (PDF)
24 pages. "What's New: FATCA filing requirement check box ... New early distribution exceptions.... Extension of tax-free distributions from IRAs for charitable purposes." (Internal Revenue Service [IRS])
[Official Guidance] Text of 2015 IRS Publication 590-A: Contributions to Individual Retirement Arrangements (IRAs) (PDF)
62 pages. "What's New for 2015: [1] Modified AGI limit for traditional IRA contributions increased.... [2] Modified AGI limit for Roth IRA contributions increased.... [3] Application of one-rollover-per-year limitation ... [4] Rollovers to SIMPLE Retirement Accounts." (Internal Revenue Service [IRS])
2016: The Year of the Fiduciary Rule
"[T]he impact on retirement plan sales and advice may be less than is commonly expected. However, the impact on advice and sales to IRAs will be nothing short of revolutionary. Similarly, the 'capturing' of IRA rollovers, through recommendations to participants to take distributions, will be dramatically affected." (
Another ROBS Gone Wrong: IRS Disqualifies ESOP
"The largest issue appears to relate to a failed rollover from Dr. Fleming's individual retirement account (IRA) in the amount of $408,543.00. Fleming alleged that this was rolled over into the ESOP and that the ESOP used the rollover funds to purchase 48.06 shares in 2005. Unfortunately, the ESOP never established a bank or brokerage account in 2004 or 2005 so there was no evidence of the receipt of a valid rollover from Fleming or his IRA custodian." [Fleming Cardiovascular Inc. v. Comm'r, No. 10776-13R (T.C. Memo Nov. 23, 2015)] (Stinson Leonard Street)
Make Your Retirement Nest Egg Last Longer by Leaving It in Your 401(k)
"Freedom of choice can feel like more of a burden than a benefit when figuring out what to do with a 401(k) after leaving a job or retiring. Do you let it stay at your old company (if an ex-employer lets you), roll it into a new company's plan, or stash it in an IRA? ... A recent study found that defined contribution plans such as 401(k)s had higher long-term investment returns than IRAs [and] had an average geometric return of 3.1 percent from 2000 to 2012 ... A lot of money in 401(k)s ... gets rolled over into IRAs, which had a return of 2.2 percent. Part of the reason for those lower returns is probably due to the 11 percent of assets that traditional IRAs ... had in money market funds; [DC] plans had about 4 percent in the funds." (Bloomberg)
President Obama Approves Consolidated Appropriations Act with Key Employee Benefits Provisions
"In addition to the Cadillac Plan Tax delay and the Section 9010 Fee suspension, the Consolidated Appropriations Act included a host of other benefits-related changes ... including: [1] Permanent parity between employer-sponsored mass transit and parking transportation fringe benefits; [2] Permanent allowance of tax-free distributions from [IRAs] for charitable purposes; [3] A safe harbor for de minimis errors on information returns, payee statements and withholding; [4] Relief for rollovers from retirement plans into SIMPLE retirement accounts; and [5] Clarification of certain tax-related church plan provisions." (Sutherland Asbill & Brennan LLP)
[Official Guidance] Text of 2015 Instructions for IRS Form 8606: Nondeductible IRAs (PDF)
Dated Dec. 18, 2015; published online Jan. 4, 2016. "What's New: Modified AGI limit for Roth IRA contributions increased.... Due date for contributions." (Internal Revenue Service [IRS])
[Official Guidance] Text of 2015 Instructions for IRS Form 5329: Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts (PDF)
8 pages, revised Dec. 30, 2015. "Part II was revised to include the tax on the amount of any distribution from an ABLE account that is included in the gross income of the distributee. Also, new Part VIII was added to reflect the tax on excess contributions to an ABLE account. For more information on ABLE accounts, see Pub. 907, Tax Highlights for Persons with Disabilities." (Internal Revenue Service [IRS])
[Guidance Overview] Year-End Tax and Spending Legislation Includes Employee Benefits Provisions (PDF)
"The PATH Act extends numerous tax provisions that expired at the end of 2014, with extensions varying from two years (2015 and 2016) to permanent extensions. The combined 2,000+ page legislation contains a miscellany of employee benefits provisions. Highlights include a permanent extension of transit and parking benefit parity, retroactive to the beginning of 2015. In addition, the 40 percent excise tax on so-called 'Cadillac health plans' is delayed for two years and is also made deductible." (Alston & Bird LLP)
Required Minimum Distributions from Inherited IRAs
"Since an IRA and an Inherited IRA have different RMD calculations, they may not be rolled into the same portfolio. Similarly, if you inherit IRAs from two different people, they will each have their own RMD schedules and will need to be held in separate accounts." (Manning & Napier)
How to Meet the 2015 IRA Contribution Deadline
"For most people, IRA contributions for tax-year 2015 are due by April 18, 2016. The tax deadline was pushed back nationwide due to the Emancipation Day holiday in the District of Columbia. However, residents of Maine and Massachusetts have until April 19, 2016 to make 2015 IRA contributions due to the Patriots' Day holiday celebrated in those states." (U.S. News & World Report)
[Guidance Overview] Tax Bill Makes IRA Qualified Charitable Distribution Option Permanent (PDF)
"While the general tax deduction for charitable donations is limited to a percentage of income, QCDs offer full tax exemption of the amount donated, up to the annual ceiling of $100,000 per taxpayer. Thus, a married couple could potentially donate up to $200,000 per year of IRA assets tax-free. Charitable distributions from the IRA are required to be paid directly to the organization, with no constructive receipt by the IRA owner or beneficiary." (Ascensus)
Congress Passes 2015 Tax Extenders With PATH Act
"Unlike past tax extenders legislation, though, this time many of the provisions are permanently renewed. From the popular qualified charitable distribution (QCD) rules for making charitable contributions from an IRA for those over age 70-1/2, to the American Opportunity Tax Credit for college, and the deduction for state and local sales taxes, this will be the last time that these key tax planning provisions remain in an end-of-year limbo! ... The legislation also includes a few new 'tweaks', from a slight expansion of how qualified distributions from section 529 plans can be used, to the elimination of in-state-plan requirement for the coming new 529-ABLE plans for disabled beneficiaries." (Michael Kitces in Nerd's Eye View)
Four Mistakes to Avoid When Tapping an IRA to Pay Education Expenses
"[1] Only post-secondary expenses are considered to be qualified higher education expenses.... [2] A qualified higher education expense must be a required expense ... [3] [T]he education expense and the IRA distribution must occur in the same year.... [4] The exception to the early distribution penalty for higher education only applies to distributions from your IRA, not distributions from your company plan." (Slott Report)
Planning for the Dementia Factor in Retirement: Options to Consider If an IRA Beneficiary May Develop a Mental Disability
"John wants to name his wife Susan as the primary beneficiary of his IRA and to name their children as contingent beneficiaries. The expectation is that, upon John's death, Susan, as surviving spouse-beneficiary, would roll the IRA over into her own IRA, and name the children as beneficiaries of the rollover IRA. But both spouses are concerned that following John's death Susan might have dementia, and not be legally competent to roll over the inherited IRA or file a new beneficiary designation. Is there a way that Susan can, now, prior to John's death, pre-elect the spousal rollover and name the children as beneficiaries of her (not yet created) rollover IRA? If that cannot be done, can John at least designate that benefits still in his IRA after Susan's death will pass to their children?" (Natalie Choate, in Morningstar Advisor)
Using Systematic Partial Roth IRA Conversions and Recharacterizations to Fill the Lower Tax Bracket Buckets
"[N]ot only is a 'partial' Roth conversion permitted, but in practice it's often the optimal strategy, allowing retirement account owners to convert just enough to fill the lower tax brackets, without causing 'too much' income that would trigger the top tax brackets. In fact, the Roth recharacterization rules make it feasible to precisely fill the bottom tax brackets, but not a dollar more, by converting more than enough to fill the lower tax brackets each year, and then doing a partial recharacterization to back into the optimal partial Roth conversion amount after the year is over!" (Michael Kitces in Nerd's Eye View)
Eight Things to Know About a Special Spousal Rule That Allows Smaller RMDs
"If your spouse is your sole beneficiary for 2015 and is more than 10 years younger than you, you may use the Joint Life Expectancy Table to calculate your RMD for 2015, instead of the Uniform Lifetime Table.... If you have more than one primary beneficiary listed on your IRA, you must use the Uniform Table and not the Joint Life Expectancy Table.... If you change beneficiaries during the year, you may not use the Joint Life Expectancy Table.... Your IRA custodian ... is permitted to use the Uniform Lifetime Table for all reporting of RMDs to IRA owners. Be aware that an amount reported to you may, therefore, be more than your actual 2015 RMD." (Slott Report)
Don't Overlook Foreign Tax Withholding in IRAs and 401(k)s
"Many foreign governments mandate the withholding of income taxes from dividend payments made to non-residents.... [If] you hold the foreign equity in a tax-deferred account, there is no current U.S. income tax liability on those dividends, therefore you cannot take a credit for the foreign tax withholdings. In addition, the IRS regards your IRA (or 401(k)) as a separate entity (separate from you as an individual taxpayer) ... Bottom line: You can usually consider any foreign taxes withheld from your IRA/401(k) dividends as permanent, unrecoverable losses." (Seeking Alpha; free registration may be required)
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])

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