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[Official Guidance] Text of IRS Announcement 2016-39: Retirement Plan Distribution Relief for Victims of Hurricane Matthew (PDF)
"[A] qualified employer plan will not be treated as failing to satisfy any requirement under the Code or regulations merely because the plan makes a loan, or a hardship distribution for a need arising from Hurricane Matthew, to an employee or former employee whose principal residence on October 4, 2016, (October 3, 2016, for Florida) was located in one of the counties identified for individual assistance by [FEMA] because of the devastation caused by Hurricane Matthew or whose place of employment was located in one of these counties on that applicable date or whose lineal ascendant or descendant, dependent, or spouse had a principal residence or place of employment in one of these counties on that date. These counties identified for individual assistance by FEMA are in Florida, Georgia, North Carolina and South Carolina and can be found on FEMA's website ...

"Plan administrators may rely upon representations from the employee or former employee as to the need for and amount of a hardship distribution, unless the plan administrator has actual knowledge to the contrary, and the distribution is treated as a hardship distribution for all purposes under the Code and regulations ...

"[A] 'qualified employer plan' means a plan or contract meeting the requirements of Section 401(a), 403(a) or 403(b), and ... a plan described in Section 457(b) maintained by an eligible employer described in Section 457(e)(1)(A), and any hardship arising from Hurricane Matthew is treated as an 'unforeseeable emergency' for purposes of distributions from such plans....

"To make a loan or hardship distribution pursuant to the relief provided in this announcement, a qualified employer plan that does not provide for them must be amended to provide for loans or hardship distributions no later than the end of the first plan year beginning after December 31, 2016. To qualify for the relief under this announcement, a hardship distribution must be made on account of a hardship resulting from Hurricane Matthew and be made on or after October 4, 2016, (October 3, 2016, for Florida) and no later than March 15, 2017." (Internal Revenue Service [IRS])

[Guidance Overview] IRS Information Release 2016-138: Retirement Plans Can Make Loans, Hardship Distributions to Victims of Hurricane Matthew (PDF)
"Participants in 401(k) plans, employees of public schools and tax-exempt organizations with 403(b) tax-sheltered annuities, as well as state and local government employees with 457(b) deferred-compensation plans may be eligible to take advantage of these streamlined loan procedures and liberalized hardship distribution rules. Though IRA participants are barred from taking out loans, they may be eligible to receive distributions under liberalized procedures.... Currently, parts of North Carolina, South Carolina, Georgia and Florida qualify for individual assistance." (Internal Revenue Service [IRS])
How Proposed Caps Could Impact IRA and 401(k) Accounts
"According to a 2014 [GAO] report ... there are almost 9,000 Americans who have accumulated more than $5 million in an IRA. However, the proposed cap would be a soft cap, allowing more than $3.4 million in an IRA or 401(k), as long as the amounts that exceed the cap are earnings, not contributions. Another interesting finding in the Government Accountability Office report was the estimate that there are 1,000 Americans with more than $10 million dollars saved in an IRA." (InvestmentNews)
When It Comes to Retirement Distributions, 401(k)s Lack Valuable Flexibility
"There's a key area where IRAs have a clear advantage over 401(k)s: in-retirement distributions. Simply put, investors who decide to leave money in their company retirement plans and draw from them to meet their living expenses typically have much less flexibility and control over withdrawals." (Morningstar)
[Guidance Overview] IRS Allows Self-Certification for Late Rollover Contributions
"Retirement plan administrators may accept late rollover contributions from taxpayers who self-certify that they qualify for a waiver of the 60-day rule. Plan sponsors may need to update their communications about rollovers to reflect the new IRS waiver procedures. The self-certification applies only to the 60-day requirement, not to other requirements for a valid rollover." (Willis Towers Watson)
[Guidance Overview] New York City to Establish City-Wide Private Sector Retirement Program
"The proposed program [includes] ... [1] A voluntary 401(k) marketplace, making available to private sector employers 'screened, competing 401(k) and other retirement plans from private and public providers.' ... [2] Private sector employer participation in a 401(k) MEP coordinated by the City of New York, including employers having no common ownership or business purpose.... [3] The New York City Roth IRA would be available as an alternative to [these] options, and employers (the news release says 'all') not offering a retirement plan would automatically enroll employees in a payroll deduction Roth IRA savings program." (Ascensus)
Disability and the Exception to 10% Early Distribution Penalty
"Many people, both advisors and IRA owners alike, think that if they are receiving any sort of disability payment that they will qualify for this penalty exception. Unfortunately, that is not true." (Slott Report)
Merrill Lynch's Move to End Commission IRAs a 'Tectonic Shift' for Brokerage Industry
"The firm, which houses more than 14,000 advisers, will no longer offer new, advised commission-based individual retirement accounts beginning April 10, the implementation date for the rule. Rather, it will migrate clients to its advisory platform, self-directed brokerage or robo advisory service. And, it could push the other large brokerages to respond in a similar way." (InvestmentNews)
New York City Comptroller Unveils 3-Pronged Retirement Program for Private-Sector Employees
"Under the umbrella title of 'New York City Nest Egg,' [New York City Comptroller Scott M. Stringer] proposed creating: [1] The Empire City 401(k), which would enable employers to join a single, publicly sponsored 401(k) plan based on a new federal law allowing multiple employers that are unaffiliated to join a single plan. [2] The NYC 401(k) Marketplace, a voluntary exchange overseen by an independent board that would offer employers a choice of 'screened, competing 401(k) and other retirement plans from private and public providers' ... [3] The NYC Roth IRA, an automatic default designed for eligible private-sector employers that do not select a plan on their own or through the NYC 401(k) Marketplace." (Pensions & Investments)
Merrill Lynch to End Commission-Based Options for Retirement Savers
"Merrill Lynch will no longer give retirement savers the option of paying a commission for trades, a wholesale exit from the traditional Wall Street sales model in accounts that stand to be affected by new conflict-of-interest rules on retirement accounts.... [W]hen the new rules take effect, investors who want a retirement account at Merrill will need to pay a fee based on a percentage of their assets, instead of having the option of being charged for each transaction made in their account." (The Wall Street Journal; subscription may be required)
Interesting Angles on the DOL's Fiduciary Rule, Part 22
"Based on the wording of the new fiduciary rule, if a bank employee recommends that an IRA invest in a certificate of deposit, and is compensated directly or indirectly for that recommendation, it is a fiduciary act for compensation. (The bonus, or bonus credit, is the compensation.) Since the bank employee is being paid compensation that is not stated and level, the payment is a prohibited transaction." (
[Guidance Overview] New IRS Procedure for Waiving the 60-Day Rollover Deadline
"The IRS increased the fee for certain private letter rulings (PLR) requests to $10,000 per application, effective February 1, 2016. This include PLR requests to waive the 60-day deadline for completing rollovers, which is a significant increase as the fees for such PLRs used to range from only $500-$3,000.... Fortunately, the IRS has issued new guidelines that now allow eligible individuals to avoid having to pay the $10,000 fee by using a new self-certification option." (Appleby Retirement Dictionary)
[Guidance Overview] DOL Finalizes Safe Harbor Rule on State-Sponsored IRAs
"While industry trade groups and others appear to generally applaud and support the fact that the final rule expands access to workplace retirement savings programs, some continue to be concerned about the fact that it creates favorable standards for payroll deduction IRA programs administered by a state, over those administered by private sector providers outside a state program. This appears particularly illogical to some because it fails to take advantage of the private sector's substantial experience in administering and distributing IRA products, and infrastructure it already has in place to meet both the state's and the DOL's goal of encouraging wide-spread and greater savings for retirement." (Trucker Huss)
Senate Finance Committee Approves Bipartisan Pension Bills (PDF)
"[The Retirement Enhancement and Savings Act of 2016 (RESA) would].... [1] permit unrelated employers ... to pool their resources by participating in a new type of multiple employer plan, provided certain conditions are met.... [2] require employers to provide defined contribution plan participants with an estimate of the amount of monthly annuity income the participant's balance could produce in retirement ... . [3] create a new fiduciary safe harbor for employers who opt to include a lifetime income investment option in their defined contribution plan.... [4] allow earnings on elective deferrals, qualified non-elective contributions and qualified matching contributions under a 401(k) plan to be distributed on account of hardship.... [5] increase the penalties for failing to file a Form 5500 and failing to provide a required withholding notice to $100 per day[.]" (Groom Law Group)
DOL Rule Could Reduce IRA Rollovers
"Nearly half of projected [IRA] rollover assets are 'at-risk' of remaining in the defined contribution plan-sponsor market once the [DOL's] fiduciary rule goes into effect, a new report claims. Assets that don't roll over into retail IRA accounts, a transaction considered a big cross-selling opportunity for retirement advisors, would cut into revenues generated by financial advisors since fewer dollars are 'in motion.' +" (
[Guidance Overview] Interesting Angles on the DOL's Fiduciary Rule, Part 21
"[T]he DOL has historically taken the position that a prudent process for advice to retirement plans must be documented. That could easily be extended to advice to IRAs as well. In fact, there is a specific documentation retention requirement under BICE. Second, there is an argument that, if a fiduciary adviser cannot obtain -- through the investigation -- enough information to formulate a prudent recommendation, the adviser needs to abstain from making a recommendation." (
Reality Sets In: How New Fiduciary Rule Impacts 401(k)/IRA Providers and Retirement Savers
"For many, especially those already leading with the fiduciary mantle, the new Rule also offers new opportunities. This could add considerable value to retirement savers impacted by the Rule. For all the disquiet associated with changed providers, they may end up in a far better situation than when they started, according to those practitioners who responded to our interview queries." (Fiduciary News)
Will the DOL Fiduciary Rule Be the End of Solicitor Arrangements?
"IRA assets held by a Broker-Dealer (B-D) range between 40 and 80% of B-D total assets. However, many of these [financial advisors] know very little about ERISA fiduciary standard of conduct. This lack of knowledge increases B-D litigation risk as tens of thousands of misguided fiduciary missiles seek to secure new engagements or service existing clients. B-Ds will have to establish new training protocols in conjunction with compliance oversight to mitigate this risk." (Fiduciary Matters Blog)
Retirement Assets Total $24.5 Trillion in Second Quarter 2016
"Retirement assets accounted for 34 percent of all household financial assets in the United States at the end of the second quarter of 2016.... Assets in individual retirement accounts (IRAs) totaled $7.5 trillion at the end of the second quarter of 2016, an increase of 1.7 percent from the end of the first quarter. Defined contribution (DC) plan assets rose 2.1 percent in the second quarter of 2016 to $7.0 trillion." (Investment Company Institute [ICI])
[Guidance Overview] Charity is Exception to 'Contingent Right', Making Trust a 'Qualified Beneficiary'
"When a trust is named as the beneficiary of an IRA, it must a qualified 'see-through' trust (qualified trust) in order to allow for extended distributions based on the trust beneficiary's life expectancy. Despite best efforts, some trusts fail to meet the requirements to be a qualified trust; and even experts in the field sometimes make incorrect determinations as to the qualified status of a trust." (Appleby Retirement Dictionary)
Unintended Tax Consequences from Mishandling of an Inherited IRA: A Case Study
"Ultimately, retirement account owners will be responsible for paying any income tax due on distributions that they take from their retirement accounts, whether or not those distributions are shared with others.... For those who want to share inherited accounts with others, strategies can be implemented to ensure that any tax burden is also shared." (Appleby Retirement Dictionary)
Why You Should Roll Your 401(k) to Your New Employer
"Many 401(k) plans offer participants access to institutional share class mutual funds and very low cost index funds, especially those sponsored by large employers.... Balances in retirement plans, such as 401(ks), are protected against civil judgments and bankruptcy.... [D]epending on where you live, your state may not extend that protection to IRAs.... Many 401(k) plans permit participants to borrow from their plan assets at a very low rate of interest." (Financial Finesse)
[Guidance Overview] Missed a 60-Day Rollover? Try Self-Certification
"Plan administrators and IRA custodians are not required to accept the self-certification and ... many of the larger institutions [may] continue to insist upon a private letter ruling.... [T]he IRS itself has cautioned that self-certification is not the equivalent of a waiver of the 60-day requirement." (Fox Rothschild LLP)
SEC Provides Free Online Financial Planning Tools
Tools at the SEC's web site include: 401(k) and IRA Minimum Distribution Calculator; Compound Interest Calculator and Savings Goal Calculator; Social Security Retirement Estimator; Retirement Ballpark Estimator; Mutual Fund Analyzer; 529 Expense Analyzer; and a link to a searchable database of investment advisers who have filed Form ADV. (U.S. Securities and Exchange Commission)
Almost Half of Projected IRA Rollover Assets 'At-Risk' Post-DOL Conflict of Interest Rule
"New research ... suggests more assets in the retirement industry will remain in employer-sponsored DC plans following implementation of the rule.... 29% of respondents said they rolled over their retirement savings from an employer-sponsored account into an IRA because of advice from a financial professional. Another 29% consolidated their retirement savings into an existing IRA." (planadviser)
Proposal Would Crack Down on Tax Avoidance in Retirement Plans, Create New Opportunities for Working Americans to Save
"In addition to cracking down on 'mega Roth IRAs,' the draft proposal would: [1] Allow employers to make 'matching' contributions to a 401(k) retirement plan while their employees make student loan repayments.... [2] Eliminate Roth conversions for both IRAs and employer-sponsored plans ... [3] Eliminate 'stretch IRAs' ... [4] Gradually increase the age at which retirement plan participants are required to begin taking distributions from their accounts.... [This] discussion draft ... is being circulated to stakeholders, members of Congress, federal officials and others for review and comment." [Also available: a one-page summary of the legislative proposal, a longer summary; full legislative text, and a Joint Committee on Taxation technical explanation.] (Committee on Finance, U.S. Senate)
Ten Important Facts About IRAs (PDF)
14 pages. "[1] IRAs are the largest pool of assets in the U.S. retirement market.... [2] The incidence of IRA ownership increases with age.... [3] IRAs are predominantly held by moderate-income households.... [4] IRA balances tend to rise with length of ownership.... [5] Equity holdings figure prominently in traditional IRA investments.... [6] Although few traditional IRA investors make contributions, those who do display persistence.... [7] Rollovers from employer-sponsored retirement plans have fueled growth in IRAs.... [8] A large majority of individuals consult a financial professional when rolling over assets to a traditional IRA from a former employer's retirement plan.... [9] Most IRA owners consult a financial professional when creating a retirement strategy.... [10] IRA withdrawals are infrequent and mostly retirement related[.]" (Investment Company Institute [ICI])
[Guidance Overview] IRS Allows 'Self-Service' 60-Day Rollover Waivers for Retirement Plan Distributions (PDF)
"If an indirect rollover does not occur within the required 60-day timeframe, IRS will now allow the affected individual to self-certify that they meet a 'hardship waiver' exception to the 60-day rule in a broad array of circumstances. Plan administrators and IRA trustees can then rely on the self-certification in deciding whether to accept a rollover contribution after the 60-day period ends." (Xerox HR Services)
Interesting Angles on the DOL's Fiduciary Rule, Part 17
"While there could be a number of ways of satisfying the requirements, ... one way -- and probably a good way -- is to have procedures, forms and services for gathering and evaluating the information and for documenting why the analysis of that information results in a recommendation that the transfer (or not transferring) is in the best interest of the IRA owner. Also, while BICE does not specifically discuss the analysis that needs to be made if the adviser will not be providing 'Level Fee Fiduciary' advice to the IRA, the logical conclusion would be that the requirements are the same[.]" (
[Official Guidance] Text of IRS Ann. 2016-30: Relief for Victims of Louisiana Storms (PDF)
"This announcement provides relief to taxpayers who have been adversely affected by the recent storms and flooding in Louisiana that began August 11, 2016, (Louisiana Storms) and who have retirement assets in qualified employer plans that they would like to use to alleviate hardships caused by the Louisiana Storms. In addition, this announcement provides relief from certain verification procedures that may be required under retirement plans with respect to loans and hardship distributions.... The parishes included in the covered disaster area for the Louisiana Storms are identified in the News Release issued by the IRS for victims of the storms and flooding in Louisiana ... Plan administrators may rely upon representations from the employee or former employee as to the need for and amount of a hardship distribution, unless the plan administrator has actual knowledge to the contrary, and the distribution is treated as a hardship distribution for all purposes under the Code and regulations." (Internal Revenue Service [IRS])
[Guidance Overview] Text of IRS IR-2016-115: Retirement Plans Can Make Loans, Hardship Distributions to Louisiana Flood Victims (PDF)
"Participants in 401(k) plans, employees of public schools and tax-exempt organizations with 403(b) tax-sheltered annuities, as well as state and local government employees with 457(b) deferred-compensation plans may be eligible to take advantage of these streamlined loan procedures and liberalized hardship distribution rules. Though IRA participants are barred from taking out loans, they may be eligible to receive distributions under liberalized procedures." (Internal Revenue Service [IRS])
[Guidance Overview] Retirement Plan Rollover Rules Relaxed: The 'I Lost It' Excuse May Actually Work
"An automatic waiver is of limited application as it only applies in a direct rollover scenario where the new plan or financial institution receives the funds before the end of the 60-day rollover period but fails to deposit them into a plan or IRA within the 60-day period due to no error of the participant. In this situation, the funds must actually be deposited into the plan or IRA within one year from the beginning of the 60-day rollover period.... Apparently appreciating the commonplace issues that arise with rollovers and seeking to avoid unintended 'leakage' of retirement plan assets from retirement vehicles for those that do not have the time or financial resources to pursue a PLR ... [Rev. Proc. 2016-47] provides taxpayers with a new mechanism to facilitate a rollover, even if a technical failure to comply with the 60-day rule has occurred." (Michael Best & Friedrich LLP)
2014 Update of the EBRI IRA Database: IRA Balances, Contributions, Rollovers, Withdrawals, and Asset Allocation (PDF)
"The average IRA account balance in the database was slightly more than $100,000 and the average IRA individual balance was $127,583, but the balances varied significantly by the IRA type: Roth IRAs had the lowest average balance, while Traditional IRAs had the highest average balance.... Roth IRAs were more likely to receive a contribution than Traditional IRAs (25.9 percent vs. 6.4 percent).... Almost 24 percent of individuals owning a Traditional or Roth IRA took a withdrawal in 2014, including 27.2 percent of Traditional IRA owners." (Employee Benefit Research Institute [EBRI])
[Guidance Overview] IRS Releases Self-Certification Procedure for Late IRA Rollovers
"In many cases, taxpayers should consider using a direct rollover from an employer plan or trustee-to-trustee transfer from an IRA to avoid any chance for missing the 60-day rollover window and to avoid withholding on the distribution. In addition, taxpayers should note that self-certification is not an automatic waiver of the 60-day window from the IRS; the issue may still be adjusted upon an IRS audit if the IRS finds incorrect information or disagrees with the facts supplied in the self-certification statement." (RSM US)
[Guidance Overview] IRS Finds Charity Is Exception to 'Contingent Right', Making Trust a 'Qualified Beneficiary'
"When there are multiple beneficiaries of a trust, the beneficiary with the shortest life expectancy is used for purposes of calculating RMDs. Only a primary or contingent beneficiary is considered ... In [a recent Private Letter Ruling], the IRS determined that [the named] charitable organizations fall under that exception, because they could become beneficiaries only if all the other beneficiaries in the other classes died before the assets were fully distributed. As such, the charitable organizations ... are 'mere successor beneficiaries'[.]" (Appleby Retirement Dictionary)
[Guidance Overview] IRS Allows Self-Certification for Late Rollovers of Retirement Plan Funds
"To qualify for this relief, the IRS cannot have previously denied relief to the taxpayer for that rollover, and the taxpayer must have missed the 60-day deadline for one of [11 specified reasons] ... According to the IRS, the taxpayer's self-certification is not a waiver of the 60-day requirement because the IRS can still deny the waiver on audit if it determines the taxpayer did not meet the requirements." (Journal of Accountancy)
[Official Guidance] Text of IRS Rev. Proc. 2016-47: Waiver of 60-Day Rollover Requirement (PDF)
"This revenue procedure provides guidance concerning waivers of the 60-day rollover requirement contained in sections 402(c)(3) and 408(d)(3) of the Internal Revenue Code. Specifically, it provides for a self-certification procedure (subject to verification on audit) that may be used by a taxpayer claiming eligibility for a waiver under Sections 402(c)(3)(B) or 408(d)(3)(I) with respect to a rollover into a plan or individual retirement arrangement (IRA). It provides that a plan administrator, or an IRA trustee, custodian, or issuer ... may rely on the certification in accepting and reporting receipt of a rollover contribution. It also modifies Rev. Proc. 2003-16 ... by providing that the [IRS] may grant a waiver during an examination of the taxpayer's income tax return. An appendix contains a model letter that may be used for self-certification." (Internal Revenue Service [IRS])
[Guidance Overview] Text of IRS News Release: New Procedure Helps People Making IRA and Retirement Plan Rollovers (PDF)
"Normally, an eligible distribution from an IRA or workplace retirement plan can only qualify for tax-free rollover treatment if it is contributed to another IRA or workplace plan by the 60th day after it was received. In most cases, taxpayers who fail to meet the time limit could only obtain a waiver by requesting a private letter ruling from the IRS. A taxpayer who missed the time limit will now ordinarily qualify for a waiver if one or more of 11 circumstances, listed in the revenue procedure, apply to them." (Internal Revenue Service [IRS])
Uber Drivers Aren't Employees, But They Have a Retirement Plan
"They may not have a 401(k) plan, but drivers working through Uber Technologies Inc.'s platform will soon be able to open a retirement account right in the app.... While fighting a pitched court battle to prevent drivers from being classified as employees, Uber has simultaneously joined forces with Betterment LLC ... to offer them IRAs.... [T]he option will be fee-free for the first year." (Bloomberg)
Why You Should Do An IRA Rollover When You Leave Your Job
"If you keep your money in an old employer's 401(k) plan, you will continue to be limited to the 10 to 15 funds it has selected for you. These funds may not be top-performing funds, and they may have higher-than-average fees.... In many 401(k) plans, roughly half of the options available are target-date funds, which can come with extra fees." (NerdWallet, via Nasdaq)
Advisors Cry Foul Over State Mandated Auto-IRAs
"In some states, the government is positioned to play the role of financial advisor within state administered auto-IRA programs and it's not just trade associations that are concerned. Financial advisors question what a state run automatic-IRA retirement plan might turn into in the long run." (
Qualified Charitable Distributions Can Ease the Tax Pain of RMDs
"Non-itemizers will get a tax benefit of reduced AGI from a donation that they otherwise wouldn't deduct. Itemizers will forgo the charitable deduction but may benefit from a lower AGI; QCDs might reduce the bite of the itemized deduction phase-out for high-income clients[.]" (On Wall Street)
DOL's Fiduciary Rule Poses New Litigation Threat to IRA Advice
"[P]laintiffs' lawyers and the courts have acknowledged that seemingly small differentials between share classes can have a meaningful impact on prospective-retirees' savings. The lesson to fiduciaries is that no fiduciary decision is insignificant and decisions should be reevaluated regularly as the clients' needs change.... Applying general best practices isn't enough -- advisors must have a holistic approach and take a look at their client's unique circumstances to determine any particular or customized needs." (Manning & Napier)
[Guidance Overview] Interesting Angles on the DOL's Fiduciary Rule, Part 15
"Since a pure level fee, or non-conflicted, adviser won't commit a prohibited transaction and therefore won't need an exemption, that adviser will not be bound by the best interest standard for investment advice to individual IRAs. Instead, the adviser will only be subject to the conduct standards in the securities laws.... The biggest [exception] is a recommendation to a plan participant to take a distribution and roll over to an IRA with the adviser." (
Rolling Over a 401(k) Distribution Has Potential Pitfalls
"If you can leave your money in the 401(k), it might make sense to do so. For example, your 401(k) plan might have an excellent investment choice that you cannot buy in your IRA. Or, your new employer might have a 401(k) plan with excellent investment choices and options that you will be able to roll your old 401(k) into. However, your IRA might have more flexible distribution and investment options." (Union Leader)
Clear Link Between Traditional IRAs and Rollovers
"Two new reports published by the Investment Company Institute (ICI) demonstrate that withdrawal activity is lower, equity holdings are higher, and investors tend to be younger in Roth [IRAs] than in traditional IRAs.... [At] year-end 2014, 31% of Roth IRA investors were younger than 40, compared with just 15% of traditional IRA investors." (planadviser)
Traditional IRA Investors Activity, 2007-2014 (PDF)
76 pages. "In tax year 2014, 8.9 percent of traditional IRA investors contributed to their traditional IRAs, and nearly half of traditional IRA investors who did so contributed at the legal limit ... Withdrawal activity is rare among younger traditional IRA investors and overall, fewer than one in four traditional IRA investors took withdrawals in 2014.... In 2014, about seven in 10 new traditional IRAs received rollovers." (Investment Company Institute [ICI])
Roth IRA Investors Activity, 2007-2014 (PDF)
88 pages. "In any given year, more than three in 10 Roth IRA investors contribute to their Roth IRAs. On average, in recent years, estimates suggest that about $18 billion of contributions flowed into Roth IRAs per year.... In 2010, more than 5 percent of Roth IRA investors made conversions, up from less than 2 percent in recent prior years. Between 2011 and 2014, Roth conversion activity declined again, to about 2.6 percent ... Four percent of Roth IRA investors took withdrawals in 2014." (Investment Company Institute [ICI])
Exceptions to the Pro Rata Rule for IRA Distributions
"Distributions that are not subject to the pro-rata rule include: [1] Qualified Charitable Distributions (QCDs) ... [2] Qualified HSA Funding Distributions (QHFDs) ... [3] Rollovers to Company Plans ... You can only fund each of these distribution with the taxable part of your IRA." (Slott Report)
[Opinion] Final DOL Fiduciary Rule Is Likely to Spawn More Litigation Against Financial Advisers
"While the extent of the change is obvious, its worth asking whether the change is for the good or not ... [A recent] article on rollovers certainly describes a process that is more labor intensive, more transparent and puts more legal risk on the adviser involved in the process: however, whether that means better outcomes for consumers is the question, one that is at the heart of the dispute between the financial industry and the [DOL]." (Stephen Rosenberg, The Wagner Law Group)
[Guidance Overview] Final DOL Fiduciary Rule: Higher Bar for Investment Advisors (PDF)
"The final rule identifies some examples of communications that are recommendations, such as recommendations to switch from a commission-based account to an advisory fee based account. The final rule also provides examples of communications that are not recommendations, such as guidelines and other information on proxy voting policies provided to a class of investors, without regard to individual investment interests or policies." (Anderson, Helgen, Davis & Cefalu, PA)
Are Rollover IRAs on the Way Out?
"Keeping more assets in the plan does have its advantages. However, [there are] several important issues related to the stay-over strategy. These include increased costs and fiduciary responsibilities to the plan sponsor for keeping former employees in the plan, as well as additional administrative time and costs.... [P]lan sponsors will need to maintain close contact with retirees still in the plan, keeping on top of address changes, monitoring death notices, and communicating with retirees (or their successors) when making changes to plan provisions or investments. Plan sponsors will also need to establish a process for communicating information conveyed at investment meetings to retirees who are unable to attend." (PenChecks)
You Are Never Too Old to Convert to a Roth IRA
"No matter what your age, you should ask yourself three questions. First, when will the money be needed? Do you need your IRA money immediately for living expenses? If so converting may not be for you. Second, what is your tax rate? If you are retired and your income is lower, that may favor conversion. The third question to ask yourself is whether you have the money to pay the tax on the conversion. It is best to pay the conversion tax from non-IRA funds." (Slott Report)
Banks Strive to Thread DOL Fiduciary Advice Needle in Way That Allows Them to Retain Small Accounts
"A common solution for banks with broker dealer operations is to shift larger clients to the bank's registered investment advisors (RIAs) while offering a robo investment advice solution to smaller accounts that require 'less hand holding' ... Offering only a robo solution will not work for all people with small accounts so banks will need other solutions that provide personal advice[.]" (Mind Over Market)
Who Pays for a Mistake in Your IRA?
"Why are these penalties owed by you, the innocent IRA owner? Because the 'I' in IRA stands for 'individual.' The tax code is structured so that you are totally, 100%, responsible for the correct operation of your IRA.... Employer plan participants may not be at as much risk, but they will be responsible for any amounts distributed to them or that are deemed to be distributed to them." (Slott Report)
Court Finds Debtor's IRA Distribution Is Exempt From Creditors Under Texas Law
"The trustee objected to the debtor's exemption in her IRA, arguing that funds invested in an IRA are only conditionally exempt. According to the trustee, all funds withdrawn from the IRA by the debtor, including the funds withheld for the payment of income taxes, lost their exempt character because of the debtor's failure to use the funds to make a rollover contribution into another exempt retirement account.... Nothing in Section 42.0021(c) requires an account holder to safeguard distributed funds for 60 days or to transfer the funds into another retirement account, the court said.... The exemption doesn't disappear when the account holder receives a distribution, the court said." [In re Moore, No. 15-42046 (Bankr. E.D. Tex. July 6, 2016)] (Bloomberg BNA)
Want to Fund Your HSA with Your IRA? Here's How
"A [Qualified HSA Funding Distribution (QHFD)] is done by direct transfer from your IRA to your HSA. This transaction is not taxable or subject to the 10% early distribution penalty. The amount that can be transferred cannot exceed the amount you are eligible to contribute to your HSA for the year.... The amount you can move will be reduced by any HSA contributions you have already made during the year. You may only do one QHFD in your lifetime. There is an exception to this rule if you start out the year with self-only coverage and then later switch to family coverage." (Slott Report)
How to Take Advantage of a 'Child IRA' Under Current Laws
"The world offers precious few jobs that require only existence, but that newborn baby will have to find them and convince someone to hire him in order to earn the necessary income to start a Child IRA. What kinds of jobs require one to merely sit there and do nothing? Pretty much only one: modeling.... Parents who own businesses and actively advertise represent a special situation. In this situation, maintaining a steady stream of child modeling work may demand less rigor." (Fiduciary News)
Everything You Always Wanted to Know About the Hypothetical 'Child IRA'
"By dialing back the start age to 'new born baby' and investing that $1,000 annual until said baby reaches age 19, we find the value of The Child IRA will have grown to two-and-a-quarter million dollars.... [It] quickly became apparent The Child IRA could easily obviate the need for Social Security.... [Published articles explain how] The Child IRA can become a viable national policy to eventually replace Social Security." (Fiduciary News)
[Official Guidance] Text of PLR 201628006: Required Minimum Distribution Rules Apply to Designated Beneficiary Despite State Court's Post-Mortem Reformation (PDF)
"After Decedent's death, the trustees of the trusts petitioned the Court for a declaratory judgment that would modify the beneficiary designation for IRA X to carry out the original estate plan. Based on its finding of Decedent's intent, the Court ordered that the beneficiaries of IRA X are Trust C as a 50% beneficiary and Trusts D an d E as 25% beneficiaries, consistent with Decedent's prior beneficiary designation. The order was retroactively effective as if such designation were made on the date Decedent signed the beneficiary designation form for IRA X.... [A]lthough the Court order changed the beneficiary of IRA X under State law, the order cannot create a 'designated beneficiary' for purposes of section 401(a)(9)." (Internal Revenue Service [IRS])

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