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<< Older News  |  September 25, 2020


All News > IRAs

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IRA Withdrawal Patterns in Times of Crisis (PDF)
Employee Benefit Research Institute [EBRI] Link to more items from this source
Sept. 11, 2020

Infographic. "The likelihood of an IRA withdrawal among retired households went down during the 2008 market downturn. In contrast, the share of not-yet-retired households taking withdrawals from their IRA increased in the same period."

Tags: IRAs  •  Misc. Distribution Issues

Isolating IRA Basis for Tax Efficient Roth IRA Conversions
Nerd's Eye View Link to more items from this source
Sept. 2, 2020

"Despite the intricacies of reporting Roth conversions from Traditional IRAs with pre- and post-tax funding, converting Traditional IRA accounts can make sense ... Since IRA-to-plan rollovers are restricted to pre-tax dollars, such rollovers can essentially serve to reduce the pre-tax balance of a Traditional IRA, maximizing the after-tax balance available for the Roth conversion. Importantly, rolling funds back into an IRA from an employer plan, after completing a Roth conversion, should not be done until after the calendar year in which the Roth conversion was carried out, as doing so would result in the basis of the rollover to be included in the converted amount."

Tags: IRAs  •  Rollovers

Traditional and Roth Individual Retirement Accounts (IRAs): A Primer (PDF)
Congressional Research Service [CRS] Link to more items from this source
[Guidance Overview]
Sept. 1, 2020

"This report explains [traditional and Roth] IRAs' eligibility requirements, contribution limits, tax deductibility of contributions, and withdrawal rules, and it provides data on the accounts' holdings. It also describes the Saver's Credit and provisions enacted after the Gulf of Mexico hurricanes in 2005, the Midwestern storms in 2008, the hurricanes in 2012 and 2017, the California wildfires in 2017, certain other federally declared disasters occurring on or after January 1, 2018, and the Coronavirus Disease 2019 (COVID-19) pandemic to exempt distributions to those affected from the 10% early withdrawal penalty." [RL34397, updated Aug. 20, 2020]

Tags: CARES Act  •  Coronavirus (COVID-19)  •  IRAs  •  Retirement Plan Design

How Does Having Both a 401(k) Plan and an IRA Change the Retirement Asset Picture?
Employee Benefit Research Institute [EBRI] Link to more items from this source
Aug. 21, 2020

"The ratio of the average combined 401(k) plan/IRA balance to the average 401(k) plan balance (of all of those having a 401(k) plan each year) was 2.48 at the end of the study.... However, many individuals with both account types did not maintain both in all years studied: Accounts were closed when individuals changed jobs or dollars were rolled over to other accounts as individuals retired."

Tags: 401(k) Plans  •  IRAs  •  Retirement Plan Design

Editor's Pick Maximizing Premium Assistance Tax Credits for Self-Employed Individuals
Nerd's Eye View Link to more items from this source
Aug. 19, 2020

"[B]ecause of the unique control that self-employed individuals have over the income and expenses of their businesses, they have a unique opportunity to make business decisions that can also help maximize their ability to receive Premium Tax Credits.... [W]hile a Solo 401(k) contribution may decrease income which both improves the PTC and reduces the Federal tax liability, the reduced income may also make the QBI deduction lower. As a result, making contributions to a Traditional IRA account instead of a Solo 401(k) could be even more beneficial, as the result would still reduce MAGI to increase the PTC, but would not reduce the QBI deduction for the self-employed individual."

Tags: 401(k) Plans  •  Health Plan Costs  •  IRAs  •  Retirement Plan Design

Editor's Pick Projected 2021 IRA and Saver's Credit Limits for 2021
Mercer Link to more items from this source
Aug. 18, 2020

"Maximum 2021 deductions for traditional IRA contributions are projected to remain at 2020 levels. Adjusted gross income (AGI) phase-out thresholds for Roth IRA contributions and a qualified plan participant's deductible traditional IRA contributions are projected to increase slightly in 2021."

Tags: IRAs  •  Retirement Plan Administration

IRS Provides Guidance on 2020 Waiver of Retirement Plan Required Minimum Distributions
Frost Brown Todd LLC Link to more items from this source
[Guidance Overview]
Aug. 14, 2020

"Individuals who receive an RMD in 2020 or one or more payments that include a 2020 RMD that would be treated as part of a series of substantially equal periodic payments may rollover such distribution to an employer's retirement plan ... or to an IRA. The deadline to roll over any such distribution ... will not be before August 31, 2020 even if the distribution was made as early as January 2020.... The deadline for a beneficiary making an election for the use of either the five-year rule or the life expectancy rule in determining an RMD ... is extended one year to December 31, 2021 if the deadline is otherwise December 31, 2020. There is no similar extension if death occurs in 2020."

Tags: CARES Act  •  Coronavirus (COVID-19)  •  IRAs  •  Required Minimum Distributions (RMDs)  •  Rollovers  •  SECURE Act

IRA Withdrawal Patterns in Times of Crisis
Employee Benefit Research Institute [EBRI] Link to more items from this source
Aug. 14, 2020

"Both the share of households reporting IRA withdrawals and the average percentage of their account balances withdrawn went up between 2008 and 2010 for IRA owners ages 50–70, suggesting that during market downturns, households are more likely to withdraw too much, too fast from their IRAs. For households ages 71 and older who were subject to RMDs, the 2008 market downturn did not appear to have increased the share withdrawing from their IRAs. However, it did result in increased average withdrawals relative to account balances for those taking withdrawals in excess of the RMD."

Tags: Coronavirus (COVID-19)  •  IRAs  •  Misc. Distribution Issues

Steady Contributions Combined with Market Performance Lead to Double-Digit Rebound Across Retirement Account Balances
Fidelity Link to more items from this source
Aug. 11, 2020

"[In Q2, the] average IRA balance was $111,500, a 13% increase from last quarter and slightly higher than the average balance of $110,400 a year ago. The average 401(k) balance increased to $104,400 in Q2, a 14% increase from Q1 but down 2% from a year ago. The average 403(b) account balance increased to $91,100, an increase of 17% from last quarter and up 3% from a year ago.... More than three quarters (76%) of workers received an employer contribution in Q2, with the average employer contribution reaching $1,080."

Tags: 401(k) Plans  •  403(b) Plans and Annuities  •  IRAs

Text of IRS Notice 2020-62: Safe Harbor Explanations -- Eligible Rollover Distributions (PDF)
Internal Revenue Service [IRS] Link to more items from this source
[Official Guidance]
Aug. 6, 2020

29 pages. "This notice modifies the two safe harbor explanations in Notice 2018‑74, that may be used to satisfy the requirement under Section 402(f) of the Internal Revenue Code that certain information be provided to recipients of eligible rollover distributions. The safe harbor explanations as modified by this notice take into consideration certain legislative changes, including changes related to the [SECURE Act] ... [T]his notice includes an appendix with two model safe harbor explanations: one for distributions that are not from a designated Roth account, and the other for distributions from a designated Roth account."

Tags: 401(k) Plans  •  IRAs  •  Rollovers  •  SECURE Act

DOL Reinstates Five-Part Test for Fiduciary Investment Advice
Frost Brown Todd LLC Link to more items from this source
[Guidance Overview]
Aug. 4, 2020

"Advice to rollover assets from a plan to an IRA can constitute investment advice and cause the person or institution providing investment advice to be an investment advice fiduciary and therefore, subject to the conflict of interest prohibitions. Notably, once plan money is invested in an IRA, it is then subject only to the Code's prohibited transaction provisions. While this is not the broad authority that the DOL originally sought over IRAs, the refreshed interpretation causes some rollover solicitations to be subject to the applicable fiduciary and prohibited transaction provisions of ERISA and/or the Code."

Tags: Fiduciary Duties  •  IRAs  •  Rollovers

Congress Should Give Americans Flexibility to Keep Retirement Savings on Track
Investment Company Institute [ICI] Link to more items from this source
Aug. 3, 2020

"Congress can help American families get their retirement savings goals back on track by including the 'Temporary Coronavirus-Related Catch-Up Contribution' proposal in the next COVID-19 relief package. The proposal would allow workers who were adversely affected by COVID-19 to make additional contributions of up to $6,000 annually -- for three years beginning in 2021 -- to their retirement accounts ... The proposal would be available to qualified workers regardless of age, and would permit employers to match their employees' catch-up contributions."

Tags: 401(k) Plans  •  403(b) Plans and Annuities  •  457 Plans  •  Coronavirus (COVID-19)  •  IRAs  •  Retirement Plan Design

The CARES Act: Waiver of Required Minimum Distributions Link to more items from this source
[Guidance Overview]
July 30, 2020

"[T]here is an opportunity for an individual to do a rollover if the participant had already received a payout in 2020 before the adoption of the CARES Act on March 27 or if the participant receives such a payout after that date. In addition, in Notice 2020-23, the IRS has already indicated that if the 60-day rollover period would have ended on or after April 1, the rollover period is extended to July 15. In Notice 2020-51, the IRS further extended this deadline, to the later of August 31, 2020 or 60 days after the distribution." [Updated Jul. 28, 2020]

Tags: CARES Act  •  Coronavirus (COVID-19)  •  IRAs  •  Rollovers

Successor Beneficiary RMDs After Death of an Inherited IRA's Owner
Nerd's Eye View Link to more items from this source
[Guidance Overview]
July 29, 2020

"While Successor Beneficiaries who inherit accounts from beneficiaries taking RMDs using the 'stretch' provision will get the 10-Year Rule (from scratch), some Successor Beneficiaries (i.e., post-SECURE Act beneficiaries of Non-Eligible Designated Beneficiaries) will 'only' be able to step into the initial beneficiary's shoes, and will have to empty the balance of the IRA by the end 10-year period established by the original 10-year rule (i.e., the Non-Eligible Designated Beneficiary's 10-year window)."

Tags: IRAs  •  Required Minimum Distributions (RMDs)  •  SECURE Act

COVID-19: IRS Details CARES Act Relief for IRA Owners and Providers
Morgan Lewis Link to more items from this source
[Guidance Overview]
July 24, 2020

"The [IRS] recently released new guidance in IRS Notice 2020-50 and Notice 2020-51 ... 60-day rollover deadline extended until August 31, 2020 to roll over 2020 'would-be' RMDs.... Restriction on number of IRA rollovers in 12-month period lifted until August 31, 2020 for 2020 'would-be' RMDs.... 2020 inherited IRA 'would-be' RMDs may be rolled over by August 31, 2020... IRA providers required to notify IRA owners.... Expanded eligibility for Coronavirus-Related Distributions.... Form 1099-R required even if repayment in same year."

Tags: CARES Act  •  Coronavirus (COVID-19)  •  IRAs  •  Misc. Distribution Issues  •  Required Minimum Distributions (RMDs)

DOL Proposes New 'Fiduciary Rule' and Provides Guidance for IRA Rollovers
Ice Miller LLP Link to more items from this source
[Guidance Overview]
July 21, 2020

"[P]lan sponsors should [1] carefully review investment advisory agreements and be sure to include protective clauses that prevent advisors from selling their own products or that result in the advisors realizing significant profit to the disadvantage of plan participants.... [2] review and approve any financial disclosures provided by investment advisors to participants and ensure that the language describing any potential conflicts of interest is clear and understandable to the average plan participant."

Tags: Fiduciary Duties  •  IRAs  •  Retirement Plan Investments  •  Rollovers

IRS Reminder: IRA Contributions Made by July 15 Count as 2019 Tax Deduction
Internal Revenue Service [IRS] Link to more items from this source
[Guidance Overview]
July 10, 2020

"Taxpayers can file their 2019 tax return now and claim the deduction before the contribution is actually made. But the contribution must then be made by the July 15 due date of the return, not including extensions.... Eligible taxpayers can usually contribute up to $6,000 to an IRA for 2019. The limit is increased to $7,000 for taxpayers who were age 50 or older by the end of 2019."

Tags: IRAs

DOL Releases Proposed Fiduciary Advice Prohibited Transaction Exemption
October Three Consulting Link to more items from this source
[Guidance Overview]
July 8, 2020

"The proposed PTE would retain the 1975 'five-part test' for who is an 'investment advice fiduciary,' but the PTE includes an extensive 'interpretation' (or re-interpretation) of that test that in many ways broadens it beyond prior law and practice and articulates principles for its application to plan-to-IRA rollovers. The proposed PTE would condition relief on the fiduciary providing advice in accordance with 'Impartial Conduct Standards' and requires that affected financial institutions and investment professionals acknowledge their fiduciary status and describe (in writing) the services they offer and material conflicts of interest."

Tags: Fiduciary Duties  •  IRAs

DOL Proposes New 'Fiduciary Rule' Exemption, Upends Longstanding Guidance on Rollover Advice
K&L Gates Link to more items from this source
[Guidance Overview]
July 8, 2020

"In the Exemption preamble, DOL now disavows the conclusion in [Advisory Opinion 2005-23A (the Deseret Letter)] ... As a result, whether one is an investment advice fiduciary under ERISA or the Code over rollover advice would depend upon whether each requirement of the five-part test is met. DOL acknowledged that not all rollover advice would be fiduciary investment advice under the five-part test."

Tags: Fiduciary Duties  •  IRAs  •  Retirement Plan Investments  •  Rollovers

DOL Unveils New Fiduciary Rule Proposal
American Retirement Association [ARA] Link to more items from this source
[Guidance Overview]
June 30, 2020

"The [DOL] has finally unveiled its much anticipated fiduciary rule, ... with some new implications for recordkeepers, Pooled Employer Plans and rollover advice.... As part of what it describes as a 'principles-based approach,' the proposal defines retirement investors as plan participants and beneficiaries, IRA owners, and plan and IRA fiduciaries.... [U]nder the new exemption, financial institutions and investment professionals could receive a wide variety of payments that would otherwise violate the prohibited transaction rules[.]"

Tags: 401(k) Plans  •  Fiduciary Duties  •  IRAs

2018 Instructions for IRS Form 8606: Nondeductible IRAs (PDF)
Internal Revenue Service [IRS] Link to more items from this source
[Official Guidance]
June 29, 2020

Rev. July 2020. "What's New: Tax relief for qualified 2018 disaster distributions. Recent legislation provides special rules that may apply to your 2018 return if you received a distribution from your IRA or other retirement plan and you suffered an economic loss as a result of a major disaster that occurred in 2018. These qualified disaster distributions are described in the 2018 Form 8915-C, Qualified 2018 Disaster Retirement Plan Distributions and Repayments, and its instructions. Special rules may also apply to your 2018 return if you received a distribution to purchase or construct a main home in a 2018 disaster area, but that home was not purchased or constructed because of the 2018 disaster."

Tags: IRAs  •  Retirement Plan Administration

Full Rollover Relief for Unwanted RMDs Under IRS Notice 2020-51
Nerd's Eye View Link to more items from this source
June 25, 2020

"Ultimately, the new guidance just released by the IRS provides a fair and favorable outcome for people who took their RMDs earlier this year ... However, this is an unprecedented and potentially troubling move by the IRS, given that they do not actually have the legal authority to make this change  ... While it's unlikely that anyone will take issue with the IRS' attempt to be fair and equitable, there's no question that they stepped outside of their legal authority when issuing this notice, and that could set a troubling precedent moving forward."

Tags: Coronavirus (COVID-19)  •  IRAs  •  Required Minimum Distributions (RMDs)  •  Rollovers

Text of IRS Notice 2020-51: Guidance on Waiver of 2020 Required Minimum Distributions (PDF)
Internal Revenue Service [IRS] Link to more items from this source
[Official Guidance]
June 23, 2020

"This notice provides guidance relating to the waiver of 2020 required minimum distributions ... from certain retirement plans under section 2203 of the [CARES Act]. In particular, the notice: [1] permits rollovers of waived required minimum distributions (RMDs) and certain related payments, including an extension of the 60-day rollover period for certain distributions to August 31, 2020; [2] answers questions relating to the waiver of 2020 RMDs; and [3] provides a sample plan amendment that, if adopted, would provide participants a choice whether to receive waived RMDs and certain related payments. The notice also provides transition relief for plan administrators and payors in connection with the change in required beginning date for RMDs under Section 401(a)(9) of the Code pursuant to section 114 of the [SECURE Act]."

Tags: 401(k) Plans  •  CARES Act  •  Coronavirus (COVID-19)  •  IRAs  •  Required Minimum Distributions (RMDs)  •  Retirement Plan Administration

Understanding the SECURE Act: Managing the 10-Year Rule
Manning & Napier Link to more items from this source
June 19, 2020

"The general impact is that the 10-year rule is less tax-efficient because traditional IRA distributions are condensed and therefore taxed at higher rates. Knowing that, what are some things to know if you are an account owner or beneficiary to help you be more strategic with distributions and potentially reduce the tax impact?"

Tags: IRAs  •  Required Minimum Distributions (RMDs)  •  SECURE Act

IRS Provides Welcome Deadline Relief for Savings Arrangement Reporting, Limited Additional Extensions
Ascensus Link to more items from this source
[Guidance Overview]
June 4, 2020

"Deadlines for providing [information returns for IRAs, health savings accounts (HSAs), Archer medical savings accounts (MSAs), and Coverdell education savings accounts (ESAs)] to the IRS and to account owners had previously been extended ... through July 15, 2020 ... The deadline for annual contributions to these accounts was also extended to July 15, 2020. This presented custodial organizations and service providers to these accounts with the dilemma of reporting contributions that could be received as late as the deadline for their reporting. Notice 2020-35 now provides a six-week window after the July 15, 2020, contribution deadlines in which organizations can prepare and provide these information returns to the IRS and to account owners."

Tags: Coronavirus (COVID-19)  •  HSAs  •  IRAs  •  Medical Savings Accounts (MSAs)

<< Older News  |  September 25, 2020

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