Question:
Is it possible to do a Backdoor Roth IRA conversion with a SEP IRA? If yes, how does it work?
Thank you!
Yulia
Answer:
Hi Yulia,
Yes, you can do a Backdoor Roth IRA conversion with a SEP IRA. You would simply contact the IRA custodian and request the conversion. If the SEP IRA is pre-tax and you have no after-tax IRA funds, then the converted amount is fully taxable in the year of conversion. If you do have after-tax funds, a portion of the conversion is tax-free under the pro-rata rule.
Question:
My mother was taking required minimum distributions (RMDs) until she passed in 2023. Her three children are the beneficiaries of her IRA. Do the children have to take annual RMDs, or can they take distributions anytime during the 10-year period as long as all monies are removed before 10 years? I have gotten several answers on this.
Answer:
These rules are confusing, so we’re not surprised you’ve gotten conflicting answers. The IRS has said that beneficiaries subject to the 10-year payout rule (like you and your siblings) must take annual RMDs during the 10-year period if the IRA owner died after starting RMDs. Because this rule surprised and confused many people, the IRS waived RMDs for 2021-2023 for beneficiaries in this situation. It’s possible the IRS will do that again for 2024, so you and your siblings should wait until later this year before taking the 2024 RMD to see if it is waived.
https://www.irahelp.com/slottreport/backdoor-roth-ira-conversions-and-annual-rmd-requirement-today%E2%80%99s-slott-report-mailbag
Specializing in private wealth management, we provide education, guidance, and strategies to help you achieve a tax-efficient retirement income.
Investment advisory services offered through Donato Wealth Management, PLLC, dba Empower Wealth Management and Empower Wealth & Tax (“Empower Wealth Management” or “EWM”),
an SEC registered investment adviser that only conducts business in jurisdictions where it is properly registered, or is excluded or exempted from registration requirements. Registration as an investment adviser is not an endorsement of the firm by securities regulators and does not mean the adviser has achieved a specific level of skill or ability. The firm is not engaged in the practice of law or accounting.
The information presented is believed to be current. It should not be viewed as personalized investment advice. All expressions of opinion reflect the judgment of the authors on the date of publication and may change in response to market conditions. You should consult with a professional adviser before implementing any strategies discussed. Content should not be viewed as an offer to buy or sell any of the securities mentioned, or as legal or tax advice. You should always consult an attorney or tax professional regarding your specific legal or tax situation. Personal investment advice can only be rendered after the engagement of EWM, execution of required documentation, and receipt of required disclosures. All investment and insurance strategies have the potential for profit or loss. Asset allocation and diversification will not necessarily improve an investor’s returns and cannot eliminate the risk of investment losses. Past performance is no guarantee of future results. For more information, please go to https://adviserinfo.sec.gov and search by our firm name or by our CRD #305031.
Insurance products and tax services are offered through Senior Tax and Insurance Advisors, PLLC, dba Empower Wealth Group (“Empower Wealth Group” or “EWG”). Any comments regarding safe and secure investments and guaranteed income streams refer only to fixed insurance products. They do not in any way refer to investment advisory products offered through EWM. Rates and guarantees provided by insurance products and annuities are subject to the financial strength of the issuing insurance company; not guaranteed by any bank or the FDIC. EWG is not affiliated with or endorsed by the U.S. Government, Social Security Administration, nor the federal Medicare program. You may be contacted by a licensed insurance agent. Calling the number above will direct you to a licensed insurance agent. EWG may not offer every plan available in your area. Any information provided is limited to plans available in your area. Please contact Medicare.gov or 1-800-MEDICARE.
EWM and EWG are both affiliated companies of Empower Wealth, LLC (“Empower”). Investment adviser representatives of EWM may have a financial incentive to recommend tax and insurance products and/or services offered through EWG which presents a conflict of interest. This conflict is addressed by EWM’s adoption of its Code of Ethics, which requires that all EWM’s Associated Persons place the interest of clients ahead of their own. Clients of EWM are also free to choose their own tax and/or insurance professionals and are under no obligation to utilize the services offered through any related entities or persons associated with Empower.
Strategic Partners listed on this page are not employees of EWM and are not affiliated through common ownership.
We do not offer every plan available in your area. Any information we provide is limited to those plans we do offer in your area. Please contact Medicare.gov or 1-800-MEDICARE to get information on all of your options.
© Empower Wealth Management All Rights Reserved.