Eligible Designated Beneficiaries and Inherited Roth IRAs: Today’s Slott Report Mailbag
Question: We have a 16-year-old minor inheriting an IRA from her 40-year-old father. Is it true that the child will have to take required minimum distributions (RMDs) each year until age 21? Then, at age 21 she will switch to the 10-year rule? Also, she will have to continue taking RMDs every year for 10 […]
New Code Y is Optional for 2025 QCDs
A few months ago, the IRS introduced a new Code Y for the reporting of qualified charitable distributions (QCDs) by IRA custodians on the 2025 Form 1099-R. The IRS has now issued guidance on its website making this new code optional for 2025. QCDs Basics QCDs first became available in 2006, and they were made […]
Eligible Designated Beneficiary Trivia
TRIVIA QUESTION: John is age 40, he has a traditional IRA, and he is updating his beneficiary form. John wants to be sure that anyone he names on the form is an eligible designated beneficiary (EDB) who can leverage “the stretch,” meaning the beneficiary can take annual required minimum distributions (RMDs) based on his […]
Eligible Designated Beneficiaries and Successor Beneficiaries: Today’s Slott Report Mailbag
By Andy Ives, CFP®, AIF® IRA Analyst QUESTION: My client is age 71 and divorced. He is the primary beneficiary of his ex-wife’s IRA. She just recently passed away this year at the age of 67. I believe my client is an Eligible Designated Beneficiary (“EDB”) because he is not more than 10 years […]
Why the Once-Per-Year Rollover Rule Is Often Misapplied
The IRS rollover rules are fraught with complexity. (That’s why we always recommend direct transfers instead of 60-day rollovers.) The rule with the most serious consequences is the “once-per-year” rule. Running afoul of that rule triggers a taxable distribution and often a 10% early distribution penalty if you’re under age 59½. And, any rolled-over funds […]
IRA Trick or Treat
The Halloween holiday is approaching. This is the time of year when tiny ghosts and goblins will ring doorbells and ask, “Trick or Treat?” In the spirit of the season, we at the Slott Report present our very own IRA Trick or Treat. Which of the following IRA strategies are “treats” and which are just “tricks?” […]
QCDs and RMDs Before Roth Conversions: Today’s Slott Report Mailbag
Question: I read your blog titled “5 Things You Need to Know About Qualified Charitable Distributions.” I was surprised that you didn’t include a 6th item to let people know that they cannot make a contribution to an IRA for the year of the qualified charitable distribution (QCD). Answer: Because of space concerns, we could […]
Good Reasons to Name a Trust as IRA Beneficiary
When a trust is named as beneficiary of an IRA, several possible negative issues may be introduced. For example, after the death of the IRA owner, things can become more complex for the beneficiaries. Trust beneficiaries cannot simply set up their own inherited IRAs. We must open a trust-held inherited IRA and, depending on the […]
State Tax Treatment of 529-to-Roth IRA Rollovers
By now, most of you probably know about the SECURE 2.0 Act provision permitting 529 funds to be rolled over to Roth IRAs. Because of this new law, parents and grandparents can fund 529 plans without worrying as much about having to pay taxes and penalties if the funds aren’t used for qualified education expenses. But […]
Roth Conversions and Qualified Charitable Distributions: Today’s Slott Report Mailbag
Question: Hello Ed Slott Team! I have been doing backdoor Roth IRA conversions for years now. I recently inherited a large traditional IRA from my aunt. Will the inherited IRA affect my ability to do tax-free backdoor Roth IRA conversions? Answer: Good news! You can continue to do backdoor Roth IRA conversions without a tax […]