Year-End IRA and Retirement Planning Questions Answered

From The Slott Report

The Slott Report recently answered some questions on IRA and retirement planning. 

1. To have your grandchildren inherit your IRA after passing, list “living grandchildren” as the beneficiary at your time of death. Although many financial institutions may want something less vague, like your grandchildren’s names. You may also consider naming a trust to your grandchildren as beneficiary of your IRAs.

2. A 2013 conversions of an IRA to Roth IRA can be characterized (changed) to up to October 15, 2014.

3. If you are over the age of 59 ½, and recently converted funds from an IRA to a newly opened Roth IRA, there is no 5 year restriction to the 10% early distribution penalty on funds being withdrawn within the first 5 years. With a Roth IRA, you would need to wait for 5 years before the funds can be withdrawn tax free.

4. A 401(k) RMD (required minimum distribution) must be taken before you roll over remaining funds from the 401(k) to an IRA.

5. If you are inheriting an IRA that was originally inherited to being with, the RMDs cannot be reset to the new beneficiary’s age. It must continue with the original beneficiary’s calculation.

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Davis & Hodgdon Associates has been assisting individuals and businesses in the Burlington Vermont Metro area for more than 20 years. If you have any questions or concerns please feel free to call 802.878.1963 or email [email protected].

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