Search found 12608 matches

by Alan S.
Mon Mar 18, 2024 3:41 pm
Forum: Personal Investments
Topic: Excess Roth IRA Contributions ?
Replies: 3
Views: 412

Re: Excess Roth IRA Contributions ?

Garymolly wrote: Mon Mar 18, 2024 1:19 pm Hi I’m in the same boat overcontributint for 2022 and 2023z I was wondering how you resolved this situation?
What caused your excess? Had you retired like the original poster with no earned income or was your MAGI too high for a Roth contribution?
by Alan S.
Mon Mar 18, 2024 11:43 am
Forum: Personal Investments
Topic: Minimum Required Distributions Wrinkle
Replies: 11
Views: 1437

Re: Minimum Required Distributions Wrinkle

A rather common situation is when a small business owner approaching RMDs chooses to sell his business to one or more children, and the parent stays on as an employee.

But this will NOT result in the parent avoiding RMDs due to the "family attribution rules" because lineal descendent ownership interests are attributed to the parent. This results in the parent being treated as a >5% owner just as if parent had not sold, and the parent will still have to take RMDs.
by Alan S.
Sun Mar 17, 2024 10:31 pm
Forum: Personal Investments
Topic: Recoup After-Tax 401K loss during excess return (due to true-up) during RIPC rollover to R-IRA
Replies: 2
Views: 358

Re: Recoup After-Tax 401K loss during excess return (due to true-up) during RIPC rollover to R-IRA

RetireGood wrote: Sun Mar 17, 2024 9:52 pm Hi

Previous company used to do 401K-,atch and true-up.
I used to front load 401K and used to get excess returned through below . Managed excess such a way it could be always returned from from After-Tax portion.
1099-R | CODE E | Box 5 > Box 1 | Box2" Taxable difference

But last year due to job-change/market-loss/time, I have a loss here i.e. below
1099-R | CODE E | Box 5 < Box 1 | Box2: 0
Looks like my loss disappeared into ether, is there anyway to re-coup that?

I have left above company in 2023.

Thanks
I think you have the < and > transposed. In any event, unlike the return of excess deferrals you cannot claim a loss on the return of excess annual additions (Box 5 > Box 1 resulting in 2a being 0).
by Alan S.
Sun Mar 17, 2024 10:03 pm
Forum: Personal Finance (Not Investing)
Topic: Aggregation of IRA Balances to Calculate RMD
Replies: 4
Views: 506

Re: Aggregation of IRA Balances to Calculate RMD

The IRS advises to calculate the RMD for each IRA separately to avoid an error if the IRA owner happens to own an IRA with a sole spousal beneficiary more than 10 years younger (Table II applies), and any other IRAs for which the Uniform Table applies.
by Alan S.
Sun Mar 17, 2024 8:58 pm
Forum: Personal Finance (Not Investing)
Topic: Excess Deferral: do 1099-R box 1 + 2a count earnings?
Replies: 3
Views: 295

Re: Excess Deferral: do 1099-R box 1 + 2a count earnings?

creant wrote: Sun Mar 17, 2024 7:52 pm Thank you, Alan.

TurboTax forums say that I will receive two 2024 1099-R's in early 2025 -- one of which I simply ignore since it was already reported in the 2023 taxes (the one reporting the $10,000 excess deferral), the other of which I report in the 2024 taxes (the one reporting the $2000 gains only).
Yes, this agrees with what I stated.
by Alan S.
Sun Mar 17, 2024 7:28 pm
Forum: Personal Finance (Not Investing)
Topic: Excess Deferral: do 1099-R box 1 + 2a count earnings?
Replies: 3
Views: 295

Re: Excess Deferral: do 1099-R box 1 + 2a count earnings?

Hi, I over-contributed to 2 401(k)/403(b) accounts. Please assume I over-contributed by $10,000 over the $22,500 limit and that the over-contribution has increased in value to $12,000 prorated. After refunding the excess salary deferral from the plan administrator, TurboTax says to report the excess on one's 2023 taxes in a "dummy" Form 1099-R (form not received yet) for 2024 with code P in box 7 and to report the excess deferral amounts in boxes 1 and 2a . My question is, what values go into the boxes 1 and 2a? $10,000 (the over-contribution that was deducted from taxable salary) or $12,000 (over-contribution plus earnings)? Thank you! 10,000 in Boxes 1 and 2a on the Code P dummy 2024 1099R, as the 10,000 will be taxable in 2023...
by Alan S.
Sun Mar 17, 2024 1:10 pm
Forum: Personal Finance (Not Investing)
Topic: RMDs On A Combined IRA With RMD/Non-RMD Age Gap
Replies: 6
Views: 428

Re: RMDs On A Combined IRA With RMD/Non-RMD Age Gap

If you were named as the sole beneficiary of your wife's IRA on 1/1/2024, she can use Table II to lower her 2024 RMD. If you were not the sole beneficiary at the start of the year, she must use the Uniform Table.
by Alan S.
Sun Mar 17, 2024 11:41 am
Forum: Personal Investments
Topic: Minimum Required Distributions Wrinkle
Replies: 11
Views: 1437

Re: Minimum Required Distributions Wrinkle

diehard wrote: Sun Mar 17, 2024 11:31 am Thanks. The purpose would be to delay my RMDs.
And how would you find a buyer that would agree to purchase and sell back to you, incurring costs and tax complications?
by Alan S.
Sat Mar 16, 2024 9:46 am
Forum: Personal Investments
Topic: 76 year old with new IRA from divorce. When to take RMD?
Replies: 8
Views: 1151

Re: 76 year old with new IRA from divorce. When to take RMD?

Note that if the ex had any basis in the IRA, she would be entitled to a % of that basis equal to the % of the IRA balance that was awarded to her. She would list that basis on line 2 of Form 8606.
by Alan S.
Fri Mar 15, 2024 1:48 pm
Forum: Personal Finance (Not Investing)
Topic: RMD Question?
Replies: 46
Views: 4270

Re: RMD Question?

user9532 wrote: Fri Mar 15, 2024 12:04 pm For somebody who will be taking RMD at age 73, how is the amount calculated? Based on the Distribution Period of 27.4 at 72 or 26.5 at 73?

From IRS Table III:

Code: Select all

Age	 Distribution Period 
72	 27.4 
73	 26.5 

The divisor for age 73 (26.5) is applied to the prior year ending IRA balance. This first distribution can be deferred to as late as 4/1 of the year following the RMD year for the first RMD only, but deferring the first RMD would result in 2 RMDs being distributed in the following year.
by Alan S.
Fri Mar 15, 2024 12:47 pm
Forum: Personal Finance (Not Investing)
Topic: [IRA Tax Reporting Question]
Replies: 6
Views: 358

Re: [IRA Tax Reporting Question]

I have one more clarifying question, please. Question: Is there an IRS publication that states an old 401K, still in place from a former employer, is not included on form 8606 line 6. The former employer's 401K remains as it was, but of course no longer receives contributions. There is a new, active, current employer's 401K. My understanding is that the old 401K is not "an outstanding rollover" since tax law does not require the old 401K to be rolled over. Thank you. There is no RMD involved - the person is 45. You are correct. Even if the old 401k had been distributed to the participant but not yet rolled over to an IRA, the amount would not go on line 6. An outstanding rollover as defined must be added to the line 6 actual year...
by Alan S.
Thu Mar 14, 2024 9:39 pm
Forum: Personal Investments
Topic: Recharacterized Roth->Traditional contribution with some earings, and then a Roth conversion
Replies: 4
Views: 423

Re: Recharacterized Roth->Traditional contribution with some earings, and then a Roth conversion

I had mistakenly made tax year 2023 and 2024 Roth Contributions last week and had that recharacterized to Traditional IRA Contributions. Schwab completed that for me today, I also had requested Schwab to calculate and adjust for any earnings or losses which they did as well, for a total of: tax year 2023: $6,517 tax year 2024: $7,015 I'm assuming they calculated that based on a fraction of the total earnings of my account, because the actual contribution funds were only invested for about 5 minutes before I realized my mistake and sold the investment which netted a $2 loss. I'm going to convert all of the traditional IRA funds to Roth. ($13,532) My understanding is that: - for tax year 2023 I'll document the $6,500 Traditional IRA contribu...
by Alan S.
Thu Mar 14, 2024 1:51 pm
Forum: Personal Finance (Not Investing)
Topic: Clarification on rollover to Roth and traditional IRA
Replies: 10
Views: 972

Re: Clarification on rollover to Roth and traditional IRA

Thank you for your response. Fidelity already sent me check for the distribution. Do you think they will be able to cancel the check and just move the money to Roth? I was not aware of one rollover limit per 12 months. Can you please elaborate on this? You are limited to only one 60 day rollover between like kind IRA accounts in a 12 month period. Because a Roth IRA is not a like kind account to the TIRA, the conversion does not count toward the rollover limit. It would count if you wanted to roll it back into a TIRA. You should just cash the check and write your own check for $20 as a conversion contribution to your Roth IRA, but if you prefer to just keep the funds you will owe the 10% penalty (only $2) in addition to the tax on $20.
by Alan S.
Thu Mar 14, 2024 1:30 pm
Forum: Personal Finance (Not Investing)
Topic: Dad's 60-day IRA Rollover plan hit a snag
Replies: 14
Views: 850

Re: Dad's 60-day IRA Rollover plan hit a snag

Would it make sense to rollover the entire larger $120K back to an IRA, take the RMD out of the $80K and put the balance in a Roth? I just skimmed this quickly, but are you trying to minimize the amount withdrawn? That's a good plan! It works as long as the 120k distribution did not occur before the 80k distribution. If same day, it should be OK. But make sure he knows that his one rollover has been used up for the 12 months following the date of the distribution that was rolled over. I don't see the problem with this. The only limitations I can see are that he can't do a 60 day rollover of two separate distributions in the same 12 months, and the RMD has to happen before the Roth conversion. I don't see a problem with either of these sequ...
by Alan S.
Thu Mar 14, 2024 12:04 pm
Forum: Personal Finance (Not Investing)
Topic: Dad's 60-day IRA Rollover plan hit a snag
Replies: 14
Views: 850

Re: Dad's 60-day IRA Rollover plan hit a snag

toddthebod wrote: Thu Mar 14, 2024 11:48 am
CAsage wrote: Thu Mar 14, 2024 11:39 am Would it make sense to rollover the entire larger $120K back to an IRA, take the RMD out of the $80K and put the balance in a Roth? I just skimmed this quickly, but are you trying to minimize the amount withdrawn?
That's a good plan!
It works as long as the 120k distribution did not occur before the 80k distribution. If same day, it should be OK. But make sure he knows that his one rollover has been used up for the 12 months following the date of the distribution that was rolled over.
by Alan S.
Thu Mar 14, 2024 10:58 am
Forum: Personal Finance (Not Investing)
Topic: Clarification on rollover to Roth and traditional IRA
Replies: 10
Views: 972

Re: Clarification on rollover to Roth and traditional IRA

This isn't over yet! I just received a check from Fidelity for $20. This is distribution from my IRA account from which I rolled over funds to 401k account a few weeks ago. I am disappointed that Fidelity didn't directly rollover this residual amount to 401k. Check is addressed to me. Should I just pay tax and penalty on this $20 instead of going through the trouble of rolling this into my 401k? Given that the rollover to the 401k can be a hassle and the amount is small, why not roll it over to your Roth IRA (conversion). You will still owe tax, but no penalty, and this will not count against the one rollover limit per 12 months. Fidelity will just add the $20 to the 1099R distribution code 7 if you are over 59.5. And you will need to file...
by Alan S.
Thu Mar 14, 2024 10:42 am
Forum: Personal Investments
Topic: Tax reporting on sales of NUA shares using tax software
Replies: 1
Views: 218

Re: Tax reporting on sales of NUA shares using tax software

I am going through my first experience with NUA shares and have several questions regarding tax reporting using tax software. I retired in 2021 and am 66. In early 2024 I distributed my company shares to take advantage of NUA tax treatment (and rolled over the remainder of my 401k into pretax and Roth IRAs). The shares were transferred to Computershare and then to fidelity with both in separate accounts to keeping these shares segregated from other company shares (from RSUs). The 401k provided the total share cost basis which will be taxed this year (I will not see the 1099-Rs til 2024 tax season), and a statements of about 30 cost bins of the shares which I expect it will not report to the IRS. In Fidelity, I assigned about 30 lots of who...
by Alan S.
Wed Mar 13, 2024 10:56 pm
Forum: Personal Finance (Not Investing)
Topic: Beneficiary Issue on Inherited IRA and Roth IRA
Replies: 8
Views: 1058

Re: Beneficiary Issue on Inherited IRA and Roth IRA

Bsteiner, thank you for your response. I read your very informative articles - thank you for linking. We have 4 adult children, 7 adult grandchildren and 4 minor grandchildren named as beneficiaries. We will be able to get disclaimers on all of them with the possible exception of the 4 minor grandchildren, as you noted. In the disclaimers, can we each specifically request that my mother receives our portion of the IRA and Roth? Would it be best to contact my parents' trust attorney to help facilitate this process through Schwab and the IRS? Should I wait to hear from the Schwab Estate department before I contact the attorney so we know what their position is? I am curious about the last line of your post: 'Whether the disclaimed IRAs go th...
by Alan S.
Wed Mar 13, 2024 6:54 pm
Forum: Personal Finance (Not Investing)
Topic: 401k Beneficiary Designations - Directing Pre-Tax vs Post-Tax?
Replies: 7
Views: 857

Re: 401k Beneficiary Designations - Directing Pre-Tax vs Post-Tax?

Not sure how many are interested, but here’s the follow up. After speaking with my employer’s HR, they informed me this is a limitation of Fidelity’s 401k management system, not something imposed by the employer or the 401k plan documents. I’m surprised Fidelity doesn’t have this ability. I will look at an in-service withdrawal or rollover of the Roth $ to have more control over the beneficiary designations. I have not heard of any 401k plans that allow beneficiary splits other than pro rata of the entire plan balance. However, if the plans wanted to take on the additional accounting requirements, I don't know why they couldn't support leaving the pre tax sub account to a charity and the Roth to individuals. Perhaps they fear that any such...
by Alan S.
Tue Mar 12, 2024 10:03 pm
Forum: Personal Investments
Topic: How will RMD required percentages be affected by changing start age to 75?
Replies: 4
Views: 1001

Re: How will RMD required percentages be affected by changing start age to 75?

The RMD tables were just updated in 2022 for mortality changes, and this happens about every 20 years, so the current tables will be here for quite some time now. The increase in RMD does not affect the divisors but obviously adds more years before RMDs even start. The result of that is the balances will be higher than they would have been throughout the RMD period unless of course the annual distributions are increased over the RMD amount. In other words the current age 75 RMD% will be the same except that 75 will be the first RMD distribution year. This delay in the RMD age will result in a higher % of RMDs for married couples occurring after the first spouse has passed, subjecting the surviving spouse to more income at the higher single ...
by Alan S.
Tue Mar 12, 2024 9:39 pm
Forum: Personal Finance (Not Investing)
Topic: Beneficiary Issue on Inherited IRA and Roth IRA
Replies: 8
Views: 1058

Re: Beneficiary Issue on Inherited IRA and Roth IRA

A year ago, my brother and I met with my elderly parents' Schwab financial advisor to obtain full trading authority on their accounts and to understand the positions of the accounts. My parents have a Trust in place where the surviving spouse is to inherit all assets upon the death of the first spouse. We wanted to make the Trust the beneficiary on all accounts, but the Schwab advisor said that this can create problems and get messy when there are several heirs (in our case there are 15 heirs after the death of both parents). He suggested that we create a letter listing all beneficiaries - surviving children and grandchildren. He understood that my mother was to be the first beneficiary and we were not told to list her specifically. Our un...
by Alan S.
Tue Mar 12, 2024 5:30 pm
Forum: Personal Investments
Topic: RMD from various IRAs
Replies: 4
Views: 481

Re: RMD from various IRAs

Lalamimi wrote: Tue Mar 12, 2024 4:07 pm My DH has a tIRA and 3 annuities (Don't judge, it was a weak moment). He has obtained the appropriate RMD amounts from the TIRA and 2 of the Annuities. Is it ok to request the remaining RMD amount from one of the other Annuities as a penalty free distribution and not as an RMD, then show it on our Tax forms as applied to the RMD? Or should we just resubmit another RMD request? This is obviously his first RMD year. TIA
Please clarify the tax character of all 3 annuities.
These accounts could be IRA annuities, other qualified annuities such as from a qualified plan, or non qualified annuities which are not subject to RMDs.

IRA RMDs can only be satisfied by distributions from IRAs or IRA annuities in any combination.
by Alan S.
Tue Mar 12, 2024 11:38 am
Forum: Personal Finance (Not Investing)
Topic: Using Tax Refund for Estimated Taxes
Replies: 7
Views: 721

Re: Using Tax Refund for Estimated Taxes

OpenMinded1 wrote: Tue Mar 12, 2024 11:06 am
Artsdoctor wrote: Tue Mar 12, 2024 10:45 am The 2023 refund will be credited for the First Quarter, not distributed equally throughout the year.
Thanks. I guess that's optimal for our situation since the distribution and sale of stocks occurred in the first quarter.
Just be sure that next year you do not forget that you applied your refund to 2024 taxes and to add it to your estimated tax payment line for 2024.
by Alan S.
Tue Mar 12, 2024 11:03 am
Forum: Personal Finance (Not Investing)
Topic: Want to transfer Roth IRA, don't like orphaned accounts, how will I access records/tax forms if I do full account ACATS?
Replies: 4
Views: 339

Re: Want to transfer Roth IRA, don't like orphaned accounts, how will I access records/tax forms if I do full account AC

Planning to do an account transfer between brokers. I dislike small balance orphaned accounts so I want to do a full transfer. But if I do that my existing account closes, so how will I access any final statements that are produced or any tax information next year? I assume they will mail me any necessary tax stuff if I no longer have a web account, right? Anything else that would be smart to download before the transfer takes place other than available statements? By law, the former custodian must either mail you and the IRS the tax forms (1099R and 5498), or make yours available on a secure website. Direct transfers do not generate any tax forms. As for your final statement, if the custodian terminates your web access, make a copy of tha...
by Alan S.
Tue Mar 12, 2024 10:45 am
Forum: Personal Investments
Topic: Rollover IRA has commingled pre & post tax funds - What are my options?
Replies: 8
Views: 876

Re: Rollover IRA has commingled pre & post tax funds - What are my options?

OP, be aware this is Plan dependent. My Megacorp plan used the archaic term "Conduit IRA", required it to contain only rolled over funds (no contributions comingled), and the IRA had be "seasoned" at least 2 years. So as mentioned, check with your Plan and see if they accept incoming rollovers, and just as importantly check if they have any restrictions related to such rollover. Good luck. Further to the above, if you recharacterized a former Roth contribution into what was previously a "rollover IRA", that IRA is no longer a rollover IRA because it now includes a regular IRA contribution. This will be a problem if your employer plan only accepts incoming rollovers from "rollover" IRAs. Many IRA cust...
by Alan S.
Mon Mar 11, 2024 9:33 pm
Forum: Personal Finance (Not Investing)
Topic: Form 1116: Why did CPA put "General Category Income" for mutual fund income?
Replies: 6
Views: 771

Re: Form 1116: Why did CPA put "General Category Income" for mutual fund income?

This is passive income, not general category.

But if the retired CPA has not been indicating passive income for years, it apparently does not matter to the IRS.
by Alan S.
Mon Mar 11, 2024 9:21 pm
Forum: Personal Finance (Not Investing)
Topic: Inherited IRA, 1099-R, 5498
Replies: 3
Views: 469

Re: Inherited IRA, 1099-R, 5498

Hello Alan, Thank you so much for the response. I am 63. I did not take any distribution from my own IRA (established by the credit union and fund transferred from the inheritance, I didn't have a IRA account in this CU prior). The 1099-R issued to me has distribution code as 7 (normal distribution). So it sounds like this should be considered as a spousal inherited IRA (I wasn't sure due to court approved legal separation). As you mentioned, I can have the inheritance rolled over my own IRA, which I did. Should I just ask the CU to issue me a corrected 1099-R indicating there is no distribution? Thanks again! Being over 59.5, you are better off with your own IRA than an inherited IRA because you can take any distributions you wish without...
by Alan S.
Mon Mar 11, 2024 6:58 pm
Forum: Personal Finance (Not Investing)
Topic: Inherited IRA, 1099-R, 5498
Replies: 3
Views: 469

Re: Inherited IRA, 1099-R, 5498

Hello, I am a long time lurker but I am looking for some help, I think that I am in a hot mess. My husband and I filed a legal separation several years ago never divorced, but he passed in 2023. I was the beneficiary of his IRA (a portion) which was in a credit union. I asked to open an Inherited IRA account, but they opened a regular IRA for me and transfer the money to this account. The paper work I had to sign indicated it was a inheritance from a deceased account. Now I received 2 1099-R forms. One is for the deceased: box 2a (taxable amount) has the entire amount (60k ish), box 2b (Taxable amount not determined) checked, Total distribution checked. box 7 (Distribution code), 4 (Death) One is for me: box 2a (taxable amount) has the ent...
by Alan S.
Mon Mar 11, 2024 3:02 pm
Forum: Personal Finance (Not Investing)
Topic: Roth IRA Excess Contributions - how to enter earnings on taxes
Replies: 13
Views: 853

Re: Roth IRA Excess Contributions - how to enter earnings on taxes

To make matters more interesting: I have Vanguard "2023 Form 1099-R" for excess contributions for 2022 tax year from our Roth 401k It has 2 individual lines: Entry 1 = $10,000 = Excess Contribution Returned $ amount = Code BP Entry 2 = $200 ( the "gains" on that amount+ = Code B8 TaxAct insists that I put the BP line on an Amended 2022 Tax Return. That shouldn't affect taxes as it's a Roth withdrawal. Question: Can I put the $200 (the gains) on the 2023 tax return? Or do I put that on the Amended 2022 return, which ripples through everything (ACA subsidy etc). As you indicated, because the excess deferrals were Roth, the distribution is non taxable, and there is no need to amend your 2022 return to report the distributi...
by Alan S.
Mon Mar 11, 2024 9:34 am
Forum: Personal Finance (Not Investing)
Topic: Roth IRA Excess Contributions - how to enter earnings on taxes
Replies: 13
Views: 853

Re: Roth IRA Excess Contributions - how to enter earnings on taxes

PaddyMac wrote: Mon Mar 11, 2024 12:12 am
toddthebod wrote: Sun Mar 10, 2024 7:38 pm You are correct that your 1099-R will come next year, but you need to report the earnings this year. You likely just need to enter a fake 1099-R.
Thank you. That's what I did, choosing "8 - Excess contributions & earnings taxable in 2023" for the Code.

I was surprised that the profit showed up on the 1040 under 1(h) "Other Earned Income", instead of 4b taxable distributions from IRAs.
The code should be 8J. Using just 8, your tax program will treat this distribution as coming from a qualified plan, not an IRA. That's why the earnings showed up incorrectly on 1(h) as excess elective deferrals rather than on lines 4a and 4b (the earnings) where it belongs.
by Alan S.
Sun Mar 10, 2024 5:31 pm
Forum: Personal Finance (Not Investing)
Topic: Successor beneficiary from pre-secure act - 10 year rule?
Replies: 2
Views: 289

Re: Successor beneficiary from pre-secure act - 10 year rule?

Does anyone know the latest guidance on whether the 10-year rule applies for a successor beneficiary who inherited an IRA prior to 2020? Consider the following scenario: Original owner dies in 2016, age 72, IRA goes to Beneficiary A Beneficiary A dies in 2019, age 70, IRA goes to Beneficiary B At the time Beneficiary B inherits the IRA, the Secure Act is not in effect. Does the Secure Act 10-year rule apply retroactively to the IRA and kick in after 2020, or does the IRA remain under the previous successor beneficiary RMD rules rather than the 10-year rule? This is an exceedingly difficult question to google and there is conflicting information from reputable-seeming sources. Have gotten different answers from different CPAs. There have be...
by Alan S.
Sun Mar 10, 2024 1:17 pm
Forum: Personal Investments
Topic: Inherited IRA Rule Clarification
Replies: 10
Views: 1003

Re: Inherited IRA Rule Clarification

What clarification? :confused Are we waiting for a clarification of the clarification to the original clarification- and counting :happy ? That's about it. The Secure Act proposed Regs issued 2 years ago to clarify the intent of the Secure Act passed 4 years ago are still not final, and we don't know when it will be. But the pressure is obviously mounting on the IRS to get this done. As a result of this situation, the IRS has still not been able to publish the 2023 edition of Pub 590 B. However, the 10 year rule beneficiary RMD issue is not the only problem. There are several other proposed Regs that add more complexity to the already complex RMD rules. Among them: 1) New time limit for a surviving spouse to elect to assume ownership 2) Ol...
by Alan S.
Sat Mar 09, 2024 1:10 pm
Forum: Personal Finance (Not Investing)
Topic: Using withholding on Roth conversion instead of estimated tax payment
Replies: 86
Views: 5891

Re: Using withholding on Roth conversion instead of estimated tax payment

What is actually being swapped is the tax payment is done by withholding rather than quarterly estimates which automatically makes them timely.

This can also be done without a conversion, just a distribution with withholding and a 60 day rollover of the gross distribution. This uses up the one rollover, while a conversion does not.
by Alan S.
Sat Mar 09, 2024 12:59 pm
Forum: Personal Finance (Not Investing)
Topic: Reporting IRA recharacterization using Cash App Tax
Replies: 10
Views: 717

Re: Reporting IRA recharacterization using Cash App Tax

I recharacterized my trad IRA to Roth, but I couldn't find a way to report it in Cash App Tax. FreeTaxUSA has the capability, but unfortunately its state filing is not free. Also, I have used Cash App Tax and its predecessor CreditKarma in the past years, so am reluctant to switch. (FWIW, I did email their support, which only replied with irrelevant canned responses. Maybe I should ditch it and switch :x ) What year was the TIRA contribution for, and when was the recharacterization done? In general, if you are using a cheap tax program such as some of the "free file" programs that do not allow you to add explanatory statements such as for a recharacterization, there is a risk that the IRS will send you an inquiry before the 1099R...
by Alan S.
Sat Mar 09, 2024 11:52 am
Forum: Personal Finance (Not Investing)
Topic: Reporting IRA recharacterization using Cash App Tax
Replies: 10
Views: 717

Re: Reporting IRA recharacterization using Cash App Tax

I recharacterized my trad IRA to Roth, but I couldn't find a way to report it in Cash App Tax. FreeTaxUSA has the capability, but unfortunately its state filing is not free. Also, I have used Cash App Tax and its predecessor CreditKarma in the past years, so am reluctant to switch. (FWIW, I did email their support, which only replied with irrelevant canned responses. Maybe I should ditch it and switch :x ) What year was the TIRA contribution for, and when was the recharacterization done? In general, if you are using a cheap tax program such as some of the "free file" programs that do not allow you to add explanatory statements such as for a recharacterization, there is a risk that the IRS will send you an inquiry before the 1099R...
by Alan S.
Fri Mar 08, 2024 8:09 pm
Forum: Personal Finance (Not Investing)
Topic: H&R Block filing 2022 Amended Return due to excess 401(k) Contribution
Replies: 3
Views: 505

Re: H&R Block filing 2022 Amended Return due to excess 401(k) Contribution

You should first check your 2022 tax return, because if the deferrals in Box 12 of her W-2 exceed the limit, many tax programs will add the excess to wage income. See if the wage income on that return exceeds the Box 1 totals of your W-2 forms. If it does exceed it by 2245, then the taxes have already been paid. If the wage line does not include the excess, then your 2022 return must be amended to add the 2245. The loss of 111 can be claimed on the 2023 return as follows, per Pub 525: Report a loss on a corrective distribution of an excess deferral in the year the excess amount (reduced by the loss) is distributed to you. Include the loss as a negative amount on Schedule 1 (Form 1040), line 8z, and identify it as “Loss on Excess Deferral Di...
by Alan S.
Fri Mar 08, 2024 6:31 pm
Forum: Personal Finance (Not Investing)
Topic: Incorrect Roth IRA contribution->Traditional IRA - how to get it back to Roth?
Replies: 3
Views: 361

Re: Incorrect Roth IRA contribution->Traditional IRA - how to get it back to Roth?

Here is the story: In early 2023 I contributed $6000 to my Roth IRA for tax year 2022. When I did my taxes 3 months later I realized I was above the income limit for Roth contributions for 2022. So I called Fidelity, explained the situation, and asked them to move it to my Traditional IRA, which they did, to the tune of $4782.50 (due to losses in the market between the time I contributed to the Roth IRA and the time I called Fidelity to move it to Traditional). Question #1: I think I should have filed a IRS form 8606 with my 2022 taxes but it is unclear to me whether, on that form, I need to: a) record my $6000 contribution to the Roth IRA in some way - I am not sure this is even necessary or possible? b) record my $4782.50 contribution to...
by Alan S.
Fri Mar 08, 2024 3:11 pm
Forum: Personal Finance (Not Investing)
Topic: Help With Taxes Please - 1099-R Code G - After Tax to Roth IRA
Replies: 2
Views: 438

Re: Help With Taxes Please - 1099-R Code G - After Tax to Roth IRA

Hi very helpful people, I will try to explain this tax situation correctly. In August 2023 I took a partial inservice rollover from my 401K. I liquidated 1 fund completely which resulted in 3 separate transactions... Before Tax - $364K - went into my TIRA (Coded G on 1099-R) After Tax - $28K - went into my Roth IRA (Coded G on 1099-R) Roth 401K - $42K - went into my Roth IRA (Coded H on 1099-R) A total of $70K went into my Roth IRA. I got 2 1099-Rs showing all 3 transactions... so here on Bogleheads I was advised to divide the 2 1099-Rs into 3 separate transactions on my taxes. I have a question about the 1099-R coded G for $28K After Tax that went into my Roth IRA. I'm attaching my entry for this in TurboTax and the results. Did I do this...
by Alan S.
Fri Mar 08, 2024 2:49 pm
Forum: Personal Finance (Not Investing)
Topic: Incorrect Roth IRA contribution->Traditional IRA - how to get it back to Roth?
Replies: 3
Views: 361

Re: Incorrect Roth IRA contribution->Traditional IRA - how to get it back to Roth?

Here is the story: In early 2023 I contributed $6000 to my Roth IRA for tax year 2022. When I did my taxes 3 months later I realized I was above the income limit for Roth contributions for 2022. So I called Fidelity, explained the situation, and asked them to move it to my Traditional IRA, which they did, to the tune of $4782.50 (due to losses in the market between the time I contributed to the Roth IRA and the time I called Fidelity to move it to Traditional). Question #1: I think I should have filed a IRS form 8606 with my 2022 taxes but it is unclear to me whether, on that form, I need to: a) record my $6000 contribution to the Roth IRA in some way - I am not sure this is even necessary or possible? b) record my $4782.50 contribution to...
by Alan S.
Fri Mar 08, 2024 11:45 am
Forum: Personal Finance (Not Investing)
Topic: Recharacterize trad IRA when income exceeds Deduction Limits
Replies: 16
Views: 747

Re: Recharacterize trad IRA when income exceeds Deduction Limits

terran wrote: Fri Mar 08, 2024 11:41 am
retiredjg wrote: Fri Mar 08, 2024 10:59 am Unfortunately, ML is the brokerage that makes you determine the "associated earnings" to recharacterize along with the contributiion. I don't know the formula - there is one - but the form tells you that you have to figure it out yourself and they don't tell you how.
Oof, that's terrible! Probably best to move to another brokerage before contributing for 2024. I've recharacterized at Fidelity and they did everything for me.
If ML won't do the recharacterization calculation, they probably won't do it for a return of contribution either - because the formula is exactly the same.
by Alan S.
Thu Mar 07, 2024 9:20 pm
Forum: Personal Finance (Not Investing)
Topic: Post - Tax IRA rollover to Roth IRA
Replies: 10
Views: 713

Re: Post - Tax IRA rollover to Roth IRA

My 401k pre-tax contributions and earnings were 2.5M, and these after-tax contributions were $25k. They were "commingled" in my 401k and rolled over into my traditional IRA together on the same check. My 1099-R had this $25k in box 5 to indicate designated Roth contributions and Box 7 distribution code G. You should have 2 1099R forms. One should be coded H and reports the Roth 401k to Roth IRA rollover. The other is coded G, and the amount in Box 5 is not Roth money, it is after tax contributions made to the pre tax 401k. Based on these numbers, the conversion of 25k will be 99% taxable (24,750) and you will still have IRA basis remaining of 24,750 for future use, and that will result in filing Form 8606 each year you take a dis...
by Alan S.
Thu Mar 07, 2024 6:39 pm
Forum: Personal Finance (Not Investing)
Topic: Post - Tax IRA rollover to Roth IRA
Replies: 10
Views: 713

Re: Post - Tax IRA rollover to Roth IRA

Hello all! I've been a lurking for a while, and this is my first post. I have a tax question. I recently retired and completed a 60-day rollover of my 401(k) into IRAs. Some of my 401(k) rollover was traditional tax-deferred. The rest of the 401(k) was designated as "Roth" and was rolled over into a Roth IRA. However, a small portion of my traditional, tax-deferred, rollover was actually post-tax excess contributions that ended up in my tIRA. I transferred that amount of post-tax excess contributions to my Roth IRA. My question is how do I keep this transfer from looking like a Roth conversion that I have to pay taxes on? How do I handle that on my taxes? Thanks in advance! Please clarify what "excess contributions" ref...
by Alan S.
Thu Mar 07, 2024 2:41 pm
Forum: Personal Finance (Not Investing)
Topic: Contribution from tIRA to Roth back to tIRA
Replies: 1
Views: 183

Re: Contribution from tIRA to Roth back to tIRA

Hello, I have some questions about a reverse Roth IRA contribution but couldn't find anything similar to my situation. Sorry if I missed anything and feel free to move this post to an existing thread. A quick background - I'm 50+ and have been self-employed for a few years now and have been making the maximum contribution to my tIRA account for several years. In 2022 I made the maximum contribution of $7000 in January for 2022 and then in December I decided to set up an Individual 401K. Due to my income and the i401k I wasn't able to deduct the tIRA amount and I filled out a 8606 form for my 2022 taxes with the $7000 as the basis because it was the first time I had a non-deductible tIRA contribution. In January 2023, I made a $7500 tIRA co...
by Alan S.
Thu Mar 07, 2024 12:18 pm
Forum: Personal Finance (Not Investing)
Topic: 401k Beneficiary Designations - Directing Pre-Tax vs Post-Tax?
Replies: 7
Views: 857

Re: 401k Beneficiary Designations - Directing Pre-Tax vs Post-Tax?

Not sure how many are interested, but here’s the follow up. After speaking with my employer’s HR, they informed me this is a limitation of Fidelity’s 401k management system, not something imposed by the employer or the 401k plan documents. I’m surprised Fidelity doesn’t have this ability. I will look at an in-service withdrawal or rollover of the Roth $ to have more control over the beneficiary designations. I have not heard of any 401k plans that allow beneficiary splits other than pro rata of the entire plan balance. However, if the plans wanted to take on the additional accounting requirements, I don't know why they couldn't support leaving the pre tax sub account to a charity and the Roth to individuals. Perhaps they fear that any such...
by Alan S.
Thu Mar 07, 2024 11:55 am
Forum: Personal Finance (Not Investing)
Topic: UBS Won't Issue a Corrected 1099
Replies: 14
Views: 1378

Re: UBS Won't Issue a Corrected 1099

So...my MIL took a chunk of money out of an IRA in mid-October 2023. We realized it over Thanksgiving weekend, and arranged for her to re-deposit the funds at UBS within the 60 day window. UBS has now issued a 1099-R, showing the withdrawal - and with the ENTIRE amount in the taxable box! Which triggers a 6-figure tax bill. We called to discuss issuing a corrected 1099-R, and the rep said that they would not issue a corrected 1099; instead, they will mail my MIL the account statements, showing the withdrawal, and the re-deposit, within the 60 day window. This seems ridiculous to me - how can they blithely send out a tax document so blatantly wrong? Don't they have an obligation to correct it? Has anyone every had this situation, and DIDN'T...
by Alan S.
Thu Mar 07, 2024 11:27 am
Forum: Personal Finance (Not Investing)
Topic: Is it Time to Self-Insure? CA Homeowners Rate Increases
Replies: 118
Views: 8836

Re: Is it Time to Self-Insure? CA Homeowners Rate Increases

ETA: I guess another option might be to increase the deductible to something reasonable like $10K? I have no idea if insurance companies generally balk at that. It's possible. I have a $10k deductible with Farmer's. Premium is still $4k. I wish they allowed a percentage of replacement cost as deductible and not just a fixed amount. Say 1-5%. That would be up to $100k deductible on a $2M house. For auto they allow $1500 deductible on collision/comprehensive even though cars are only worth $10-$15k. So that's closer to 10% deductible. Agree. A deductible of up to 5% of the Cov A amount would be helpful. For HC areas, this would basically eliminate claims other than fire claims. I carry a 2% deductible, and that's the max for the current carr...
by Alan S.
Wed Mar 06, 2024 8:25 pm
Forum: Personal Investments
Topic: May Rollover TSP to Traditional IRA - What are the inheritance issues?
Replies: 8
Views: 764

Re: May Rollover TSP to Traditional IRA - What are the inheritance issues?

There are no issues for the first person who inherits a TSP account. If the first inheritor is someone other than a spouse, the TSP simply rolls into an inherited IRA with the usual payout requirements (usually 10 years). No real issues here but I think there are some time limits that must be observed. https://www.bogleheads.org/wiki/TSP_estate_planning There is a 90 day time limit before the non spouse beneficiary receives a distribution check that cannot be rolled over. But that 90 days appears to begin once the "Determination package" has been mailed to the beneficiary, but the beneficiary needs to find out when the clock starts for them to be sure. Timing. Non-spouse beneficiaries have 90 days to request payment from their te...
by Alan S.
Wed Mar 06, 2024 5:19 pm
Forum: Personal Investments
Topic: IRA Conversion Question
Replies: 10
Views: 1149

Re: IRA Conversion Question

thanks - to clarify - say my RMD at age 73 is $100,000. Couldn't I take that RMD, pay taxes on it, and then put it directly into my Roth? Or do these need to be 2 separate transactions - take the RMD, pay taxes. Then, convert other funds (also paying taxes on the distribution)? Because an RMD cannot be rolled over and a conversion is a rollover, you must complete the RMD for all your IRA accounts before converting additional amounts. If you made a mistake and converted first, your conversion would be credited against your RMD, but the disallowed rollover would create an excess contribution to your Roth IRA that would have to be withdrawn to avoid annual 6% excise taxes. The best time to convert is before your first RMD year since that will...
by Alan S.
Wed Mar 06, 2024 1:47 pm
Forum: Personal Investments
Topic: tax reporting on NUA employee stock sale
Replies: 5
Views: 504

Re: tax reporting on NUA employee stock sale

Enter "various" for the date of acquisition in Part II of Form 8949 (long term). Box E should be checked in most cases since the broker will probably report as non covered shares. Cost basis will typically be the total of Boxes 2a and 5 of the 1099R times the % of shares that were distributed which were sold.

To avoid additional complications in these calculations, you should NOT reinvest dividends after the distribution from the plan.
by Alan S.
Tue Mar 05, 2024 9:53 pm
Forum: Personal Finance (Not Investing)
Topic: Roth IRA overcontribution reversal questions
Replies: 5
Views: 705

Re: Roth IRA overcontribution reversal questions

You could try, but I doubt they will unblock the account. This is a VG policy and not an IRS requirement.

And even if a contribution is returned with allocated earnings/loss, the 5498 reporting the contribution to the IRS is still issued, but the IRS also receives the 1099R showing the returned contribution.

Of course, you could open a Roth IRA elsewhere to receive the 529 rollover, and that custodian will report it on a 5498 and the IRS will receive both the VG 5498 and the other custodian 5498 resulting in the total contributions exceeding the limit. But it does not matter as long as one of them was returned.