Search found 12648 matches

by Alan S.
Wed Mar 27, 2024 6:35 pm
Forum: Personal Finance (Not Investing)
Topic: TIRA for prior year is not deductible question
Replies: 14
Views: 711

Re: TIRA for prior year is not deductible question

I spoke with IRS department that deals with 8606 form. They confirmed that my wife could contribute to Roth IRA. Now, because I already have $6000 on 8606 form as ND. Do I really gain anything if I would recategorise TIra as Roth IRA? Should I just leave it as is? Despite her being on SSD, I think that the additional worksheets in Pub 590 A (Appendix B) would still allow her to deduct the full TIRA contribution if your MAGI is as stated. However, her Roth contribution will be allowable, so you could have her TIRA contribution recharacterized as a Roth contribution. If her TIRA contribution has generated gains since contributed, those gains would then become Roth IRA gains (eventually tax free). If so, then her 8606 showing a ND contributio...
by Alan S.
Wed Mar 27, 2024 3:08 pm
Forum: Personal Finance (Not Investing)
Topic: Calculation IRA Roth Recharacterization
Replies: 8
Views: 324

Re: Calculation IRA Roth Recharacterization

JP Morgan's recharacterization options are more restrictive than most, and they won't even do the calculations. For example, Schwab's form states: Part of Account Select one: O Transfer only from my cash balance to satisfy the required amount. O Transfer the securities listed below, in order of preference, to satisfy the required amount. O Transfer the securities listed below, in order of preference, and also use my available cash as necessary to satisfy the required amount. For example, if you are recharacterizing a Roth contribution as traditional and your Roth IRA holds several securities, you should be able to select which securities are transferred (and therefore which will remain in the Roth) in preferential order. The third option is...
by Alan S.
Tue Mar 26, 2024 10:41 pm
Forum: Personal Finance (Not Investing)
Topic: Penna. executor's fees for handling will?
Replies: 26
Views: 1421

Re: Penna. executor's fees for handling will?

On the off chance anyone is familiar with this, I'd appreciate info on what if anything is a norm on this. My brother is going to receive this for being executor of my parent's estate, which is news on me (silly me I thought he was doing it out of deference to them), and it seems like it might be a lot. I can't help but wonder if he isn't taking advantage of the situation. Following is a link explaining what fees are considered "reasonable" per a PA court decision. But these are not mandated so your brother could elect not to charge any fees or he could charge more than these fees. If he charges substantially more, he might be milking the estate. https://pennsylvaniaprobatelawfirm.com/how-are-estate-executor-fees-calculated-in-pe...
by Alan S.
Tue Mar 26, 2024 10:28 pm
Forum: Personal Finance (Not Investing)
Topic: TIRA for prior year is not deductible question
Replies: 14
Views: 711

Re: TIRA for prior year is not deductible question

Did my tax today and found out that my wife's TIra contributions are not deductible because she is on SSD, my income is too high and my contribution to 401K is preventing her contributions from qualifying. Hers $6500 for 2023 $6000 for 2022 This seems to happen even the year before last year but I did not catch it. So my questions are 1. Can I call Vanguard to reclassify 2023-year contributions and move the money into a Roth IRA for her? What do I have to say exactly? 2. Does it make sense to even contribute to a Roth IRA or just put it into my Brokerage account? 3. What can I do for 2022 contributions? Thanks 1) Recharacterize her 2023 contribution as Roth? No, because your joint MAGI is too high for her to make a Roth contribution when s...
by Alan S.
Tue Mar 26, 2024 6:44 pm
Forum: Personal Finance (Not Investing)
Topic: TIRA for prior year is not deductible question
Replies: 14
Views: 711

Re: TIRA for prior year is not deductible question

Did my tax today and found out that my wife's TIra contributions are not deductible because she is on SSD, my income is too high and my contribution to 401K is preventing her contributions from qualifying. Hers $6500 for 2023 $6000 for 2022 This seems to happen even the year before last year but I did not catch it. So my questions are 1. Can I call Vanguard to reclassify 2023-year contributions and move the money into a Roth IRA for her? What do I have to say exactly? 2. Does it make sense to even contribute to a Roth IRA or just put it into my Brokerage account? 3. What can I do for 2022 contributions? Thanks 1) Recharacterize her 2023 contribution as Roth? No, because your joint MAGI is too high for her to make a Roth contribution when s...
by Alan S.
Tue Mar 26, 2024 6:07 pm
Forum: Personal Finance (Not Investing)
Topic: Does the IRS website have the ROTH contribution withdrawal rules?
Replies: 6
Views: 367

Re: Does the IRS website have the ROTH contribution withdrawal rules?

I'm currently in a battle with my tax guy, I withdrew $10K from my ROTH IRA which were all contributions, no profits (and I can prove it). He is telling me I owe a 10 percent penalty for this because I am not 59 1/2. I went on the IRS website to try and find where it says the actual rules, but could not find it on there. Does anyone have a link to this info? I know I can take out my own Roth contributions at any time for any reason at any age, but I need to prove it so I don't get hit with a penalty. Your tax preparer does not seem to be up to speed, nor is he willing to research your concerns, which is a bad combination. Unless this person is much better qualified on other aspects of your return that makes it worthwhile to retain him, you...
by Alan S.
Tue Mar 26, 2024 1:41 pm
Forum: Personal Finance (Not Investing)
Topic: Confirming my understanding of RMD Basics
Replies: 18
Views: 1453

Re: Confirming my understanding of RMD Basics

One thing you'll want to consider is if you take the RMD in January 2025, you will have to take 2 RMDs that year, as subsequent RMDs are due Dec 31st. Not true. OP turns 73 in 2025 so no RMD needed for 2024. Second RMD won't be due until 2026. As recently as February this year in a similar thread, I replied the following, but seeing this new thread, makes me wonder if I am still not understanding the requirements and new law. Lets say spouse born in January 1955. That means she turns 73 in January 2028. I thought she must take her first RMD the year she turns 73, and that she did NOT have the option to put her first RMD off until age 74 (but under the old rules she could have put off the first RMD and take the first one by April 1 when she...
by Alan S.
Tue Mar 26, 2024 11:49 am
Forum: Personal Finance (Not Investing)
Topic: RMD Clarification
Replies: 3
Views: 616

Re: RMD Clarification

Hi All: A friend of mine is turning 73 this coming August. He knows he has to take his first RMD by April 1 2025. Does he calculate his RMD from his IRA total on the last trading day of 2024 or 2023? And then he has to take another RMD in 2025 based on what IRA totals? 2024 or 2025? Thanks. We're both a little fuzzy on this and I need to know how to advise him. His 2024 RMD is based on the 12/31/2023 value, even if deferred to 2025. The 2025 RMD is based on the 12/31/2024 value. Note that this value will be higher if all or part of the 2024 RMD is deferred to 2025. The one time option to defer all or part of the 2024 RMD presents an opportunity to crunch some numbers, typically late in 2024 to determine if deferring all or part of the 2024...
by Alan S.
Tue Mar 26, 2024 11:38 am
Forum: Personal Finance (Not Investing)
Topic: Trustee-to-Trustee Transfer of a tIRA
Replies: 2
Views: 353

Re: Trustee-to-Trustee Transfer of a tIRA

Hi, this is a question for my mom, who is 72+ years old and has been taking RMDs for years already. Mom has three total tIRAs, two at Merrill and two at UBS. One of the ones at Merrill and the one at UBS were inherited from her husband (my dad) when he died about eight years ago. Relevant background info: her 'team' at Merrill screwed up that process (failed to take the RMD from dad's account before rolling the funds into mom's new inherited IRA). I only mention this because the experience has left my mom feeling paranoid about doing anything with her IRAs, and not very trusting of the Merrill team's expertise when it comes to these sorts of matters. On to the current situation: Mom wants to transfer the UBS IRA to Merrill (I wont get into...
by Alan S.
Mon Mar 25, 2024 6:14 pm
Forum: Personal Finance (Not Investing)
Topic: Confirming my understanding of RMD Basics
Replies: 18
Views: 1453

Re: Confirming my understanding of RMD Basics

Thank you for the input. I'll need to review Safe Harbor requirements as I haven't looked that up in a while. But if memory serves me correctly, if I withhold 125% of last years federal tax obligation, then I'm good to go. I will read up on that though. Sorry for the delayed reply. Here they are - no 125% factor. And withholding can be done at anytime during the year, even very late in the year. Generally, an underpayment penalty can be avoided if you use the safe harbor rule for payments described below. The IRS will not charge you an underpayment penalty if: You pay at least 90% of the tax you owe for the current year, or 100% of the tax you owed for the previous tax year, or You owe less than $1,000 in tax after subtracting withholdings...
by Alan S.
Mon Mar 25, 2024 4:36 pm
Forum: Personal Finance (Not Investing)
Topic: Mega Backdoor Roth : 1099-R Taxable Amount Confusion
Replies: 3
Views: 435

Re: Mega Backdoor Roth : 1099-R Taxable Amount Confusion

teaman wrote: Mon Mar 25, 2024 3:57 pm Thanks Alan. I checked with the plan administrator. They are going to issue a new 1099-R for 2020 with the new tax reporting method wherein the losses are all erased and the individual gains are summed up to come up with the taxable amount.
Will be interesting to see if they actually revise a 2020 1099R now and if they will do it for all affected employees or just you.
by Alan S.
Mon Mar 25, 2024 2:07 pm
Forum: Personal Finance (Not Investing)
Topic: Confirming my understanding of RMD Basics
Replies: 18
Views: 1453

Re: Confirming my understanding of RMD Basics

Please confirm if I have this correct. I will be 72 in December of this year, 2024. My first RMD will be due in 2025, or by April of 2026(which I won't wait until then) If I take the distribution in January, 2025, and do not withhold federal taxes at that time, I do not need to prepay federal taxes on the distribution if I have withheld enough federal taxes through social security for the year to cover it. State taxes will need to be prepaid. Does that sound correct? Yes, your first RMD distribution year is 2025. You are correct with respect to federal taxes as long as you have enough withheld from SS to meet your safe harbor. As for the state, each state as separate rules with respect to withholding or estimates, so check your state rules.
by Alan S.
Mon Mar 25, 2024 1:36 pm
Forum: Personal Finance (Not Investing)
Topic: Different Traditional IRA Basis Federal versus State (California)
Replies: 2
Views: 195

Re: Different Traditional IRA Basis Federal versus State (California)

I did a partial Roth conversion so a tax issue I have avoided thinking about has arisen. Many years ago in the golden state of California it was possible to have a higher Federal deductible traditional IRA contribution than was permitted by California. I think the difference was on the order of $500 or $1,000 each year before California came to it's senses (might be an overstatement) and they got in sync. So my California traditional IRA basis is higher than my Federal basis. But due to no additional traditional IRA contributions in the last 25 years it's been a long time since I would have filed a Form 8606 and I doubt the IRS or California Franchise Tax Board has those available. While I have no difficulty completing Federal and Californ...
by Alan S.
Mon Mar 25, 2024 12:15 pm
Forum: Personal Finance (Not Investing)
Topic: Mega Back Door Roth 401K AND Back Door Roth IRA
Replies: 13
Views: 788

Re: Mega Back Door Roth 401K AND Back Door Roth IRA

I've been Mega backdoor Roth + Backdoor Roth IRA for the last few years, I actually got busy late last year and forgot to the Backdoor Roth in calendar 2023, so just a few weeks ago I did both the 2023+2024 tax year tIRA contribution and then converted the total to Roth. One has until April 15 2024 to make the 2023 tIRA contributions I found this guide helpful for the tax filing details, and he has a section covering "late" contribution scenarios like what I just did: https://www.whitecoatinvestor.com/backdoor-roth-ira-tutorial/#late Thanks for the quick reply. The link says they can still do this for 2023 through April 15, 2024. Great. But the link isn't clear if this can still be done if the tax return has been filed. I assume ...
by Alan S.
Mon Mar 25, 2024 10:21 am
Forum: Personal Investments
Topic: Correctly Representing 2 Years of Roth Backdoor Conversions That Were Done At The Same Time in Form 8606
Replies: 7
Views: 425

Re: Correctly Representing 2 Years of Roth Backdoor Conversions That Were Done At The Same Time in Form 8060

toddthebod wrote: Mon Mar 25, 2024 8:29 am FreeTaxUSA does not let you choose not to take the IRA deduction if you are eligible. Either you have not entered your 2023 contribution yet, or you were eligible to take the deduction. If the latter, your form 8606 is fine, as the IRA deduction will offset the taxable amount on line 18.
If the latter, a partially taxable conversion will result in the 5 year conversion holding penalty of 10% on distributions from this conversion in the first 5 years.
by Alan S.
Sun Mar 24, 2024 9:36 pm
Forum: Personal Finance (Not Investing)
Topic: 401(k) to Roth 401(k) Rollover as dependent subject to Kiddie Tax?
Replies: 5
Views: 481

Re: 401(k) to Roth 401(k) Rollover as dependent subject to Kiddie Tax?

Thanks to you both for the input. Alan, I have come to this realization with great chagrin, as it would've avoided the complications experienced right now. Sadly, due to my astronomical tuition bills, my $33k gross income would not amount to greater than 50% of my support. That being said, you're getting at the point I'm trying to make here: by a conventional definition of "earned", I earned all $33,000 of the wages in question by going to work and clocking in. Now I am in a position of needing to demonstrate this to the IRS. My parents certainly gifted me the $13500 to cover my contributions to the at-the-time standard 401(k), but it's my understanding that this should be considered a gift, and thus not taxed as earned/unearned ...
by Alan S.
Sun Mar 24, 2024 6:25 pm
Forum: Personal Finance (Not Investing)
Topic: 401(k) to Roth 401(k) Rollover as dependent subject to Kiddie Tax?
Replies: 5
Views: 481

Re: 401(k) to Roth 401(k) Rollover as dependent subject to Kiddie Tax?

Seems that if deferrals were made as Roth instead of pre tax, Box 1 of the W-2 would have been ~13,500 higher and the 1099R that created the unearned income of the same amount would have been avoided.

This would also have increased the earned income ratio to perhaps >50% of support.
by Alan S.
Sun Mar 24, 2024 5:18 pm
Forum: Personal Finance (Not Investing)
Topic: Understanding Inherited IRA with delayed RMDs
Replies: 17
Views: 888

Re: Understanding Inherited IRA with delayed RMDs

Blake7 wrote: Sun Mar 24, 2024 3:40 pm I’m looking for some help on how to calculate RMDs on my spouse’s inherited IRA, which needs to be emptied under the 10-year rule, so by 12/31/2032 as it was inherited in 2021. We skipped RMDs for 2022 and 2023 per the IRS waiver, but wish to start RMDs this year, regardless of the IRS’s final ruling on RMDs. Is the calculation to take the account balance on 12/31/2023 and divide it by 8 (the remaining years left in the 10-year window)? Thx!
Since the IRA was inherited in 2021 the 10 year rule period ends in 2031, not 2032.
by Alan S.
Sun Mar 24, 2024 5:07 pm
Forum: Personal Investments
Topic: RMD from various IRAs
Replies: 10
Views: 1086

Re: RMD from various IRAs

My DH has a tIRA and 3 annuities Edited: IRA 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 Lalamimi: For 2024, I had RMDs due from three qualified accounts. I is a traditional IRA, 1 is a 403b, and 1 was an IRA Annuity. The total of the IRAs can be taken from either one of the IRAs. The RMD from a 401k or 403b falls into a different category, as they cannot be "paired" with IRAs. In ...
by Alan S.
Sun Mar 24, 2024 1:35 pm
Forum: Personal Investments
Topic: 529 Plan conversion to Roth question
Replies: 11
Views: 1745

Re: 529 Plan conversion to Roth question

Form 5498 tax form prep for 2023 contributions begins around a month from now. If VG does not code this as a 2023 regular Roth contribution by that deadline, they will probably be more resistant to recoding once these 2023 books are closed. Therefore, I would keep pressing them for a resolution.
by Alan S.
Sat Mar 23, 2024 10:32 pm
Forum: Personal Finance (Not Investing)
Topic: How far back can I file forms 8606 for?
Replies: 10
Views: 939

Re: How far back can I file forms 8606 for?

Only because without an 8606 to report the conversion, your tax return will just show a distribution. Your 1099R may have code 2 in Box 7 (penalty waiver), but if it has code 7 there is no penalty waiver. I wouldn't count on the IRS to pair up the 5498 showing a conversion contribution before charging the 10% penalty.

Note that your initial post referred to the $50 penalty, but that is not related to lack of conversion reporting on Form 8606. Rather, that penalty is for failing to report a non deductible contribution, which I initially thought was your concern. For not properly reporting a conversion on Form 8606, the possible penalty would be 10% of the taxable portion of the conversion if under 59.5
by Alan S.
Sat Mar 23, 2024 9:54 pm
Forum: Personal Finance (Not Investing)
Topic: How far back can I file forms 8606 for?
Replies: 10
Views: 939

Re: How far back can I file forms 8606 for?

The IRS will typically ignore old 8606 forms you send in. Therefore, you should save yourself the trouble and simply update line 2 of the next 8606 you would otherwise file to reflect the correct amount of IRA basis you have. For the last 3 years, if your 8606 included incorrect basis that affected those taxes, you should amend those returns, and update line 2 of the oldest of the amended returns to the correct basis for that time. Keep you own notes for the amounts and years for which prior basis was incorrectly reported. These were conversions from TIRAs to Roths so taxes were paid but if I am understanding correctly the the deposit into the Roth account wasn't documented because of the lack of a 8606, although the custodians issued 5498...
by Alan S.
Sat Mar 23, 2024 5:29 pm
Forum: Personal Finance (Not Investing)
Topic: How far back can I file forms 8606 for?
Replies: 10
Views: 939

Re: How far back can I file forms 8606 for?

The IRS will typically ignore old 8606 forms you send in. Therefore, you should save yourself the trouble and simply update line 2 of the next 8606 you would otherwise file to reflect the correct amount of IRA basis you have.

For the last 3 years, if your 8606 included incorrect basis that affected those taxes, you should amend those returns, and update line 2 of the oldest of the amended returns to the correct basis for that time. Keep you own notes for the amounts and years for which prior basis was incorrectly reported.
by Alan S.
Fri Mar 22, 2024 12:32 pm
Forum: Personal Finance (Not Investing)
Topic: IRA contribution reported, but problems with deposit made contribution late
Replies: 3
Views: 221

Re: IRA contribution reported, but problems with deposit made contribution late

In April of 2023, I started an IRA and made a contribution using 2022 wages. I reported this contribution on my 2022 taxes. Much later (after filing deadline) I got my contribution check back from my IRA broker stating that I sent the check to the wrong address. I didn't get my account funded until Dec 2023. Ideally, I would like that contribution to count as 2022, but it's my understanding that having the check not accepted by my IRA broker around April 15th puts my contribution in limbo. I didn't work as much this year, so it would be too large to recharacterize as 2023. Any advice appreciated, ( including what kind of professional would be best to answer this kind of question ) Thanks! Your IRA custodian will assign the contribution to ...
by Alan S.
Fri Mar 22, 2024 11:19 am
Forum: Personal Finance (Not Investing)
Topic: Failed to take RMD for Inherited IRA in 2023- what next?
Replies: 7
Views: 593

Re: Failed to take RMD for Inherited IRA in 2023- what next?

Last year the IRS issued Notice 2023-54 on 7/14/2023, as they likely knew that the final Regs would not become final early enough in 2023 to allow for RMD completion. For 2024, the pattern will likely be similar - if the IRS fails to once again finalize the Secure Act proposed Regs by late summer, they will need to extend the waiver for yet another year. Therefore, if you do not want to take a distribution this year from your applicable inherited IRA, hold off until the IRS clarifies the situation. However, if you are allowed to defer these beneficiary RMDs for several years, it will just lead up to a larger lump sum distribution in year 10, so you might want to take a distribution this year of an amount at least equal to the RMD, and proba...
by Alan S.
Thu Mar 21, 2024 7:41 pm
Forum: Personal Investments
Topic: Roth 401K Withdrawal To Roth IRA
Replies: 13
Views: 672

Re: Roth 401K Withdrawal To Roth IRA

barrybonds282 wrote: Thu Mar 21, 2024 7:12 pm My plan has an "In-Service Withdrawal Fee". Does that mean the fee applies when I make a withdrawal while I am still working for my employer?
Yes. And if so you should avoid small distributions and just make max distributions less frequently.
by Alan S.
Thu Mar 21, 2024 7:38 pm
Forum: Personal Finance (Not Investing)
Topic: Mega Backdoor Roth : 1099-R Taxable Amount Confusion
Replies: 3
Views: 435

Re: Mega Backdoor Roth : 1099-R Taxable Amount Confusion

I have been doing the Mega Backdoor Roth for the past few years. I see a difference in the way the taxable amount is reported in Box 2a of 1099-R (with Code G in box 7) in the years 2020 and 2022. This form is specifically issued for after-tax to designated Roth account conversions. Say, the exact same contributions as below were made in years 2020 and 2022. Jan contribution : $1000 Jan distribution : $1200 Feb contribution : $1000 Feb distribution : $950 Mar contribution : $1000 Mar distribution : $990 ** No further contributions ** Total contribution : $3000 Gains before distribution : $200 Losses before distribution : 50 + 10 = $60 Net Gain : $200 - $60 = $140 1) The 1099-R for the year 2020 shows the Taxable amount of $140 (which was t...
by Alan S.
Thu Mar 21, 2024 12:01 pm
Forum: Personal Finance (Not Investing)
Topic: Capital loss carryover question
Replies: 10
Views: 686

Re: Capital loss carryover question

Once the cap loss carryover reduces her taxable income to 0, the rest is carried over to future years. Cap losses that cannot be applied are never lost until the taxpayer passes.
by Alan S.
Thu Mar 21, 2024 11:38 am
Forum: Personal Finance (Not Investing)
Topic: Help with Advanced Roth IRA Withdrawal, what's in each bucket?
Replies: 5
Views: 550

Re: Help with Advanced Roth IRA Withdrawal, what's in each bucket?

Confirm - Q to Q results in the entire Roth IRA balance being qualified with no further tracking required, but the end result would be as if the entire balance including future growth was treated as 1a. Form 8606 is no longer required once the Roth IRA is qualified. I agree, Q to Q means no tracking is necessary. The purpose of the table is to address NQ Roth IRA withdrawals. So I will remove the transactions going to Q Roth IRA. NQ Roth 401k to NQ Roth IRA -> 4a stays as 4a Q Roth 401k to NQ Roth IRA -> 4a becomes 1d How would a Roth 401K be qualified and go to a NQ Roth IRA? One case I can think of is where someone is > 59.5 and their Roth401k is >= 5 years old, but their Roth IRA is less than 5 years old so it is not qualified. A rare c...
by Alan S.
Wed Mar 20, 2024 6:09 pm
Forum: Personal Finance (Not Investing)
Topic: Help with Advanced Roth IRA Withdrawal, what's in each bucket?
Replies: 5
Views: 550

Re: Help with Advanced Roth IRA Withdrawal, what's in each bucket?

Thank you for your input Alan S. 4b should be included in 1c per the 8606 instructions (all IRRs are reported on line 22 of Form 8606 and all taxes have already been paid). Got it, I think I see it in the instructions now. "Increase the amount on Line 22 by any amount rolled in from a designated Roth, Roth SEP, or Roth SIMPLE account that is treated as investment in the contract." Your chart also assumes that a NQ Roth 401k has been rolled into a NQ Roth IRA. If the Roth 401k was qualified before rolling to the Roth IRA 4a becomes 1d. But if the Roth IRA is itself qualified, no tracking is needed as the entire balance is qualified. This is an interesting point. I was not aware that the bucket each conversion/rollover ends up in d...
by Alan S.
Wed Mar 20, 2024 5:40 pm
Forum: Personal Investments
Topic: Accidental mid-air conversion (Rollover 401k to Roth IRA)
Replies: 15
Views: 2311

Re: Accidental mid-air conversion (Rollover 401k to Roth IRA)

Hi, I have the exact same issue as OP. Vanguard gave me only one option, to take a distribution from the RothIRA and put the money into the traditional IRA. I am still in the 60-day grace period that IRS gives and I realized that this mistake happened 2-3 weeks after the rollover was done. I have really 2 options: 1. Leave the money into the account as a mid-air conversion. This will push me however to a higher income bracket from 23 to 32% and I will have to pay an extra 9% taxes to my whole salary of the year. The difference is about 30k in extra taxes that I would have to pay. The rollover amount was around 45k... 2. I take an "early contribution" from my vanguard roth IRA and put the money into my pre-tax IRA. IFF the 60-day ...
by Alan S.
Wed Mar 20, 2024 5:12 pm
Forum: Personal Finance (Not Investing)
Topic: First time owing federal taxes
Replies: 45
Views: 4465

Re: First time owing federal taxes

hpeachey wrote: Wed Mar 20, 2024 2:22 pm Does anyone know the answer to this: I owed federal taxes for the first time ever this year however, my ex husband claimed our child as a dependent. I received the payment vouchers and was informed that I need to pre-pay for 2024 taxes but if I won't owe in 2024 like I did this year (because it will be my year to claim my child AND i have work taking more money out of paycheck), do I still need to pay those? Thank yoU!
No. Estimates are voluntary, so if not needed there is no reason to pay them. Just be sure your withholding is adequate to prevent an underpayment penalty for 2024.
by Alan S.
Wed Mar 20, 2024 5:05 pm
Forum: Personal Finance (Not Investing)
Topic: Form 8606 and non-deductible Trad IRA contributions: how to amend the total basis?
Replies: 13
Views: 750

Re: Form 8606 and non-deductible Trad IRA contributions: how to amend the total basis?

Hi folks, While getting feedback on another thread I started mentioned Form 8606, I went and checked Form 8606 for the last 5 years. In line 14 of the form ( " 14 Subtract line 13 from line 3. This is your total basis in traditional IRAs for 2021 and earlier years ") every year and I have the maximum contribution amount the IRS allows. It seems to me, this should be the accumulated non deductible contributions for all tax years. I have no Roth contributions or distributions of the traditional IRA. While searching the forum I do see one thread where the author mentions he just corrected the total basis (line 14) with the amended value while submitting the taxes. My questions: 1- if my understanding is correct and that line 14 of t...
by Alan S.
Wed Mar 20, 2024 4:55 pm
Forum: Personal Finance (Not Investing)
Topic: Help with Advanced Roth IRA Withdrawal, what's in each bucket?
Replies: 5
Views: 550

Re: Help with Advanced Roth IRA Withdrawal, what's in each bucket?

I've been taking advantage of the mega backdoor for over ten years. However, I realized I wasn't sure what counted as a contribution or conversion in case of Roth IRA withdrawal. I read the Mega-backdoor wiki page and it addresses the MBD to Roth IRA withdrawal situation. But it doesn't cover the MBD to in-plan roth rollover to Roth IRA route. Any ideas? I read this https://www.bogleheads.org/forum/viewtopic.php?t=422238 and it seems it is treated same as Roth 401k contributions that were rolled over. MBD - mega backdoor roth IRR - in-plan roth rollover Here's the table I have so far. Anyone know where these two fit? Are they treated similar to Roth 401K or MBD to Roth IRA?? MBD + IRR to Roth IRA contributions - currently 1c MBD + IRR to R...
by Alan S.
Tue Mar 19, 2024 8:47 pm
Forum: Personal Finance (Not Investing)
Topic: H&R Block Missing Recharacterization Statement Form 8606
Replies: 2
Views: 376

Re: H&R Block Missing Recharacterization Statement Form 8606

When did you do the recharacterization? In 2023 for which you received a recharacterization 1099R, or in 2024? What year was the recharacterized contribution made for?
by Alan S.
Tue Mar 19, 2024 5:21 pm
Forum: Personal Finance (Not Investing)
Topic: Step-up Cost Basis in Revocable LT Upon 1st's death
Replies: 33
Views: 1605

Re: Step-up Cost Basis in Revocable LT Upon 1st's death

yayacoolsc wrote: Tue Mar 19, 2024 5:17 pm Thanks again for the source! A follow up question:
Even if the RE acquired is treated as a community property, does it necessarily mean that it has the property of "community property with the right of survivorship?"
No. Both CP and CPWROS will get the total basis adjustment, but CP only will not directly pass to the spouse and will be subject to probate.
by Alan S.
Tue Mar 19, 2024 5:18 pm
Forum: Personal Consumer Issues
Topic: How does a landline phone decrease my bundle cost
Replies: 52
Views: 3327

Re: How does a landline phone decrease my bundle cost

May have to try this with the infamous insurance company bundle.
by Alan S.
Tue Mar 19, 2024 5:13 pm
Forum: Personal Finance (Not Investing)
Topic: Step-up Cost Basis in Revocable LT Upon 1st's death
Replies: 33
Views: 1605

Re: Step-up Cost Basis in Revocable LT Upon 1st's death

I guess we could refer to the ChatGPT take on this as artificial misinformation. :oops:
by Alan S.
Tue Mar 19, 2024 1:10 pm
Forum: Personal Finance (Not Investing)
Topic: Excess Roth IRA contribution in 2022
Replies: 4
Views: 479

Re: Excess Roth IRA contribution in 2022

But he failed to request specifically that the identified excess 2022 contribution be returned, or there would have been the earnings adjustment and the 1099R would have included code P along with J. Similarly in pub 590-A: You won’t have to pay the 6% tax if you withdraw an ex- cess contribution made during a tax year and you also withdraw any interest or other income earned on the ex- cess contribution. You must complete your withdrawal by the date your tax return for that year is due, including ex- tensions. Since the above transaction was not done, the 2022 excise tax will be due. But the 2023 distribution (after the due date) eliminated the excess for 2023, therefore the excise tax is only due for 1 year. A removal of excess before the...
by Alan S.
Tue Mar 19, 2024 10:49 am
Forum: Personal Finance (Not Investing)
Topic: Excess Roth IRA contribution in 2022
Replies: 4
Views: 479

Re: Excess Roth IRA contribution in 2022

Hi, I have a pretty complicated issue on excess contribution to Roth IRA for tax year 2022. Any insights and suggestions are appreciated. In early 2023 when I started filing my tax for 2022, TurboTax told me I overfunded the Roth $2,000 as my income increased. I then withdrew the excess contribution by myself instead of asking my plan admin to do so. Now I knew it's wrong as I received 2023 1099-R which coded the $2,000 as early withdrawal instead of removal excess contribution. I explained the situation to my plan admin but they said there is nothing they can do as it's beyond the IRS deadline. What I'm confused about are: 1) is the 2022 excess contribution still in my Roth account? If so, what options I have to remove them? 2) if not, I ...
by Alan S.
Mon Mar 18, 2024 3:41 pm
Forum: Personal Investments
Topic: Excess Roth IRA Contributions ?
Replies: 4
Views: 656

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: 1623

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: 388

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: 538

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: 318

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: 318

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: 468

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: 1623

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: 1196

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: 4356

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.