Search found 10503 matches

by Alan S.
Fri Apr 16, 2021 7:57 pm
Forum: Personal Investments
Topic: Annuity Question, Can it work this way in Roth?
Replies: 15
Views: 786

Re: Annuity Question, Can it work this way in Roth?

I haven't heard of any life insurance company developing a product in which an annuitized annuity payout will be retained in the IRA and invested in another investment. In fact, annuitization within an IRA has not been popular, as very few fixed or IRA VAs have been annuitized. In fact, there are so...
by Alan S.
Fri Apr 16, 2021 11:56 am
Forum: Personal Investments
Topic: 403 overcontribution- 1099 form?
Replies: 4
Views: 237

Re: 403 overcontribution- 1099 form?

Employers do not amend W-2 forms to reflect any excess deferrals returned. Your tax program should automatically add up the Box 12 figures from all W-2 forms and add the excess deferral amount to your wages line on your 2020 1040. This will happen whether you have the excess returned or not. This is...
by Alan S.
Fri Apr 16, 2021 11:34 am
Forum: Personal Investments
Topic: How Do I Untangle an Old Commingled IRA?
Replies: 8
Views: 625

Re: How Do I Untangle an Old Commingled IRA?

The IRS cannot help you for more than 10 years back, and the custodian never knew. But if you still have your 1987 tax return, it will show whether you filed an 8606 or deducted any contribution. If you any other internal record keeping possibilities, best exhaust them. Did you take any TIRA distrib...
by Alan S.
Thu Apr 15, 2021 7:28 pm
Forum: Personal Finance (Not Investing)
Topic: Mega Backdoor Roth for Early Withdrawals
Replies: 17
Views: 1004

Re: Mega Backdoor Roth for Early Withdrawals

While the clocks of a designated Roth and Roth IRA are intended to be largely identical, there are some aberrations in the reporting rules when it comes to rollovers as opposed to distributions. This is illustrated by the 8606 Inst for reporting Roth IRA distributions of regular contributions. • Inc...
by Alan S.
Thu Apr 15, 2021 5:18 pm
Forum: Personal Finance (Not Investing)
Topic: desperately seeking help understanding Form 8606 on 2020 tax filing (Roth recharacterization/conversion issues)
Replies: 78
Views: 2562

Re: desperately seeking help understanding Form 8606 on 2020 tax filing (Roth recharacterization/conversion issues)

Do retail tax programs actually ask for recharacterization info to make the adjustment? Input requested. I started completing HR Block's free web version software. HRB asks for the amount that was recharacterized for 2020 (either from Roth to TIRA or vice versa) in 2020 and 2021. It also asks for t...
by Alan S.
Thu Apr 15, 2021 3:58 pm
Forum: Personal Finance (Not Investing)
Topic: desperately seeking help understanding Form 8606 on 2020 tax filing (Roth recharacterization/conversion issues)
Replies: 78
Views: 2562

Re: desperately seeking help understanding Form 8606 on 2020 tax filing (Roth recharacterization/conversion issues)

I noticed some references to determining gains through 12/31/2020. This is entirely unnecessary because the actual amount transferred in the recharacterization is the amount by which the year end line 6 is increased. The earnings transferred are calculated from the date of the contributed Roth amoun...
by Alan S.
Thu Apr 15, 2021 3:01 pm
Forum: Personal Investments
Topic: Roth In-Plan Conversion to Roth IRA
Replies: 3
Views: 477

Re: Roth In-Plan Conversion to Roth IRA

Only challenge is that your plan treat your IRR money (In Plan Roth rollover) as distributable while still in service. Some do not. Some have enabled IRRs with the purpose of retaining funds within the plan. Finally, if you are able to complete the direct rollover, you need to update your Roth IRA ...
by Alan S.
Thu Apr 15, 2021 2:07 pm
Forum: Personal Finance (Not Investing)
Topic: desperately seeking help understanding Form 8606 on 2020 tax filing (Roth recharacterization/conversion issues)
Replies: 78
Views: 2562

Re: desperately seeking help understanding Form 8606 on 2020 tax filing (Roth recharacterization/conversion issues)

Just to confirm that line 6 of Form 8606 DOES have to adjusted for recharacterized amounts in either direction per the following Form 8606 line 6 instructions: Line 6 Enter the total value of all your traditional, SEP, and SIMPLE IRAs as of December 31, 2020, plus any outstanding rollovers. A statem...
by Alan S.
Wed Apr 14, 2021 5:43 pm
Forum: Personal Investments
Topic: Roth In-Plan Conversion to Roth IRA
Replies: 3
Views: 477

Re: Roth In-Plan Conversion to Roth IRA

My current employer offers a 401k that allows for After-Tax contributions with daily Roth conversions (mega backdoor Roth) that I'm enrolled in. I wanted to use some of my Roth In-Plan Conversion funds to invest in another way (stock picking, using different mutual funds, etc.) and the financial ad...
by Alan S.
Wed Apr 14, 2021 4:45 pm
Forum: Personal Investments
Topic: Backdoor Roth conversions (Multiple accounts)
Replies: 7
Views: 448

Re: Backdoor Roth conversions (Multiple accounts)

We have seen continued situations where tax preparers, even CPAs, have no idea how to handle back door Roth transactions. But some of the instant excuses they grasp for (like this one) are humorous. A single 8606 is filed adding up all ND contributions and 1099R reported conversion distributions occ...
by Alan S.
Wed Apr 14, 2021 3:21 pm
Forum: Personal Investments
Topic: Roth Conversion Pro-rata Question
Replies: 10
Views: 685

Re: Roth Conversion Pro-rata Question

"The pro-rata rule only applies for the conversion step. The OP plans to make the contributions for both 2020 and 2021 in this calendar year and will do the conversion of all $12K at once. The fact that there was a tax-deferred tIRA balance on Dec 31, 2020 is therefore completely irrelevant (i...
by Alan S.
Wed Apr 14, 2021 3:18 pm
Forum: Personal Finance (Not Investing)
Topic: 403b and 457b roll over to single IRA
Replies: 12
Views: 449

Re: 403b and 457b roll over to single IRA

Oregon exempts IRAs and Roth IRAs from creditor claims.
by Alan S.
Wed Apr 14, 2021 2:56 pm
Forum: Personal Finance (Not Investing)
Topic: 403b and 457b roll over to single IRA
Replies: 12
Views: 449

Re: 403b and 457b roll over to single IRA

Well, I did have one thought.... A lot of people seem to be worried that their work plans will lose come creditor protections when rolled into IRA. If this is a concern to you, it might be something to consider. I've never been clear on the details myself and I'm not particularly worried about it, ...
by Alan S.
Wed Apr 14, 2021 2:37 pm
Forum: Personal Investments
Topic: How is your IRA held?
Replies: 5
Views: 898

Re: How is your IRA held?

If the trust fails qualification, the 5 year rule only applies if you pass prior to your RBD (4/1 of the year following the year you reach 72). If you pass on or after your RBD, the applicable distribution period for a NQ trust is your remaining Table I LE, which would likely be much longer than 5 y...
by Alan S.
Wed Apr 14, 2021 2:18 pm
Forum: Personal Investments
Topic: Is there any basis step up in a 1035 annuity exchange?
Replies: 11
Views: 466

Re: Is there any basis step up in a 1035 annuity exchange?

I bought a variable annuity in 1995 from company X with $50,000 in one purchase. I have never put any more into it. In 2010 I did a 1035 to a Vanguard annuity. At that time, it was worth $125,000. (I’m using fake numbers just for the question.) Today, it is worth $200,000. When I begin to take mone...
by Alan S.
Wed Apr 14, 2021 11:09 am
Forum: Personal Finance (Not Investing)
Topic: Beneficiary IRA (Inherited IRA) Process/ Financial Advisor
Replies: 7
Views: 516

Re: Beneficiary IRA (Inherited IRA) Process/ Financial Advisor

Hello, My mother passed away last month. My brother and I inherited her 401k, which is held internally at a big healthcare company. I am thinking about opening the inherited IRA at Fidelity where I will manage the money myself (maybe a Three Fund Portfolio etc.) But when I called Fidelity to learn ...
by Alan S.
Wed Apr 14, 2021 10:39 am
Forum: Personal Investments
Topic: Backdoor Roth - additional forms needed other than 8606?
Replies: 1
Views: 170

Re: Backdoor Roth - additional forms needed other than 8606?

Hi all - for the past four years I've contributed/converted my backdoor Roth a year behind, i.e. for tax year 2020 I just contributed/converted in 2021. Moving forward this won't be an issue because I've finally caught up and will be doing my backdoor Roth for tax year 2021 IN the year 2021. I thou...
by Alan S.
Tue Apr 13, 2021 11:53 am
Forum: Personal Finance (Not Investing)
Topic: Backdoor Roth- IRA basis timing question
Replies: 3
Views: 180

Re: Backdoor Roth- IRA basis timing question

I’ve ready the Backdoor Roth Wiki, which was super helpful. One part I needed a little clarity is the date for which your IRA basis is calculated. I know you have until tax filing to contribute (usually 4/15, this year 5/17), but is your basis in your IRA calculated as of year end of the tax year (...
by Alan S.
Mon Apr 12, 2021 8:33 pm
Forum: Personal Investments
Topic: Question on simultaneous 72t & Roth ladder
Replies: 23
Views: 1481

Re: Question on simultaneous 72t & Roth ladder

Yes, that's correct.
by Alan S.
Mon Apr 12, 2021 7:57 pm
Forum: Personal Investments
Topic: Question on simultaneous 72t & Roth ladder
Replies: 23
Views: 1481

Re: Question on simultaneous 72t & Roth ladder

Yes, once an IRA of any type is included in your "SEPP universe", meaning that the balances of those IRAs was factored into the SEPP distribution calculation, you can take distributions in any combination from those plans, including not taking any distributions from an account. When the ac...
by Alan S.
Mon Apr 12, 2021 6:26 pm
Forum: Personal Finance (Not Investing)
Topic: 401k loan and RMDs
Replies: 4
Views: 309

Re: 401k loan and RMDs

If I take out a 401k loan this year for $50,000 but I am required to start taking RMDs from the same 401k next year, how does that impact the RMD amount? Or is that not allowed (it appears I can take out the loan this year)? The loan has no impact on your RMD. Your 12/31/2021 401k balance on which ...
by Alan S.
Mon Apr 12, 2021 5:47 pm
Forum: Personal Investments
Topic: Question on simultaneous 72t & Roth ladder
Replies: 23
Views: 1481

Re: Question on simultaneous 72t & Roth ladder

In other words, if you do not take Roth distributions from BOTH the 72t Roth and the non 72t Roth in the same year, you will avoid a commingled 8606 form which would be a confusing mess, and also avoid the explanatory statements. This part is clear to me, makes sense, and would almost always be the...
by Alan S.
Mon Apr 12, 2021 4:51 pm
Forum: Personal Investments
Topic: Withdrawing from 401k/Roth 401k
Replies: 2
Views: 270

Re: Withdrawing from 401k/Roth 401k

In previous years I have invested in a traditional 401k at work. Recently we have been offered a roth 401k option to use. I started to use the ROTH 401k to pay less taxes when it is time for me to withdraw...ie 59 and it has been in a roth 401k for 5 years... I tried looking at my statement...and i...
by Alan S.
Mon Apr 12, 2021 3:16 pm
Forum: Personal Investments
Topic: Question on simultaneous 72t & Roth ladder
Replies: 23
Views: 1481

Re: Question on simultaneous 72t & Roth ladder

With 72t plans, complex structures attract IRS attention, attention you would rather not have. Yes, you can have both TIRA and Roth accounts in your SEPP universe and even select which one to distribute from to control your annual taxable income, but the IRS sees very few of these. If you partition...
by Alan S.
Mon Apr 12, 2021 2:00 pm
Forum: Personal Finance (Not Investing)
Topic: 2020 Roth Conversion 8606 Question
Replies: 10
Views: 422

Re: 2020 Roth Conversion 8606 Question

We have heard of many cases where tax preparers do not understand back door Roth transactions and reporting. That said, this is only one facet of your entire return. If all the rest of it is done correctly and efficiently, I would give him another year. 2021 will also be simpler if you can make your...
by Alan S.
Sun Apr 11, 2021 8:50 pm
Forum: Personal Investments
Topic: Partial rollover of current 401k to Vanguard
Replies: 4
Views: 435

Re: Partial rollover of current 401k to Vanguard

I turn 60 this year, I think my plan does allow in service withdrawals (non hardship ) , I just need the okay from the company. Thank you for the link! What is the correct terminology for this? Is it a withdrawal or a in kind transfer? I do not want any tax consequences. Thanks It is a "distri...
by Alan S.
Sun Apr 11, 2021 4:53 pm
Forum: Personal Finance (Not Investing)
Topic: [How to deal with] 1099-R with code(s) PJ
Replies: 1
Views: 167

Re: [How to deal with] 1099-R with code(s) PJ

[Post edited and split into own thread by Moderator Misenplace] Hi - I'm in the exact same situation as the original poster in this thread Subject: Confused by 1099-R with code(s) PJ except I do have a small taxable amount ($370 taxable, $110 federal taxes withheld). In 2019, I contributed to my RO...
by Alan S.
Sun Apr 11, 2021 12:43 pm
Forum: Investing - Theory, News & General
Topic: Strategy for RMD to ROTH
Replies: 4
Views: 478

Re: Strategy for RMD to ROTH

Hello, I have an inherited Vanguard IRA that I need to take out about 8k per year. I want to divide the amount up by 12 ( month in a year) and then move that amount to a Roth. Both accounts have VTSAX funds. So moving the same amount from IRA(VTSAX)...take out 15% fed and 5% state taxes.. and remai...
by Alan S.
Sun Apr 11, 2021 12:29 pm
Forum: Personal Finance (Not Investing)
Topic: Permissible to do a CARES Act withdrawal and Roth IRA contribution the same year?
Replies: 2
Views: 179

Re: Permissible to do a CARES Act withdrawal and Roth IRA contribution the same year?

If someone has made a CARES Act distribution from a Roth 401k and repaid that into a Roth IRA, can they also contribute to the Roth IRA the same taxable year? Or does the repayment into the Roth IRA essentially count as the contribution for that year? What if the repayment was made the following ca...
by Alan S.
Sun Apr 11, 2021 12:03 pm
Forum: Personal Investments
Topic: Question on simultaneous 72t & Roth ladder
Replies: 23
Views: 1481

Re: Question on simultaneous 72t & Roth ladder

With 72t plans, complex structures attract IRS attention, attention you would rather not have. Yes, you can have both TIRA and Roth accounts in your SEPP universe and even select which one to distribute from to control your annual taxable income, but the IRS sees very few of these. If you partition ...
by Alan S.
Sun Apr 11, 2021 10:40 am
Forum: Personal Finance (Not Investing)
Topic: Can I have a employer Traditional 401K and a Roth IRA simultaneously and contribute to both in the same year
Replies: 17
Views: 1595

Re: Question regarding Traditional IRA for spouse MAGI limits

Hello Friends, My situation is I am married filing jointly. I contribute maximum possible to my employer provided 401K (~19.5K). My wife is a home maker and I put maximum possible 6 K to her IRA. Now the Traditional IRA AGI/MAGI limits for my spouse in our situation, "Married filing jointly wi...
by Alan S.
Sat Apr 10, 2021 10:05 pm
Forum: Personal Finance (Not Investing)
Topic: [Spouse recently passed away. Please help me handle his financial matters]
Replies: 111
Views: 7299

Re: Inherited IRA or IRA rollover?

Background: my husband died in Januray and left me his retirement accounts. I am working but need to replace his income from this money now. I heard that you can tranfer the monies into an inherited IRA and withdraw immediately without penalty (the money is income before taxes, of course). In fact,...
by Alan S.
Sat Apr 10, 2021 7:34 pm
Forum: Personal Finance (Not Investing)
Topic: Help me untangle this Roth tax issues: first time home purchase + rollover + over-contribution
Replies: 8
Views: 484

Re: Help me untangle this Roth tax issues: first time home purchase + rollover + over-contribution

instead of both of you  ‘recharacterizing’ $1310 from your respective Roths to your Traditional IRA, one of you could recharacterize $2620 (or more) instead. After reading the Backdoor Roth wiki page, if one of you has a large ‘Traditional’ IRA and no employer plan to roll the pre-tax money to, the...
by Alan S.
Sat Apr 10, 2021 4:53 pm
Forum: Personal Finance (Not Investing)
Topic: Help me untangle this Roth tax issues: first time home purchase + rollover + over-contribution
Replies: 8
Views: 484

Re: Help me untangle this Roth tax issues: first time home purchase + rollover + over-contribution

I've created a bit of a tricky situation with my family's Roth IRAs and I'd like your help sorting it out. PARTNER Partner withdrew the full value of her Roth ($29K) 6/29/20 to apply towards first time home purchase. The money flowed Roth --> Checking --> Savings --> Checking --> Wired to Escrow. W...
by Alan S.
Sat Apr 10, 2021 11:56 am
Forum: Personal Investments
Topic: Can I contribute the max to a traditional IRA if I made an excess contribution to a Roth IRA then withdrew it?
Replies: 5
Views: 412

Re: Can I contribute the max to a traditional IRA if I made an excess contribution to a Roth IRA then withdrew it?

I contributed $300 to a Roth IRA in early 2020, for tax year 2020. I subsequently found out that I am not eligible to contribute to a Roth IRA. So I withdrew the excess contribution + earnings, as required. I would now like to make a contribution to a traditional IRA for tax year 2020. How much can...
by Alan S.
Fri Apr 09, 2021 5:34 pm
Forum: Personal Investments
Topic: Roth IRA transfer basis
Replies: 4
Views: 598

Re: Roth IRA transfer basis

Thanks a lot for all the information! The additional $12,000 a year of after-tax contributions in my 401k are IRR if I understand that term right (As soon as the contribution is made, Fidelity automatically rolls it into the roth portion of my 401k). So, sounds like this shouldn't be too bad - I ca...
by Alan S.
Fri Apr 09, 2021 3:51 pm
Forum: Personal Investments
Topic: Please Help: After tax - non Roth 401k?
Replies: 10
Views: 923

Re: Please Help: After tax - non Roth 401k?

So, I just asked for a rollover from my 401K from a prior employer at Merrill to my IRA at Fidelity. Merrill cut two checks made out to Fidelity FOB me. The larger one was identified as pre tax 401k money. The smaller check is listed as ‘non-taxable amount eligible to be rolled over’. None of the m...
by Alan S.
Fri Apr 09, 2021 1:59 pm
Forum: Personal Investments
Topic: HELP! Mega Backdoor Roth
Replies: 10
Views: 1184

Re: HELP! Mega Backdoor Roth

My current 401k plan allows me to make after-tax contributions, which I did last year with $17k after-tax contributions. It's currently in money market fund and has grown by about $200. The plan allows me to make in-service transfer/withdrawal of the after-tax amount (the $17k and $200), or do a Ro...
by Alan S.
Fri Apr 09, 2021 1:43 pm
Forum: Personal Finance (Not Investing)
Topic: desperately seeking help understanding Form 8606 on 2020 tax filing (Roth recharacterization/conversion issues)
Replies: 78
Views: 2562

Re: desperately seeking help understanding Form 8606 on 2020 tax filing (ROTH recharacterization/conversion issues)

(my statement will be a little longer because the 2019 Roth contributions were spread across 12 months, but I have all the details on all of the dollar flows). For purposes of the statement it's surely OK to summarize, e.g., [of year-2019 Roth IRA contributions totaling $7000.00 on various dates sp...
by Alan S.
Fri Apr 09, 2021 12:48 pm
Forum: Personal Investments
Topic: Roth IRA transfer basis
Replies: 4
Views: 598

Re: Roth IRA transfer basis

Roth basis accounting must be done by you for a Roth IRA, and it is done by the plan administrator for a Roth 401k. Therefore, the 1099R reporting a direct rollover from Roth 401k to Roth IRA will show your Roth 401k basis in Box 5. Once in your Roth IRA, add the Box 5 amount to your existing Roth I...
by Alan S.
Fri Apr 09, 2021 11:11 am
Forum: Personal Investments
Topic: Recharacterization screwup - Can this be fixed?
Replies: 3
Views: 336

Re: Recharacterization screwup - Can this be fixed?

Assuming that VG does not see this as their fault and will not reconstruct your request, you now have a confusing array of choices: 1) You could have the now recharacterized 2020 TIRA contribution returned to you with earnings. Unfortunately, those earnings would be taxable and subject to penalty in...
by Alan S.
Fri Apr 09, 2021 10:36 am
Forum: Personal Investments
Topic: Missed RMD from inherited IRA
Replies: 3
Views: 448

Re: Missed RMD from inherited IRA

LE RMDs can begin in 2021 using the 12/31/2020 balance. The Table I divisor used for the 2021 RMD should be what it would have been for 2020, less 1.0. Complete the 2021 beneficiary RMD by 12/31/2021. You are also responsible for decedent's 2019 year of death RMD if decedent passed after RBD and did...
by Alan S.
Thu Apr 08, 2021 7:10 pm
Forum: Personal Finance (Not Investing)
Topic: TurboTax -- 1099-R Taxable Amount for Mega Backdoor Rollover
Replies: 3
Views: 277

Re: TurboTax -- 1099-R Taxable Amount for Mega Backdoor Rollover

Correction:

The second 4000 1099R should show 0 in 2a, not 4000. Pre tax dollars are going to a TIRA in a non taxable direct rollover.
by Alan S.
Wed Apr 07, 2021 9:33 pm
Forum: Personal Finance (Not Investing)
Topic: Roth 401k RMD's
Replies: 10
Views: 802

Re: Roth 401k RMD's

Most people should have no problem rolling over their Roth 401k to a Roth IRA before reaching 72. That will avoid any RMDs on the Roth money. Even if they are still working at 72 for the plan sponsor, if they complete an in service distribution prior to the year they retire, RMDs will be avoided. Th...
by Alan S.
Wed Apr 07, 2021 3:19 pm
Forum: Personal Finance (Not Investing)
Topic: CARES Act IRA Distribution/repayment - Tax Software
Replies: 13
Views: 808

Re: CARES Act IRA Distribution/repayment - Tax Software

I got the latest update from H&R today. However, it still doesn't work correctly. The issue is on the 8606 line 15b it says to put the amount attributable to disaster relief. The software is not doing that resulting in double taxation. It has 0 on that line. According to the 8606 directions for...
by Alan S.
Tue Apr 06, 2021 9:00 pm
Forum: Personal Finance (Not Investing)
Topic: Tax withheld on corrective distribution
Replies: 2
Views: 245

Re: Tax withheld on corrective distribution

I mistakenly had an excess salary deferral situation in 401k accounts after switching jobs in 2020, which resulted in an excess of employee contributions. I contacted my current employer's 401k custodian and they issued a corrective distribution of the excess salary deferred + the earnings from tha...
by Alan S.
Tue Apr 06, 2021 8:23 pm
Forum: Personal Investments
Topic: Coronavirus Retirement Withdrawal Ideas [Cash withdrawal, what now?]
Replies: 7
Views: 734

Re: Coronavirus Retirement Withdrawal Ideas [Cash withdrawal, what now?]

Hi Alan-- Thank you for working this out for me. Looks like taxes are the killer here (like usual), and you are recommending I return the money to the pre-tax plan. Thank you! It depends. If you perceive an advantage in adding to your Roth at current marginal rates (tantamount to a conversion) you ...
by Alan S.
Tue Apr 06, 2021 8:03 pm
Forum: Personal Investments
Topic: Are converted Roth IRA Contributions Penalty Free Withdrawal?
Replies: 36
Views: 2458

Re: Are converted Roth IRA Contributions Penalty Free Withdrawal?

The 1099R posted above is incorrect. Box 2a should be 0. Since code H signifies as direct rollover from a Roth 401k to a Roth IRA, there would never be taxable amount in 2a. Conversely, if this had been a distribution to the participant then 2a would be correct, but Box 7 would then have shown code ...
by Alan S.
Tue Apr 06, 2021 5:30 pm
Forum: Personal Investments
Topic: Coronavirus Retirement Withdrawal Ideas [Cash withdrawal, what now?]
Replies: 7
Views: 734

Re: Coronavirus Retirement Withdrawal Ideas [Cash withdrawal, what now?]

In 2020, I withdrew $100,000 from my IRA Rollover account in cash for the coronavirus relief bill. There was no selling of securities. I took the money in case I needed it, but it turns out I don't. My question is; what to do with it? 1. Return the money to the IRA Rollover and not pay taxes. 2. Fu...