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Donato Wealth Management
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BUSY, BUSY, BUSY!

By Andy Ives, CFP®, AIF®
IRA Analyst

Ah, the end of the year. Snow is drifting, music plays quietly in the background. Ma in her kerchief, Papa in his cap, just settling down for a long winter’s nap…

Nope. No time for that. ‘Tis the season of BUSY, BUSY, BUSY!

Did you write a check to a charity from your checkbook IRA in hopes that it would be a qualified charitable distribution (QCD) for 2020? If so, you better make sure the charity in fact CASHES the check before the end of the year. The IRA custodian will not reflect a debit from the IRA account until the check is cashed. Even if you hand-delivered the check to the charity in 2020, if it isn’t cashed in time, it will not count as a 2020 QCD.

Busy, busy, busy!

Did you notice what was NOT included in any of the year-end legislation that has been kicking around Washington? How about an extension of coronavirus-related distributions (CRDs)? As of now the availability of CRDs has not been extended to 2021. So, if you want to withdraw up to $100,000 from an IRA or workplace retirement plan as a CRD…you need to get it done by Wednesday, December 30. You do not have until the end of the year.

Busy, busy, busy!

Are you still working and leveraging the still-working exception on your 401(k) to avoid taking RMDs? If so – excellent planning! I’m sure you also realize there is NO still-working exception on IRAs, right? If you want to minimize a 2021 RMD on your IRA by rolling the pre-tax IRA dollars into your 401(k) with the still-working exception, you better send that package! The plan must allow rollovers in, and the dollars need to be out of the IRA by the end of the year. Otherwise, if you still have an IRA balance as of December 31, then “Hello, IRA RMD!”

Busy, busy, busy!

Did you enjoy having no RMD in 2020 due to the CARES Act waiver? Are you trying to avoid a 2021 RMD by withdrawing all your IRA money now with the idea of rolling it back within 60 days? Since this will create a $0 year-end balance, do you think this will beat the RMD system? Oh, you scheming little elf! That won’t work. The IRS says that outstanding rollovers and transfers must be added back to calculate the proper RMD. Might as well return those dollars to your IRA before the end of the year to avoid the mathematical hassles.

Busy, busy, busy!

https://www.irahelp.com/slottreport/busy-busy-busy

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Investment advisory services are offered through Foundations Investment Advisors, LLC and is a SEC registered investment advisor.