A Safer Retirement and Environment – What We’re Implementing to Help Keep You Safe: READ MORE

Here at Donato Wealth Management, we are adhering to state and local guidelines in order to protect both the health and safety of clients and staff. Keeping our clients and staff safe is our highest priority and we’re taking all appropriate measures to ensure a safe environment. Should you prefer to not meet face-to-face, we are continuing to serve our clients through virtual settings such as Zoom or phone calls.

We look forward to continuing to help individuals and families achieve their ideal retirements.

Donato Wealth Management
(512) 833-6557

CLOSE

ONCE-PER-YEAR ROLLOVERS AND RMDS FOR INHERITED IRAS: TODAY’S SLOTT REPORT MAILBAG

By Sarah Brenner, JD
Director of Retirement Education
Follow Us on Twitter: @theslottreport

Question:

Good morning,

I have a client who took out $100K from his SEP IRA and put the funds back in on 8/19/22 — within 60 days from the distribution. The client has now called me and asked if he can take the same $100K out and move it to his Roth IRA and pay taxes on it. Is he allowed to do this, or do we have to wait until 2023 to do the conversion?

Frank

Answer:

Hi Frank,

This is an area that can be a little tricky. The once-per-year rollover rule says that only one distribution from an individual’s IRAs can be rolled over within a 356-day period. It applies on a 365-day basis starting with the day a distribution is received and not on a calendar-year basis.

The rule applies to rollovers from a traditional IRA (or SEP or SIMPLE IRA) to another traditional IRA (or SEP or SIMPLE IRA) and rollovers from a Roth IRA to another Roth IRA.. The once-per year rollover rule, however, does not apply to conversions. Therefore, the rollover that the client did back in August 2022 will not prevent him from doing a conversion later this year.

Question:

Ed & Company,

With the newest interpretation of the SECURE Act, it still seems unclear if a beneficiary must take an annual RMD on an inherited Roth. I’ve seen conflicting commentary on both sides of the issue, including from Fidelity (as custodian of the account).  Has there been any additional insight as to what the IRS is thinking here – is it just empty by the end of the 10th year or does a beneficiary who inherited in 2021 have to take something in 2022?

Thanks.

Sharon

Answer:

The SECURE Act and the IRS proposed RMD regulations that followed it have created a ton of confusion. However, one rule is clear. If a Roth IRA is inherited by a non-eligible designated beneficiary, no RMDs are required during the 10-year period. That is because RMDs are only necessary during the 10-year period when the IRA owner died on or after the RMD required beginning date, and all Roth IRA owners are considered to have died before their required beginning date. No RMD would be required for 2022 or any other year during the 10-year period.

https://www.irahelp.com/slottreport/once-year-rollovers-and-rmds-inherited-iras-todays-slott-report-mailbag

Ready To Take

THE NEXT STEP?

 

For more information about any of our products and services, schedule a meeting today.

Or give us a call at (512) 833-6557

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

Investment advisory services are offered through Donato Wealth Management and is a SEC registered investment advisor.