Table of Contents

Contents

General Disclaimer and Copyright A

About the Author C

What’s New   1

●        IRS Extends Waiver of Excise Tax for Inherited IRAs and employer plans to 2024  1

●        Final RMD Regulations Published July 19, 2024  2

●        Proposed Regulations Published July 19, 2024 Proposes Age 73 Applicable Age for 1959 Year of Birth  2

1.           Summary of Operational Procedures for Setting Up Your IRA  4

How to set up your IRA  4

Your Right to Revoke Your IRA  6

Funding Your IRA  6

Investing in Your IRA  6

2.           Checklist: Designating your beneficiary for your IRA  7

3.           2025 Limits for IRAs & Employer Plans  9

IRA and Salary Deferral Contribution limits if you are under age 50 as at year-end 2025  10

IRA and Salary Deferral Catch-up contribution if you are at least age 50 as at year-end 2025  10

Special Employer, Salary Deferral & Employer Contributions for 2025  10

2025 MAGI limits for deducting regular contributions to Traditional IRAs  11

2025 MAGI limits for making a regular contribution to a Roth IRA  12

2025 AGI limits for eligibility for Saver’s Credit: salary deferral and IRA/Roth IRA contributions  12

4.           Traditional IRA Features and Benefits: Quick Reference Guide  13

5.           Traditional IRA Funding Options: Quick Reference Guide  16

Regular Traditional IRA Contribution  16

Spousal Traditional IRA Contributions (Kate Bailey Hutchinson Spousal IRA) 17

Recharacterization of IRA/Roth Contribution  19

Deemed Traditional IRA Contribution  19

Payroll Deduction IRA  20

Employer-Sponsored IRA  20

Rollover from qualified plans [401(a) and 403(a)], 403(b) and governmental 457(b) plans [Not a Designated Roth Account (DRA)] 20

6.           Traditional IRA Deductibility: Quick Reference Guide  23

Eligibility to deduct regular Traditional IRA Contribution  23

Determination of “Who Is an Active Participant” in an Employer Sponsored Plan  25

7.           Roth IRA Features and Benefits: Quick Reference Guide  27

8.           Roth IRA Funding Options: Quick Reference Guide  29

Regular Roth IRA Contribution  29

Spousal Roth IRA Contributions  30

Recharacterization of Contribution Made to Traditional IRA  30

Deemed Roth IRA Contribution  31

Payroll Deduction Roth IRA  32

Employer-Sponsored Roth IRA  32

Conversion from Traditional IRA, SEP IRA and SIMPLE IRA  32

Retirement plan rollovers from qualified plans [401(a) and 403(a)], 403(b) and governmental 457(b) plans [non-Roth] 34

Designated Roth Accounts (DRA) [Roth 401(k), Roth 403(b) and Roth Governmental 457(b)] Rollovers  36

Military Death Gratuities and Service Members’ Group Life Insurance (SGLI) Payments  36

9.           Roth IRA vs. Traditional IRA: Side-by-Side Quick Reference Guide  38

IRA Contribution Limits  38

Contribution Eligibility  38

Deadline IRA/Roth Contribution  39

Eligibility to deduct contributions  39

Age Limitation  40

Saver’s Credit 41

Treatment of earnings  41

Distributions | Optional Vs. Required  41

10.         Saver’s Credit: Quick Reference Guide  43

Eligibility Requirements  43

Eligible Contributions  43

Credit Amount 44

Reduction of Eligible Contributions  45

11.         Checklist for Your Regular Traditional and Roth IRA Contribution  46

12.         The Transfer/Rollover Lingo: Recommend when communicating with financial institutions and plan trustees  49

13.         Rollover and Transfer Permissibility: Quick Reference Guide  52

Summary of rollover/transfer permitted between different types of accounts  53

Rollover and Transfer Limitations for IRAs and Employer Sponsored Plans: Quick Reference  55

14.         Rollover and Transfer Rules for Nonspouse Beneficiaries: Quick Reference  62

15.         Early Distribution Penalty Exceptions: Quick Reference Guide  65

Exceptions to the 10% Early Distribution Penalty ‘by Type of Account 65

16.         Quick Reference Guide: Substantially Equal Periodic Payments/SEPP/72(t) 68

General Rules  68

SEPP Guidance  71

Planning Tips  73

17.         Roth IRA Distribution: Tax and Penalty Treatment: Quick Reference  74

Identifying a qualified distribution  74

The Ordering Rules: How to Determine how much of a nonqualified distribution is subject to income tax and/or the 10% additional tax on pre-age 59 ½ distributions. 74

First source/Tranche 1: Your distributions come from this source first. You never get to the second source until all of these amounts have been distributed. 75

Second Source/Tranche 2: Your distributions come from this source on a first in first out (FIFO) basis. 75

Last source/Tranche 3: Your distributions come from this source only after other sources are already fully distributed. 76

Summary: Tax & Penalty Treatment of Roth IRA Distributions  77

18.         Required Minimum Distributions  78

Accounts Subject to RMDs  78

RMD Related Definitions and Rules  79

RMD Start Years for Various Birthdates and Ages  81

RMD Deadlines for Account Owners  82

RMDs and Portability: Summary  84

RMD Aggregation Rules  85

Summary of RMD Aggregation Rules  85

The RMD for the Year of Death can be taken by any beneficiary  86

The RMD for the Year of Death for multiple IRAs is pro-rated among beneficiaries  86

Aggregation Rules for Annuity Portion of IRA balance  86

IRA RMD Calculation Formula  87

Uniform Lifetime Table: Effective 2022 and After 88

19.         IRA Beneficiary Distribution Options: When the IRA Owner Died on or before December 31, 2019  89

Traditional IRA Beneficiary Distribution Options  89

Traditional IRA: IRA Owner Dies before the Required Beginning Date (RBD) 90

Traditional IRA: IRA Owner Died on or after the Required Beginning Date (RBD) 92

Roth IRAs: Beneficiary Distribution Options  94

20.         IRA Beneficiary Distribution Options: When the IRA Owner Dies After December 31, 2019  96

New 10-Year Rule for Designated Beneficiaries  96

10-Year Rule for Eligible Designated Beneficiaries  97

When the IRA owner Dies before 2020, and the beneficiary dies after 2019  97

Notes for quick reference guides  98

Trust as Beneficiary: IRA Owner dies after 2019  98

IRA Beneficiary Options: under the SECURE Act 99

A.      Beneficiary is an Eligible Designated Beneficiary: Spouse. The options are: - 99

Please note: Taking a distribution of the entire IRA balance at any time is always an option. 99

B.      Beneficiary is an Eligible Designated Beneficiary: Nonspouse. The options are: 100

If the IRA owner died before the RBD, the options are  100

If the IRA owner died on/after the RBD, the options are (N/A For Roth IRA) 100

B. Beneficiary IRA: Simple 10-year rule  100

Please note: Taking a distribution of the entire IRA balance at any time is always an option. 100

C.      Beneficiary is a Designated Beneficiary who is not an Eligible Designated Beneficiary. The options are: - 101

If the IRA owner died before the RBD, the options are  101

If the IRA owner died on/after the RBD, the options are (N/A For Roth IRA) 101

·        Beneficiary IRA: Simple 10-year rule  101

D.      Beneficiary is a Nondesignated Beneficiary. The options are: - 101

·        Beneficiary IRA: Simple 5-year rule. 101

Successor Beneficiary Options  102

Special Rules for Spouse Beneficiaries  104

Life expectancy matters and definitions  104

RMD for Year of Death Must be Satisfied by Beneficiary  105

Beneficiary deadlines  105

21.         Qualified Charitable Distributions  107

General Rules and Requirements for Qualified Charitable Distributions  107

QCD and RMDs  109

QCDs and Basis Amounts  111

QCDs and Deductible Traditional IRA Contributions: No Double Dipping for Tax-Free  113

22.         Tax Reporting Forms and Requirements for IRAs  115

IRS Form 1099-R, Distributions from Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc., 115

IRS Form 5498, IRA Contribution Information  116

IRS Form 990-T, Exempt Organization Business Income Tax Return  116

IRS Form 1042-S, Foreign Person’s U.S. Source Income Subject to Withholding  116

Form W-8CE, Notice of Expatriation and Waiver of Treaty Benefits  117

IRS Form 8606, Nondeductible IRAs  117

IRS Form 5329, Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts  118

IRS Form 8880, Credit for Qualified Retirement Savings Contributions  118

Appendix A. Life Expectancy Tables: Effective 2022 and After i

Single Life Expectancy-For Use by Beneficiaries: Effective for 2022 and after i

Uniform Lifetime Table: For use by Unmarried Owners, Married Owners Whose Spouses Are Not More Than 10 Years Younger, and Married Owners Whose Spouses Are Not the Sole Beneficiaries of Their IRAs): Effective for 2022 and after iv

Appendix B: List of IRS Publications on Retirement Accounts  vi

Appendix C: IRS Forms for IRAs  viii

Recommended IRA Resources  ix

SIMPLE, SEP, and SARSEP Answer Book  x

Roth IRA Answer Book  x