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

Here at Asset Preservation Capital, LTD, 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 call.

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

Asset Preservation Capital, LTD
(248) 649-4759

By Andy Ives, CFP®, AIF®
IRA Analyst
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@theslottreport
Question:

Both of my parents passed away last year. My mother passed earlier in 2022 and I was able to take her year-of-death RMD out of the inherited IRA before the end of the year. My dad passed in October and once I got the inherited IRA transferred over in December, I forgot to take his year-of-death RMD until January of 2023. What forms will I need to complete to request a waiver, and would this be a good cause for a waiver?

Answer:

Sorry for the loss of your parents. Some good news is that you do not need to request a waiver for missing your dad’s year-of-death RMD. As of last year, the IRS granted an automatic waiver for a missed year-of-death RMD penalty if the RMD is taken by the beneficiary’s tax filing deadline, including extensions. Since you took the RMD in January, the year-of-death RMD has been satisfied, and no forms are needed.

Question:

I converted an IRA to a Roth seven years ago. I want to convert more IRA money to a Roth in 2023. My age is 64. When I convert the additional IRA money to a Roth: 1) Will I need to wait 5 years for this second conversion before I can take out any money? 2) Should I create a new account for the second conversion to keep the second conversion separate from the first conversion done 7 years ago? I’m getting different answers from different financial advisors/CPAs.

Thank you for your help.

Clay

Answer:

Clay,

The definitive answers are this:

1) No, you do not need to wait 5 years on the second conversion to take out any money. The entire balance is immediately available tax- and penalty free, including any earnings. This is because you have had ANY Roth IRA for 5 years AND you are over age 59 ½.

2) No, you do not need to create a second account for the second conversion – unless you want to. Whether you maintain multiple Roth IRAs or not, the IRS does not care. All they see is one consolidated Roth IRA under your name.

https://www.irahelp.com/slottreport/year-death-rmds-and-roth-conversions-todays-slott-report-mailbag