15 IRA Rules You Must Know

 

1. IRA distribution basics.  701/2 rules- which age to use

2. 5 year rule confusion- 5 year rule only applies if IRA ower dies before the required beginning date (RBD).

3. No designated beneficiary? IRA payout is limited to 15.3 years

4. Year of death distribution.  Who takes it? The beneficiary takes the year of death distribution.

5. IRAs don't pass through wills, they pass through IRA beneficiary forms.

6. A non-spouse beneficiary cannot do a rollover. The sixty-day rollover rule does not apply to non-spouse beneficiaries.

7. The 10% penalty exceptions for education and first time homebuyer apply only to distributions from IRAs -NOT to plans.

8. IRAs with multiple beneficiaries can be split at anytime (before or after the IRA owner's death), but if split after 12/31 of year after death, they will be stuck using the age of the oldest beneficiary.

9. Age 55 exemption from 10% penalty applies only to plans - IRAs.

10. From age 591/2 to 701/2 there are no rules, no penalties.

11. There is no deadline for a spousal rollover. It can be done at anytime.

12. You don't have to name your spouse as your IRA beneficiary, as you do with a qualified plan.  State law may provide a right of election though if you disinherit your spouse (IRS notice 97-10 provides sample spousal waiver language from plans)

13. 20% withholding tax rule does not apply to IRAs, it only applies to eligible rollover distribution plans.

14. Only eligible rollover distributions can be rolled over - required minimuim distributions and 72(t) payments cannot be rolled over.

15. 60 - day rollover relief.  The IRS can give relief on a case-by-case basis, but don't hold your breath.  It can be very costly to make a mistake with the 60 day time limit with the ONE rollover allowed per year.

 

 

 

 

 

 

 

 

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