The Retirement and IRA Show

Jim and Chris discuss listener emails on Social Security child-in-care and spousal benefits, drawing from an inherited IRA to delay Social Security, and Roth conversions to fund a Special Needs Trust.

(7:15) A listener caring for a disabled adult daughter wonders whether a child-in-care spousal benefit could allow the higher-earning spouse, to delay her own benefit until age 70.

(16:45) The guys field a question from a 68-year-old waiting until 70 to claim, who asks whether a wife already collecting since 62 can add a spousal benefit and, if so, when to file.

(23:45) Jim and Chris weigh whether a single 68-year-old ready to leave a stressful job should start Social Security now or draw from an inherited IRA until age 70.

(44:30) George asks whether Roth conversions, paired with a tax-efficient place to hold the cash for conversion taxes, are the right way to protect an inheritance left to two children through a special needs trust.

The post Social Security, Special Needs Trust: Q&A #2646 appeared first on The Retirement and IRA Show.

If you would prefer to skip Jim and Chris chatting about Chris’s mild fall weather in Colorado, Jim’s Nashville trip, and upcoming Cumberland Gap hike and whitetail hunting trip, you can skip to 13:30.

Chris’s Summary

Jim and I continue our discussion of little-known IRA rules, centered on naming a trust as an IRA beneficiary. We cover when a trust may make sense, compressed trust tax brackets, a recap of see-through trust requirements, master trusts and subtrusts under SECURE, and moving an IRA out of a trust into separate inherited IRAs. We also look at which date starts the 365-day count under the once-per-year rollover rule.

Jim’s “Pithy” Summary

Chris and I pick back up on our list of little-known IRA rules, and if you want confusion, just involve a trust. A trust is a non-human. It’s a piece of paper. Yet the IRS will let it be treated as human for distribution purposes if certain rules are followed to the T. We’re not huge fans of naming a trust as IRA beneficiary, but I can concede a few situations, like a charitable remainder trust, or a trust that passes required distributions and proactive tax planning through to your child rather than giving them access to a large inheritance all at once. Want the trust to hold that money back from a spendthrift? That’s where compressed trust tax rates come in, and Chris shows how fast a trust hits the top bracket.

Ever heard of the master trust workaround, where a very creative attorney got a PLR so a 1-year-old wouldn’t have to stretch over the life expectancy of a 100-year-old? SECURE made that easier, though with some very strict rules. I bring in Moe, Larry, Curly, and Shemp to show who can stretch, who gets the 10-year rule, and how an IRA may be able to pass through a trust into separate inherited IRAs.

The once-per-year rollover rule may be the most confusing of the bunch. Everybody says you can only do one rollover per 365 days, but when does that 365-day count begin? I give an example where a second rollover was completed less than 365 days after the first and was perfectly acceptable, and another that may look fine but isn’t.

The post Little-Known IRA Rules, Part 2: EDU #2645 appeared first on The Retirement and IRA Show.

Chris is joined by Jacob to discuss listener emails on withdrawing an early Social Security claim to collect survivor benefits, how Medicare Part A back-dating can affect HSA contributions, details of a liquidity account, buffered ETFs, and buying a protection ETF after its outcome date.

(10:00) George asks whether a husband who claimed Social Security at 62 could withdraw his application within 12 months after his wife’s death, collect survivor benefits on her record, and later switch to his own benefit at 70.

(20:45) A listener points out that Medicare Part A’s six-month retroactive coverage may be counted back from when a Social Security appointment is made rather than when benefits begin, which can affect when HSA contributions need to stop.

(26:00) The guys get a request to define the liquidity account term heard on recent episodes, including how it is funded, how often it is replenished, and how much it should hold.

(37:30) Chris and Jacob field a question on how to gauge the historical performance of buffered ETFs and what happens to the cap and buffer if one is sold before the outcome period ends.

(58:30) A listener wonders how buying a structured protection ETF after its outcome date changes the cap rate and downside protection, and whether lower caps still compare favorably with CD rates.

The post Social Security, HSA Contributions, Liquidity Account, ETFs: Q&A #2645 appeared first on The Retirement and IRA Show.

If you would prefer to skip Jim and Chris chatting about Jim’s end-of-season garden update and what home-grown produce he’s going to try to get through TSA (and why), you can skip to 7:45.

Chris’s Summary

Jim and I continue our run of IRA topics with seven IRA mistakes that cannot be fixed once they are made. The list spans inherited IRA transfers, rollover limits and requirements, Roth conversions, net unrealized appreciation, and 72(t) distributions. In at least one case, nothing improper occurred at the time. We also distinguish these seven from errors that may still be corrected, such as certain missed 60-day rollovers.

Jim’s “Pithy” Summary

Chris and I keep the IRA conversation going this week. With all the rules attached to these accounts, I like to picture the Peanuts character Pigpen, with a cloud of rules, regulations, taxes, and penalties following the IRA from custodian to custodian and owner to beneficiary until it is finally closed. Plenty of slip-ups, like a missed RMD or an excess contribution, can be fixed. But some IRA mistakes, once made, you are stuck with. Their simplicity is sometimes their downfall, because people think they understand the rule and don’t quite.

Spouses and non-spouses do not get the same options for moving inherited dollars, and using the wrong method may create two problems at once. I put your feet in the shoes of a 40-year-old surviving spouse who makes a perfectly legal move that cannot be taken back. Chris tackles the one-rollover-per-year rule, earns a grade for it, and we discuss the 2014 tax court case that changed how that rule is counted. I also worked hard to come up with a realistic way someone could violate the same property rule, and it involves fat fingers.

We get into Roth conversion regrets and why I am still irked about losing my old cup of flour and butter knife approach. We touch on net unrealized appreciation and the moves that can wipe it out, along with the 72(t) payment schedule and the single word in its rules that people tend to miss. Chris also explains why he thinks a 72(t) calls for a compelling reason and careful precautions.

The post Seven Unfixable IRA Mistakes: EDU #2644 appeared first on The Retirement and IRA Show.

Jim and Chris discuss listener emails, starting with a listener PSA on HSA contributions and Medicare Part A, then cover Social Security survivor benefits, a Roth conversion rules follow-up, and moving an estate’s IRA into Inherited IRAs.

(8:00) George shares a PSA on an often-overlooked Medicare Part A consideration for anyone still contributing to an HSA after 65.

(19:15) A listener asks if there’s any truth to an article on Social Security survivor benefits. Specifically, if someone who started their own benefits at 65 must wait until full retirement age to collect 100% of their survivor benefits, and whether claiming early will reduce them.

(28:00) The guys revisit the Roth conversion example from Q&A #2640 in response to a question on whether the extra money deposited into the Roth IRA from a brokerage account would be an excess contribution.

(36:15) Jim and Chris tackle a question about an IRA that ended up with no named beneficiaries after an advisor moved it to a new account before the owner’s death. The question is whether the private letter rulings (PLRs) cited in an article can be relied on to transfer the IRA from the estate into Inherited IRAs without a taxable event.

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