Elevate your IRA practice with the Definitive IRA Quick Reference Guides—an indispensable resource crafted by Denise "The IRA Whisperer" Appleby, a nationally recognized expert on IRAs and rollovers from employer plans. These guides deliver high-level yet practical insights that give you an immediate head start when addressing client questions and managing IRA transactions. By integrating these tools into your workflow, you’ll save time—your most valuable asset—and reduce costly mistakes.
Why Advisors Choose These Guides:
Expert-Curated Content: Developed by Denise Appleby, whose expertise in IRAs is unmatched, these guides combine expert knowledge with actionable information.
Time & Cost Efficiency: Quickly find answers to common IRA questions and transaction issues, streamlining your process and saving both time and money.
High-Level, Pertinent Information: Although concise, the content is designed to provide critical guidance on IRA transactions, ensuring you’re well-equipped to advise your clients from the get-go.
Frequently Asked Questions:
Q: If I already own the IRA Quick Reference Guide Book, do I need to purchase these individual guides?
A: Not necessarily—the majority of the information found in these individual guides is included in the book. However, if you’re looking for a more streamlined, focused reference for quick answers, these guides are a perfect complement.
What’s Included: A Collection of 17 Essential IRA Guides
Each guide is meticulously designed to address the most common IRA scenarios encountered by advisors:
Comparing Roth vs. Traditional IRAs: Quickly contrast the similarities and differences to determine the best fit for your client’s needs.
The IRA Calendar: Identify transaction deadlines, statement dates, and compliance requirements with ease.
Early Distribution Penalty: Determine whether a distribution made before age 59½ qualifies for an exemption from the 10% penalty.
Required Minimum Distributions Overview: Navigate the RMD rules for IRAs, defined contribution plans, 403(b)s, and governmental 457(b) plans.
IRA Beneficiary Options: Understand the distribution alternatives available to beneficiaries of Traditional, SEP, SIMPLE, or Roth IRAs.
Rollover and Transfer Rules for IRAs: Assess the feasibility of moving funds between various retirement accounts, with a clear overview of applicable rules.
Rollover and Transfer Rules for Inherited Accounts: Clarify the types of inherited accounts eligible for rollovers or transfers.
Roth IRA Tax and Penalty Determination: Identify when a Roth IRA distribution might trigger income tax or the early distribution penalty.
Qualified Charitable Distributions: Learn the rules for implementing qualified charitable distributions (QCD) within client portfolios.
Substantially Equal Periodic Payments (SEPP): Understand the rules for SEPP, ensuring penalty-free distributions under specific conditions.
Rollovers from a Long-Term 529 QTP to a Roth IRA: Discover the regulations for transferring eligible amounts from a 529 QTP to a Roth IRA.
IRA Transfers in Divorce Settlements: Get a high-level overview of how to manage IRA or employer-sponsored plan splits during a divorce.
Bonus – Key Traditional IRA Funding Options: Explore the primary ways to fund a Traditional IRA and the associated rules.
Bonus – Key Roth IRA Funding Options: Review several funding methods for a Roth IRA along with their requirements.
Bonus – Deducting Traditional IRA Contributions: Determine eligibility for federal tax deductions related to traditional IRA contributions.
Bonus – Tax Reporting for IRA Transactions: Understand the tax reporting obligations for both the IRA custodian and the account owner.
Bonus – Comparing Roth IRA vs. Roth 401(k): Gain a high-level comparison of the benefits and features of a designated Roth account, such as a Roth 401(k), versus a Roth IRA.
Elevate your ‘IRA service with these Definitive IRA Quick Reference Guides and turn complex IRA issues into straightforward solutions—ensuring you deliver exceptional value to your clients every time.
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
Answers to common Questions on a specific topic
