May 13, 2012

A case of two wives and one pension

By Ed Slott

Consider the case of a man who named his wife as the beneficiary of his union pension but never told anyone that he had a first wife whom he never divorced. Here's the question: Which wife gets the money? Before we get to the answer, let's look at what happened....

• commodities,
• Individual retirement accounts (IRAs),
• tax

April 15, 2012

When an IRA deduction is denied

In a recent Tax Court case, a taxpayer's $5,000 IRA deduction was disallowed because she and her husband were active participants in company retirement plans, and their joint income exceeded the limit to be able to deduct her IRA contribution. The couple claimed that this was unfair since the...

• Individual retirement accounts (IRAs),
• tax

March 18, 2012

Paying the Roth conversion tax

By Ed Slott

Certified public accountants across the country who are preparing 2011 tax returns are seeing clients who don't have the money to pay the first half of the 2010 Roth conversion tax now due. As a result, they need options to present to their clients. As you probably...

• Individual retirement accounts (IRAs),
• ING Group,
• retirement planning

February 26, 2012

Neither a borrower nor a lender be

In order to enjoy an IRA's tax-deferred growth, its owners must abide by certain rules. One of those rules is that they must avoid engaging in what are known as prohibited transactions. All such transactions carry the same severe tax consequences: The entire individual retirement...

• Individual retirement accounts (IRAs),
• ING Group,
• retirement planning,
• tax

January 22, 2012

When decisions are impaired by disability

In following self-imposed restrictions on her IRA distributions, a bipolar investor recently learned from the IRS that her actions would not cause any adverse tax consequences. Here's the story: “John” and “Jane” got divorced, and as part of their agreement, Jane was entitled to...

• Individual retirement accounts (IRAs),
• ING Group,
• retirement planning

December 11, 2011

When a mom raids her child's IRA

In an unusual private-letter ruling, the Internal Revenue Service recently allowed a 13-year-old beneficiary of her father's company plan assets largely to undo a previously taxed lump-sum distribution and transfer the distributed plan funds to an inherited IRA for the child's benefit.

• Individual retirement accounts (IRAs)

November 13, 2011

A fraud warning for self-directed IRAs

By Ed Slott

In September, the SEC issued an investor alert warning investors to be wary of fraudulent promoters targeting self-directed IRAs

• Individual retirement accounts (IRAs)

October 16, 2011

More the exception than the rule

Recently, the Tax Court ruled that a taxpayer's continuing business activities and lack of credible evidence failed to qualify him as disabled under the tax code

• Individual retirement accounts (IRAs)

September 18, 2011

IRAs and special-needs trusts

By Ed Slott

In a recent private-letter ruling (PLR 201116005), the Internal Revenue Service allowed a disabled beneficiary to transfer his share of two inherited individual retirement accounts to a special-needs trust of which he was the beneficiary

• Individual retirement accounts (IRAs)

August 21, 2011

Roth re-characterization confusion

By Ed Slott

Recent market volatility exposed a basic misunderstanding by financial advisers and even certified public accountants of the mechanics of undoing Roth conversions, a process called a Roth re-characterization

• Individual retirement accounts (IRAs)