An IRA could be useful to restrict certain inherent rights that are required within qualified retirement plans covered by ERISA.
qualified retirement plan
More Clarification on Rollovers and Transfers
I’m compelled to provide an additional update to the posts I’ve provided in the past in the article Running Afoul of One Rollover Per Year Rule and its follow-up More on the One-Rollover-Per-Year Rule. This is primarily to provide clarity to a portion of this rule that I personally was unclear on when the articles were originally written. The rule is that you are restricted to one IRA rollover in a 12-month period. So let’s define a few things for the purpose of this discussion: Rollover – this is when you move money from one IRA to another, first taking possession of the funds prior to depositing the funds into the new (or the same old) IRA account. You have 60 days to complete this process. At the end of the tax year you’ll receive a 1099R from the original custodian, with a distribution code of 1 or 7 (this […]
Avoid the Overweight Retirement Plan
While it’s generally a good idea to defer as much income as possible into your available IRAs, 401(k)s and Roth accounts, as with everything else in life, too much of a good thing can be a problem as well. When you have the bulk of your financial assets in retirement plans, you might accidentally expose yourself to some risks that you haven’t thought about… since retirement plan assets are much more likely to be impacted by changes to legislation – as we have seen in the past. In these days when Congress is looking for money just about everywhere, it’s not a stretch to imagine new legislation coming down the pike to tax retirement plan assets (like the excess plan accumulation tax that has been proposed). Other possibilities include accelerating required minimum distributions to achieve a faster payout taxation of the plan and eliminating the “stretch” provisions (this has already […]
The 457(b) Special Catch-Up
If you’re a governmental employee, you may be aware that your employer offers a 457(b) retirement plan. Additionally, you likely know that like a 401(k), the 457(b) allows you to contribute $19,000 annually to the plan with an additional $6,000 catch-up for those aged 50 or older. What you may not be aware of is the special catch-up provision the 457(b) offers. This special catch-up provision allows a governmental employee that is within 3 years of the normal retirement age (as dictated in the plan) to contribute up to twice the annual amount ($38,000 for 2019). To take advantage of this special contribution the plan sponsor (employer) must allow it in the verbiage of the plan. Additionally, the employee must have unused contribution amounts from prior years. In other words, an employee can contribute twice the amount normally allowed if that employee has unused contributions from prior years; they didn’t […]