I received the following question from a reader. It’s a unique situation that you may find interesting, so I thought I’d share the interaction with you: Here’s my situation, this year I started with the following: (A) Rollover IRA (from rollover funds several years ago with no new funds added since. $157K was rolled over in 2020, but account is now valued at ~$146K). (B) Roth IRA (that was opened years ago with minimal amount, but no new funds added in the past decade due to income limitation). (C) Non-deductible (separate) traditional IRA account opened in 2016 with contributions deposited in each year, but have only been depositing NON-DEDUCTIBLE dollars (a total of $23K invested). However, the account was only worth ~$17K/$18K at the time I went to convert). In early 2022, after making the 2022 contributions, I converted the entire value of the non-deductible traditional IRA account to a […]
traditional ira
Traditional or Roth IRA?
If you’re thinking on starting and contributing to an IRA, you may be wondering which IRA is right for you. Generally, an individual has two IRAs to choose from – the traditional IRA and Roth IRA. This post provides some guidelines and information to help you make your decision. In some cases, based on your income, the decision is already made. In all cases, to contribute to an IRA an individual must have earned income. This is generally W2 wages, Schedule C income, and even alimony received. Let’s start with the traditional IRA. For 2016, the maximum annual contribution amounts is $5,500 for individuals under age 50 and those 50 and over are allowed an additional $1,000 catch-up for a total of $6,500 annually. This is also true for Roth IRAs. Also, the annual maximums are the total among all IRAs. That is, if an individual is under age 50, […]
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IRAs and Medicaid
When it comes to IRAs and Medicaid eligibility the question that gets asked is, “How does my IRA affect my eligibility for Medicaid?” Many states share similar guidelines when it comes to exempt and non-exempt assets in IRAs. Essentially, it boils down to this: if the IRA is not in payout status (the IRA owner is not taking required minimum distributions) then the assets in the IRA are included (non-exempt) in the determination of eligibility. However, if the IRA is in payout status and the owner is now taking required minimum distributions (RMDs) the total amount of the IRA is not included, but the annual income from the RMDs is.The same would be true regarding 401(k)s, 403(b), and other qualified plans that may require RMDs after age 70 ½. There are some states (Illinois for example) that treat IRAs, a 401(k), and pensions as exempt. Check your state’s laws to […]
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Facts About the 72t Early Distribution
Image by wallygrom via Flickr In case you don’t know what a 72t distribution is, this is shorthand for the Internal Revenue Code Section 72 part t, and the most popular provision of this code section is known as a Series of Substantially Equal Periodic Payments – SOSEPP for short. Enough about the code section already. What is this thing? A SOSEPP is a method by which you can access your IRA funds prior to age 59½. In order to take advantage of this rule, you determine the amount of the annual distribution from your IRA (this is done in a prescribed manner, more on this in a bit) and then begin taking the distributions. Once you start the SOSEPP, you have to keep it going for the longer of five years or until you reach age 59½. Methods of Distribution There are three ways that you can determine the […]
Sterling Raskie, MSFS, CFP®, ChFC®
The latest in our Owner’s Manual series, A 401(k) Owner’s Manual, was published in January 2020 and is available on 
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And if you’ve come here to learn about queuing waterfowl, I apologize for the confusion. You may want to discuss your question with Lester, my loyal watchduck and self-proclaimed “advisor’s advisor”.