IRAs: The Basics
Have you ever noticed sometimes when the IRA Guru leaves the financial institution it is without notice or training for a replacement??!! On the first day of training, you feel like someone placed you on the top of a mountain and told you to work your way down. In other words, you have NO IDEA where to go or what they are talking about. Everything just sounds foreign to you. It’s true. IRAs are a different world from the other accounts at your bank. Oh, they may look similar, but the rules, regulations and IRS reporting build the complications to the point where you feel like you are falling off of a cliff!! And, just when you finally find your footing, they change the rules again!
While it may take years to build a confidence level where you can answer almost any question thrown your way, the goal in this IRA Basic webinar is to supply you with the basic tools to help you on your descent into the IRA world.
IRAs: Rollovers and Transfers
One of the most misused and abused language in the IRA World is using the words “rollover” and “transfer” interchangeably. Not only that, it is also one the most frequent mistakes financial institutions make when reporting these transactions to the IRS resulting in unnecessary bills sent to bank customers.
Rollovers and Transfers have been confusing to IRA administrators since their inception. Financial institutions think they can make up their own policies, rules and definitions on what they will call a “rollover” vs. a “transfer”. That’s not the way this works. The IRS has very clear definitions on the difference between these two movements of IRA money. Everyone must understand these rules so the debit side reporting matches the credit side reporting and cancels out the taxability of the transaction. It’s not rocket science. It’s a 3-piece puzzle with clear answers.
IRAs: Beneficiary Payout Options
As a result of the SECURE Act signed into law in December 2019, most nonspouse beneficiaries have lost the ability to extend their Inherited IRA payments over a long period of time by using the Single Life Expectancy Table.
Beginning for beneficiaries of owners who died in 2020 or later, non-eligible designated beneficiaries can only extend their payout over 10-years. The most confusing aspect of this change is the transition of Single Life Expectancy to a 10-year Payout.
We will delve into who is ‘grandfathered’ by the old rules and who must use the new rules.
IRAs: Auditing Your IRA Files
After we have absorbed all the basic rules, it’s time to check everything we – and those who came before us – have done to the IRA files. There are increased IRS Penalties for Incorrect IRA Reporting to the IRS!! The IRS is losing patience – especially with financial institutions who do not complete the IRA 1099-R and 5498 IRS forms correctly. How many mistakes do you think are sitting in your IRA files right now? Do you have signed applications? Are the beneficiaries current? Are distributions being calculated correctly? Have all the required amendments been sent out? The bank examiners and auditors are zeroing in on incorrect IRA files and writing the banks up for the errors. Not to mention the legal problems to the bank if the beneficiary payouts are not done correctly. Whether you have paper IRA files or electronic IRA files, let’s sort out the required ‘stuff’ from the junk.
IRA Update – Annual Review
In the ever-changing world of IRAs, it is always important to keep up with the latest IRS updates to the rules and regulations. Not to mention, you never know what Congress may slip in at the end of the year to turn the financial world upside down.
IRA Reporting – Annual Update
While we may have hoped the IRA reporting deadlines would be back to normal, the federal disasters and other interruptions on ‘normal’ life have triggered some late reporting in several states.
We are not sure whether or not the processors picked up the late contribution deadlines or IRS filing extensions. If not, there may have to be some adjustments in how these are being reported in “which box”?
