The financial organization holding the IRA as of December 31 of the prior year must provide an RMD statement to the IRA owner by January 31 of the year for which the distribution is required.
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The Internal Revenue Service recently released Treasury Decision (TD) 10008, which provides guidance on income tax withholding requirements for certain periodic payments and nonperiodic distributions from deferred compensation plans, individual retirement arrangements (IRAs), and commercial annuities.
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Financial organizations must offer federal withholding on all IRA distributions that may be subject to income tax.
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Before SECURE 2.0’s enactment, SEP and SIMPLE IRA plan contributions had to be made as pre-tax contributions, but now employers may allow employees to elect to have contributions into a SEP or SIMPLE IRA made as Roth contributions.
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Escheat, which is the transference of unclaimed property to a government entity, is primarily governed by state laws. So each state has its own laws that set procedures and timelines for reporting and reverting unclaimed or abandoned property to the state. Each financial organization should determine and set its own procedures to properly report and pay out unclaimed accounts.
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Withholding elections for nonperiodic distributions are now made on the new IRS Form W-4R.
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The 2021 tax season is almost over. We say almost because most financial organizations still have one last report to file, IRS Form 5498, IRA Contribution Information, which must be filed with the IRS by May 31. Do you know what to do after the Form 5498s have been sent to the IRS and to IRA owners and errors are discovered on the form? We will walk you through the corrections process.
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Maintaining a compliant IRA program can feel like a moving target for many financial organizations. Even if you feel confident in the checks and balances built into your daily IRA operations, mistakes happen. These errors can become costly, especially if the IRS comes calling with an audit.
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Ascensus consultants conduct compliance reviews throughout the country in order to help financial organizations recognize errors and identify ways to mitigate their risks. Here are some of the more common compliance mistakes that Ascensus consultants have discovered.
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A new IRS withholding form released in 2022 means that payers and individuals will have a new process for calculating and electing federal income tax withholding on retirement distributions. Although the IRS will not require payers to use the new and revised forms until January 1, 2023, payers may start using them in 2022.
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The IRS recently released a new draft of Form W-4R and of Form W-4P, in which the IRS indicates that it will not require use of the redesigned Form W-4P and the new Form W-4R to meet federal withholding requirements until January 1, 2023.
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Are IRA owners always allowed to waive federal withholding on IRA distributions? What are the withholding requirements for nonresident aliens? Do the withholding rules apply to Roth IRA distributions?
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The IRS has indicated that Form W-4P will be split into two forms: one for periodic pension or annuity payments and the other—a new form—for nonperiodic payments. Early release of the 2022 draft versions of these forms are now available.
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When an IRA is forgotten or abandoned, it can prove problematic from an administrative perspective for IRA custodians, trustees, and issuers. What can these organizations do when this occurs? Can they legally “shed” these IRAs that are owned by unresponsive individuals?
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Recent IRS guidance addresses reporting and withholding issues related to escheatment of retirement plan assets. This guidance also adds receipt of escheated funds to the list of approved reasons for individuals to self-certify that they qualify for the 60-day rollover waiver.
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These days, IRA owners may be noticing a drop in their IRA balances. While discouraging, it might be an opportunity to convert to a Roth IRA. Be sure that you—and your clients—understand how a conversion works.
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As a trustee or custodian of IRAs, HSAs, or ESAs, your organization must keep track of many deadlines throughout the year. Missing a deadline can be costly. Seeing the big picture of all due dates in one calendar year with a brief description of each may be helpful.
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IRS Notice 2018-90 extends the transition period to January 1, 2020, for satisfying withholding and reporting requirements when paying out an abandoned IRA to the state.
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