Successor Beneficiaries: What Are Their Distribution Options?

When an IRA owner dies, the assets are distributed to beneficiaries, whether named by the IRA owner or determined by IRA document defaults. This can sometimes be a complicated process for financial organizations. And further complications may arise when the original beneficiary dies, leaving the inherited IRA to a successor beneficiary.

Read More
When an HSA Goes Negative: Why it Matters and How to Prevent it

Health savings accounts (HSAs) are designed to help people pay for qualified medical expenses, so it’s no surprise that there’s a lot of money going in and out of these accounts. To make it easier for account owners to pay for things like prescriptions or doctor visits, many financial organizations offer HSA debit cards or checks. While these tools add convenience, they can also create problems, especially when they lead to negative balances.

Read More
Understanding RMDs for SEP Plans and SIMPLE IRAs

Just like Traditional IRA owners, an individual with a SEP plan can delay taking his first RMD until April 1 of the year after he attains age 73. This date is known as the required beginning date (RBD). But remember—if the SEP plan owner or participating employee delays taking his first RMD until the following year, he will need to take out two RMDs in the same year: the RMD for year one and the RMD for year two.

Read More
Early Distributions and Penalty Tax Exceptions

IRAs and qualified retirement plans (QRPs) are intended to be used for retirement. Therefore, the tax laws and regulations encourage people to leave their money in an IRA or QRP until they retire. If distributions are taken from an IRA (including an IRA holding SEP contributions) or QRP before the account owner reaches age 59½, a 10 percent early distribution penalty tax is assessed on the taxable amount of the distribution, unless a penalty tax exception applies.

Read More
Making Sense of POAs

Power of attorney (POA) legal arrangements are becoming a prevalent tool that retirees use to manage their finances—including their IRA assets. Under such an arrangement, an individual—including an IRA owner—may grant to another the legal authority to act on his behalf in financial or other matters. To reduce liability, financial organizations should create a process for reviewing, accepting, and responding to a POA.

Read More
Deadlines for IRA Activities and Possible Postponements

If a client has received an extension to file his taxes, he may believe that he has an extension to make a prior-year contribution. It is important to understand that a tax filing extension is not an extension to make a prior-year IRA contribution: it is only an extension to file the tax return. But other postponements may apply to some of your clients.

Read More
Mergers, Acquisitions, Dispositions, and Spinoffs can Affect a Plan’s Minimum Coverage Obligations and Testing

When a business is acquired or sold, the employer’s business structure may change (e.g., a sole proprietorship may become a corporation); the employer may join or leave a controlled or affiliated service group; or the employer may change for one or more individuals. Such business transactions could affect many aspects of the business’s qualified retirement plan.

Read More