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Tax & Estate Planning For Your Retirement Savings

ED SLOTT’S IRA ADVISOR • DECEMBER 2018

ANNIVERSARY

A Tale of Two Couples and Their RMDs

ρ Which Age, When? ρ Which Life Expectancy Table? ρ Calculating the RMD ρ The First Year RMD ρ Death and RMDs

<Pages 1-3>

Guest IRA Expert Martin E. James, CPA, PFS Martin James Investment & Tax Management Mooresville, IN

Inserting Qualified Business Income into Retirement Planning

<Pages 4-5>

2018 Index of Articles Thank You to Our 2018 Guest Experts

<Pages 6-7>

Acknowledgements<Page 8> $500 OFF

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NEWSLETTER

Ed Slott and Company’s Exclusive 2-Day IRA Workshop

INSTANT IRA SUCCESSFebruary 22-23, 2019 | Las Vegas

December 2018

A Tale of Two Couples and Their RMDs

Before we begin our "tale of two couples," here’s some background

on taking required minimum distributions (RMDs).

Taking an RMD can be challenging and confusing for clients and their advisors. A failure to calculate the distribution correctly can have opposite outcomes – neither results in a happy client:1. The client takes too much which

depletes the account balance early and results in more income tax; or

2. The client takes too little, resulting in a 50% penalty on the shortfall (which still must be withdrawn from the account) and is taxable.

The RMD calculation depends on several factors: the age of the IRA owner, the age of the owner’s spouse, the life expectancy table used, and the prior year-end account balance.

Which Age, When?

The first item – the age of the IRA owner and their spouse, if they have one – would seem to be relatively easy. However, we frequently get questions on this.

Is it the age of the IRA owner at the time of the distribution; is it their age on their birthday; or is it their age at the end of the year? Actually, the last two items in that list are essentially

the same. The age a client turns on their birthday will be the same age they are at the end of the year. This is the age that will be used for RMD purposes. Will the age of a spouse impact an RMD calculation? Only if the spouse is more than 10 years younger.

Which Life Expectancy Table?

The majority of IRA owners will use the Uniform Lifetime Table. (To view or download 2018 IRA and Tax Tables, visit irahelp.com/2018.) They will look up their age as of the end of the year on this table to get their life expectancy factor. The Uniform Lifetime Table is actually a joint life table. It takes the age of the IRA owner and pairs it with an assumed age of a beneficiary 10 years younger than the IRA owner. Thus, the actual age of the spouse or a beneficiary (if less than 10 years younger than the IRA owner) has no impact on their life expectancy factor. Only when the spouse is more than 10 years younger than the IRA owner, and when the spouse is the sole beneficiary of the IRA for the entire year, will the age of the spouse also be used to determine the life expectancy factor for the year. The IRA owner will now use the Joint Life Expectancy Table instead of the Uniform Lifetime Table.

HappyHolidays

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TWO COUPLES AND THEIR RMDS

The IRA owner will look up their age as of the end of the year and find where it intersects with the age of their spouse as of the end of the year to get the factor. This factor will produce smaller RMDs each year for the IRA owner resulting in the account balance lasting longer and a smaller annual income tax bill.

If the spouse dies during the year, the IRA owner can still use the Joint Life Expectancy Table for that year only. In subsequent years, the Uniform Lifetime Table must be used. If the IRA owner divorces the spouse during the year and names a different beneficiary for the IRA account that year, then the IRA owner must use the Uniform Lifetime Table for calculating their RMD for that year and all subsequent years.

A marriage to a new spouse who is more than 10 years younger and is a sole beneficiary would allow the IRA owner to go back to using the Joint Life Expectancy Table.

Calculating the RMD

Math is the simplest part of the RMD process. To get the RMD amount for the year, the IRA account’s prior year-end account balance is divided by the factor obtained from the life expectancy table.

Remember, when using the IRS tables to look up an age, the number found on the table is not a percentage.

Say you have a client, age 82. On the Uniform Lifetime Table, the corresponding number for age 82 is 17.1. You would divide the prior year-end account balance by 17.1 to find the RMD amount for the year.

When calculating an RMD for a previous year, such as 2017, use the prior year-end account balance. For 2017, that account balance is the December 31, 2016 balance.

The First Year RMD

IRA owners must take their first RMD in the year they turn age 70½. For the IRA owner’s first year RMD only, the distribution can be deferred until April 1 of the year after the owner turns age 70½. Note that neither the date nor the age is “normal.” The date is April 1, not the end of the quarter or the tax filing date. The age is 70½, not 70 or 71. April 1 is the IRA owner’s required beginning date (RBD). Don’t confuse RBD with RMD.

For the IRA owner’s first year RMD only, the

distribution can be deferred until April 1 of the year after the owner turns age 70½.

Here is where our “tale of two couples” – Barney and Betty and Zach and Zoey – comes into play. Barney’s birthday is in March, so he is turning 70 and 70½ this year and will have to take his first RMD. Betty is age 55, which is 15 years younger than Barney. She is also the sole beneficiary of his IRA account. Barney will use the Joint Life Expectancy Table for calculating his RMDs. He looks up his age 70 and Betty’s age 55 to find his factor of 31.1. Barney will divide his prior year-end account balance of $500,000 by 31.1 which results in an RMD of $16,077.17. Barney can take the distribution at any time during the year, even before he turns 70 or 70½. Barney could also defer his first distribution to April 1 of next year. But that would mean that he would have two RMD distributions next year: his distribution for the current year by April 1 and his distribution for next year by the end of the year. Deferring his first distribution would not change the calculation of the distribution. The amount would remain $16,077.17.

Deferring his distribution will result in a doubling up of RMDs into one year, creating a higher income tax bill. This option could make sense if Barney is expecting a significant reduction of income in that year.

Fast forward 15 years and now Betty, a Taurus, is turning age 70 and 70½. What table does Betty use? She is 70 and Barney is 85. Barney uses the Joint Life Expectancy Table. Betty cannot use the same table. The rule is that the spouse of the IRA owner must be more than 10 years younger. Barney is 15 years older than Betty, so the rule does not apply. Betty must use the Uniform Lifetime Table. She looks up her age of 70 and finds that her factor is 27.4. She will divide her prior year-end account balance of $500,000 by 27.4 which results in her having an RMD of $18,248.18 for the year.

Despite having the same year-end balance, Betty’s first RMD is over $2,000 more than Barney’s initial RMD. That is the difference between using the Joint Life Expectancy Table and the Uniform Lifetime Table.

In contrast, Zach and Zoey were born in the same year. Zach’s birthday is in January and Zoey’s birthday is in August. They are both turning 70 this year, but only Zach has an RMD for this year. The rule is that an RMD is due beginning in the year you turn 70½.

Since Zach was born in January, he will be 70½ in July, so he has an RMD for this year. Zoey, on the other hand, turns 70 in August and will not be 70½ until next year, so her first RMD is next year.

Zach uses age 70 – the age he is at the end of the year – to determine his factor. He will use the Uniform Lifetime Table which tells him his factor is 27.4. He divides his prior year-end account balance of $500,000 by 27.4, resulting in an RMD of $18,248.18 for the year.

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TWO COUPLES AND THEIR RMDS

Fast forward one year and now Zoey must take her first RMD. Zoey will turn 71 in August, so that will be her age as of the end of the year. She uses the Uniform Lifetime Table which gives her a factor of 26.5. She divides her prior year-end account balance of $500,000 by 26.5 which results in an RMD of $18,867.92 for the year. Her RMD is only slightly higher than Zach's first RMD.

Death and RMDs

Assume that in the case of both couples they named each other as the primary beneficiary of their IRAs. If a spouse dies before an RMD is fully satisfied for the year, the surviving spouse beneficiary must take the balance of the RMD. It does not go to the deceased spouse or to their estate; it goes to the named beneficiary, the surviving spouse.What should the surviving spouse do with the inherited IRA? That depends on the age of the surviving spouse and when the beneficiary would be required to take RMDs.If Barney (15 years older) dies before Betty turns 59½, Betty should consider keeping his IRA as an inherited IRA. As a beneficiary, Betty would not be subject to the 10% early distribution penalty on any funds she takes out of the inherited IRA. If she moves his IRA to her own IRA, Betty is treated as the IRA owner and is subject to the early distribution rules on Barney’s funds in the same manner as the funds in her own IRA. Since Barney is 15 years older, Betty could be in a situation where keeping Barney’s IRA as an inherited IRA in order to avoid the 10% early distribution penalty also means she likely will have to take RMDs from the inherited IRA. As a spouse, Betty will not have to take RMDs until the year Barney would turn age 70½.

Those RMDs would be calculated using the Single Life Expectancy Table to which Betty would refer each year to find her factor. If Betty is 57, her factor from the table would be 27.9. The factors from the Single Life Expectancy Table produce much higher RMD amounts than the factors from the other two tables. If Betty does keep Barney’s IRA as an inherited IRA, she should move his funds to her own account as soon as she turns age 59½. This would defer any RMDs from the inherited account until Betty becomes age 70½. In addition, at 59½, she will no longer be subject to the 10% early distribution penalty rules.

If a spouse dies before an RMD is fully satisfied for the year, the surviving spouse beneficiary must take the

balance of the RMD.

What if Betty dies before Barney? Barney might want to consider leaving Betty’s IRA as an inherited IRA. He would not have to take RMDs from her inherited account until the year Betty would have turned age 70½. That could be a deferral of RMDs for up to 15 years. No matter what either spouse decides, they should be sure to name their own beneficiaries as soon as possible after inheriting an account. As soon as a spouse inherits an IRA account, the previously named contingent beneficiaries no longer have any future standing as a named beneficiary. The spouse beneficiary would have to rename them as a beneficiary.The choices for Zach and Zoey are much simpler at the death of the first spouse. Since they were born in the same year, they will reach ages 59½ and 70½ at almost the same time.

If Zach dies before age 59½, Zoey should keep his IRA as an inherited IRA until she reaches age 59½. This allows her to take funds as needed from the inherited IRA with no 10% early distribution penalty. Once she reaches her actual age 59½ (or if Zach dies after Zoey becomes 59½), Zoey should move the funds from Zach’s inherited IRA to her own IRA. She will not have to take any RMDs based on Zach’s funds until the year she turns 70½. If Zoey dies before Zach has reached age 59½, Zach should also keep her funds in an inherited IRA for the same reasons noted in the previous paragraph. Once Zach reaches age 59½, he should move the funds into an IRA in his own name. He will not have to take RMDs until the year he turns 70½. Zach could keep the funds in an inherited IRA until he reaches age 70½. That would enable him to defer taking any RMDs on the inherited funds for one more year (since Zoey turns 70½ a year later than Zach). Zach should move the funds in the inherited account into his own account in the year he turns 70½ to avoid the possibility of having to use the Single Life Expectancy Table the following year when Zoey would turn 70½. Most clients will be like Zach and Zoey; they will be close in age and will use the Uniform Lifetime Table. But there are a lot of couples like Barney and Betty who have a significant difference in age. For those clients, keep in mind that the RMD calculation provided by the IRA custodian at the beginning of the year might not be accurate. Did the custodian use the correct table? Only IRA owners who, like Barney, have a sole spouse beneficiary that is more than 10 years younger than they are will use the Joint Life Expectancy Table. IRA custodians may not take this into account when processing RMD calculations. ◼

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QUALIFIED BUSINESS INCOME

Guest IRA Expert

Martin E. James, CPA, PFS

Martin James Investment & Tax

ManagementMooresville, IN

Among the many provisions of the Tax Cuts and Jobs Act

(TCJA) of 2017, Section 199A of the tax code was created. Now, income from certain sources (LLCs taxed as pass-through entities, S corporations, partnerships, sole proprietorships, trusts, estates) is considered qualified business income (QBI) and thus may merit a 20% tax deduction. This deduction is taken on the owner’s personal income tax return, not at the entity level. This article focuses on the 20% QBI deduction for clients with taxable income below $157,500, or $315,000 on a joint tax return. Those with higher income will have to plan around limits on QBI.Example: Wendy Baker, a sole proprietor, has $150,000 of QBI in 2018. She and her husband, Bob Baker, may be able to deduct as much as $30,000 (20% of $150,000) on their joint tax return for 2018.If the Bakers have sufficient income that’s completely taxed in the 24% bracket, they will owe $28,800 in income tax on the income from Wendy’s sole proprietorship: 24% times the $120,000 that winds up on their tax return. That’s effectively a 19.2% tax rate on her $150,000 of self-employment earnings. (The 199A deduction does not reduce self-employment taxes).

Impact on Contributions

How does the new Section 199A deduction impact retirement planning? It may affect the decision to contribute pre-tax or after-tax dollars to retirement plans.For clients with QBI, the key point is where the retirement plan contributions are deducted. For owners of pass-through entities other than S corporations, those deductions are taken as an adjustment to income, reducing adjusted gross income but not self-employment income.

For clients with QBI, the key point is where the retirement

plan contributions are deducted.

Because sole proprietors and partners deduct profit sharing contributions on this portion of their tax return (Schedule 1 on the draft version of Form 1040 for 2018, as of this writing), they get the QBI deduction from their business income as well.Thus, sole proprietors, partners, etc., will make pre-tax contributions to retirement plans that are based on their marginal tax rate. The decision between, say, a Roth or a traditional 401(k) typically is the same as for taxpayers without QBI: How does the current tax bracket compare with likely future tax rates?Although the QBI deduction generally isn’t relevant to the choice between pre-tax and after-tax retirement plan contributions for pass-through entities other than S corporations, an exception would occur if 20% of the business owner’s taxable income is less than 20% of QBI. Then the 199A deduction would be limited to 20% of taxable income instead of 20% of QBI. (More on this issue later.)

Devaluing S Corporation Deductions

The presence of the Section 199A deductions is more likely to influence retirement planning choices made by S corporation owners. A corporation deducts profit sharing contributions and any 401(k) matches at the corporate level, which reduces QBI and the resulting 20% deduction on the shareholder’s personal tax return. Instead of saving tax at, say, 22% or 24%, deductible retirement plan contributions by S corporation owners would have a current tax benefit of only 17.6% or 19.2% – 80% of the posted tax rate.For clients with QBI, it is the deductible employer contributions, and where they occur, that matter the most for the choice between pre-tax and after-tax accounts. S corporation owners may be best-served by placing some or all of their retirement plan contributions into after-tax accounts, including Roth plans, because pre-tax, profit-sharing contributions effectively reduce their QBI deduction.

Selecting a Structure

The creation of the QBI deduction, and its impact on retirement plan contributions, can affect the choice of business entity. For example, the nature of taxes paid by either S corporations or other pass-through entities can be an important factor.

I’ve run simulations that assume an S corporation shareholder and a non-S corporation LLC member pay approximately the same amount of total taxes. However, the non-S corporation LLC member pays less in income taxes and more in self-employment taxes, for Medicare and Social Security. This could produce more future Social Security income for the non-S corporation LLC member.

Inserting Qualified Business Income into Retirement Planning

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QUALIFIED BUSINESS INCOME

In addition, an LLC member probably can contribute more in profit sharing contributions than an S corporation shareholder. That’s because the S corporation owner’s profit-sharing contribution is based on wages, which don’t generate a 20% QBI deduction under Section 199A. (Most S corporations do not pay out all of their net income to the shareholders as wages.)

Example: Jeff is an S corporation owner with a $100,000 salary and $125,000 in pass-through income. Then Jeff could make a $25,000 profit sharing contribution (25% of his $100,000 salary) and take a QBI deduction that might be $20,000 (20% of $100,000, which is Jeff’s $125,000 in pass-through income minus the $25,000 profit-sharing contribution).

By comparison, if Jill has $225,000 in earnings that pass through from her LLC, she can make a $45,000 profit sharing contribution (20% of the $225,000 LLC pass-through) and also take a 20% QBI deduction that might be $45,000, assuming Jill is not limited by the 20%-of-taxable-income hurdle.

Plan Contributions Vs. Elective Deferrals

Drilling down, the impact of QBI deductions on the choice between S corporation status and LLC status may be more about profit sharing plan contributions than about elective deferrals to plans such as 401(k)s. That’s because elective deferrals come from wages, which are not considered a part of QBI income.

As illustrated, deductible employer contributions are 20% less effective for an S corporation owner. For an S corporation owner in the 24% bracket, the profit-sharing deduction is reducing QBI, so the real rate of income tax being deferred is only 19.2%: 80% of the 24% tax bracket.

This will create an unsatisfactory result on a subsequent Roth conversion or an outright distribution. Those transactions will come back into the client’s tax return at 24%, if other factors are unchanged, after a 19.2% tax saving. The S corporation owner in this situation will have absorbed 4.8% in negative tax alpha.

Conversely, LLC members take the profit-sharing deduction on their personal income tax return, after they have calculated their QBI. Thus, they can get a full 20% QBI deduction, under Section 199A.

If an LLC member received the QBI deduction at 24% and pays 24% on distribution or conversion, there would be no negative tax alpha. Properly structured, clients with QBI who are not S corporation owners could put more into their retirement accounts, reduce their income tax and contribute more to the Social Security system.

Calculating Conversions

Previously in this article, a 20%-of-taxable-income rule was mentioned. In the TCJA, which created QBI, the QBI deduction is the lesser of 20% of QBI or 20% of taxable ordinary income.This limitation is likely to surprise many business owners. Advisors can warn selected clients about this rule and point out that adding income via a Roth IRA conversion may allow a greater QBI deduction, making it very tax-efficient.

The QBI deduction is the lesser of 20% of QBI or 20% of taxable ordinary income.

Example: Li Min is a sole proprietor with a net business income of $250,000 this year. That’s the only income for Li and his wife, on their joint return. Their maximum QBI deduction would be $50,000: 20% of $250,000.

However, suppose the Mins deduct about $60,000 for self-employment tax and a profit-sharing contribution, and they also take a $24,000 standard deduction. Their taxable income, before the QBI deduction, would be around $166,000: $250,000 minus $84,000.Then 20% of that $166,000 would be $33,200. That’s less than $50,000, so the Mins could take only $33,200 as a QBI deduction.Now suppose the Mins convert $84,000 of their IRAs to the Roth side, increasing taxable income from $166,000 back to $250,000, and allowing a full $50,000 QBI deduction. My calculations show that the additional tax cost of the $84,000 Roth IRA conversion would be only 18.5%, far below the Mins’ 24% marginal tax rate, in this hypothetical example.The bottom line is that Section 199A can provide welcome tax relief for many clients, and savvy planning can make a good deal even better. Subtracting or adding income via deductions or Roth IRA conversions can impact valuable tax credits so consulting with a knowledgeable tax professional is always prudent. ◼

Martin E. James, CPA, PFS has been assisting individuals and businesses for over 38 years with their tax, accounting and financial planning needs. A native Hoosier, Marty is a 1981 graduate of Indiana University, School of Business, majoring in accounting. Marty is President of Martin James, CPA, PC, founded in 1986, and Managing Member of Martin James Investment and Tax Management, LLC, located in Mooresville, IN. Marty has written and been quoted in numerous articles on tax and financial issues, including those that have appeared on Forbes.com and in The Wall Street Journal, Investor’s Business Daily and other publications. Marty can be reached by phone at (317) 834-2276 or by email at mjames@mjamescpa.com. Securities and investment advisory services offered through World Equity Group, Inc., member FINRA and SIPC, a Registered Investment Adviser. Martin James Investment & Tax Management, LLC is not owned or controlled by World Equity Group, Inc. World Equity Group, Inc. does not provide tax advice.

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INDEX OF ARTICLES / EXPERTS

2018 Index of Articles Thank You to Our 2018 Guest Experts

January 2018

A Newsletter Just for IRAs? …YES!!!

Roth IRAs Come of Age ρ Roth Opportunities ρ Pushing the Roth Limits ρ A Winner and a Loser ρ Roths Reduce RMDs ρ Roths and Estate Planning ρ Roths and Trusts ρ Undoing the Recharacterization ρ Roth Pitfalls ρ Double or Nothing ρ Additional Ideas ρ The Devil is in the Details ρ Last Words

The Current State of the IRA Retirement-Saving Landscape

ρ Room for Improvement ρ The Road to Today’s Roth IRA ρ Advantages of the “Opposite IRA” ρ The Still Under-Appreciated Roth IRA ρ Overcoming Resistance to a Roth IRA

Conversion ρ Boosting Roth Contributions

Infographic: About Roth IRAs

Roth IRAs for Children and Young Adults ρ Roth Contribution Rules ρ Roth IRA Distribution Rules ρ The Power of the Roth

Roth IRA Conversions – One Size Does Not Fit All

ρ The Conversion Conversation ρ Who Should Convert? ρ Who Should NOT Convert? ρ Priorities and Partial Conversions

Recharacterization is Gone – Almost ρ Recharacterizing Contributions ρ Recharacterizing 2017 Conversions

How Roths Offered Employer Plans a New Option

ρ Roth 401(k) Distribution Rules ρ More Differences ρ Roth IRA Contributions and Employer

Plans

Evaluate Decisions by Marvin Rotenberg

February 2018

10 Ways the Tax Cuts and Jobs Act of 2017 Affects IRA Planning1. Roth IRA Recharacterizations2. Back Door Roth IRA Conversions3. Kiddie Tax4. Disaster Area Losses5. Charity Deductions6. Medical Expense Deductions7. Estate and Gift Taxes8. Investment Expenses9. Alimony10. Lower Tax Rates

Chart: 2018 Retirement Plan Contribution Limits

IRS Allows Recharacterizations of 2017 Roth Conversions

Managing Roth Accounts Under the Tax Cuts and Jobs Act by Martin E. James, CPA, PFS

March 2018

Bipartisan Budget Act of 2018 Impacts Retirement Plans ρ California Wildfire Disaster Relief ρ Hardship Distribution Rule Changes ρ Rollover of Wrongful Levy ρ Now is the Time to Stay Tuned

8 Ways to Help IRA Planning with 2017 Tax Returns 1. Reverse and Redo a 2017 Roth IRA Conversion Using 2018's Lower Tax Rates 2. Plan an Irreversible Roth IRA Conversion in 20183. Maximize IRA Contributions for 2017 4. Make Roth IRA Contributions for Children 5. Reverse 2017 IRA Contribution Mistakes 6. Use the "Back Door" to Save Roth Contributions 7. Make Earliest Possible 2018 Contributions8. Check Beneficiary Designations for Every "1099 Form" Account

Retirement Account Tax Time Reminders for CPAs

Social Security Planning is Dead, You Say? Think Again by Heather Schreiber, RICP®

April 2018

Maximizing the Stretch IRA with Multiple Beneficiaries

ρ Stretch IRA Basics ρ The Stretch IRA with Multiple Beneficiaries ρ Maintaining the Stretch IRA When a

Charity is the Beneficiary ρ Update Beneficiary Forms

10 Costly Mistakes to Avoid with Inherited IRAs1. Overlooking Spousal Options2. Not Stretching the IRA3. Not Splitting an IRA to Maximize the Stretch4. Treating an Inherited IRA as One’s Own5. Not Taking RMDs6. Doing 60-Day Rollovers7. Not Naming a Successor Beneficiary8. Commingling IRA Assets9. Missing the Income Tax Deduction10. Relying on IRA Custodians

Putting IRAs into a Bucket Plan by Chris Cordoba, CFP®, RFC®, CFS

May 2018

Untying the Knot – How to Get It Right When Handling an IRA in Divorce

ρ Divorce Decree is a Must ρ No QDRO Needed ρ Preparing for a Transfer Due to Divorce ρ How to Transfer IRA Funds in a Divorce ρ What NOT to Do: The Kirkpatrick Case ρ After the Transfer Due to Divorce

Splitting Retirement Accounts in Divorce

Using the Disclaimer as an Estate Planning Tool

ρ The Basics ρ Example 1: Complete Disclaimer

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INDEX OF ARTICLES / EXPERTS

ρ Example 2: Pecuniary Disclaimer ρ Example 3: Fractional Disclaimer ρ Last Thoughts

Beating Uncle Sam to the Punch! by Brad Pistole

June 2018

Company Plan Distribution Rules: The End of the Line

ρ Plans and IRAs Share RMD Rules ρ Three RMD Differences ρ Plan Distribution Options ρ Post-Service Distributions ρ In-Service Distributions: Age 59½ ρ In-Service Distributions: Rollover Amounts ρ In-Service Distributions: Factors Other

Than Age ρ Plan Loans and Hardship Distributions ρ Summary Plan Description

IRA Planning for the Rest of 2018

Powers of Attorney: A Must for IRAs by Steve Gorin, J.D.

July 2018

The Spousal Rollover and What to Do When a Trust or Estate Is Involved

ρ Additional IRS Guidance ρ Surviving Spouse Advantages ρ Taking Ownership of the Account – The

Spousal Rollover ρ It Can All Be Avoided

Money for Nothing: IRS Releases Guidance on Escheatment of IRAs

ρ Escheatment – Bigger & Badder Than Ever ρ IRA Escheatment Concerns ρ Revenue Ruling 2018-17 ρ Escheatment Aftermath – PLR 201611028

IRAs and Life Insurance: Powerful Parlay by Rao Garuda, ChFC, CLU

August 2018

Employer Plans for Small Businesses ρ SEP IRAs ρ SIMPLE IRAs

ρ Qualified / 401(k) Plans ρ Putting It All Together

IRS Finally Says Back-Door Roths Are OK!

ρ Back-Door Roth IRA Basics

U.S. Supreme Court Rules That State Laws Removing Ex-Spouse as Beneficiary Work

ρ Court Says the Revocation upon Divorce Law Is Constitutional

ρ About IRAs... The Lazar Case ρ ERISA and Federal Preemption

Be Diligent About Distribution Planning by Walter Pardo, CWS®, PPC®

September 2018

The Final Recharacterization of Roth IRA Conversions – Don’t Let This Planning Opportunity Pass by You… And Your Clients!

ρ Mechanics ρ Partial Recharacterization ρ Tax Reporting ρ Recharacterization of Contributions ρ Late Recharacterization

Oct. 15, 2018 Critical Deadlines Checklist

Computing Net Income Attributable for IRA Recharacterizations and Corrective Distributions

ρ NIA Formula ρ Full Balance Roth IRA Recharacterization ρ Partial Balance Full Recharacterization ρ Partial Recharacterization ρ Corrective Withdrawals ρ Recharacterizing Multiple Contributions

Dealing with Ineligible Roth IRA Contributions by Joseph R. Brooks, ChFC®

October 2018

How the Tax Cuts and Jobs Act Impacts Alimony Payments

ρ For Better or for Worse? ρ Other Considerations ρ Planning Opportunity

SEC Investor Alert for Self-Directed IRAs ρ Overview ρ SEC Concerns

ρ How to Reduce Fraud Risk ρ Recourse for Fraud Victims

How to Integrate QCDs into Planning

Proposed Legislation Impacts Retirement ρ Allow Traditional IRA Contributions at any

Age ρ No RMDs for Total Retirement Balances of

$50,000 or Less ρ Penalty-Free Retirement Withdrawals for

Births or Adoptions ρ Universal Savings Accounts

Double Deaths Create Tangled RMDs by Natalie Choate, J.D.

November 2018

IRS Updates Qualified Plans' Rollover Notice: Use This to Your Clients' Advantage

ρ Extended Rollover Period for Plan Loan Offsets

ρ Exceptions from the Early Distribution Penalty

ρ Self-Certification for Late 60-Day Rollovers

Year-End Planning for IRAs ρ Meeting the Requirements ρ Direct Donations ρ Beneficiaries Beware ρ Sooner Than Later ρ Avoiding Penalties ρ Conversions ρ Employer Plans

19 Ways to be Ready for 2019

Dealing with RMD Shortfalls by Seymour Goldberg, CPA, MBA, JD

December 2018

A Tale of Two Couples and Their RMDs ρ Which Age, When? ρ Which Life Expectancy Table? ρ Calculating the RMD ρ The First Year RMD ρ Death and the RMDs

2018 Index of Articles Thank You to Our 2018 Guest Experts

Inserting Qualified Business Income into Retirement Planning by Martin E. James, CPA, PFS

© 2018 Smart Subscriptions, LLC

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End Note

ED SLOTT’S IRA ADVISOREditor-in-Chief Ed Slott, CPAContributing Writers Beverly DeVeny Sarah Brenner, JD Jeremy Rodriguez, JDCopy Editor Ryan ForteseGraphic Design Debbie Slott, D. Slott Design

Disclaimer and Warning to Readers: Ed Slott’s IRA Advisor has been carefully researched to provide accurate and current data to financial advisors, taxpayers, and others who seek and use the information contained in this newsletter. Readers are cautioned, however, that this newsletter is not intended to provide tax, legal, accounting, financial, or professional advice. If such services are required, then readers are advised to seek the aid of competent professional advisors. This newsletter contains timely information about complicated tax topics that may eventually be changed, outdated, or rendered incorrect by new legislation or official rulings. The editors, writers, and publisher shall not have liability or responsibility to any person or entity with respect to any loss or damage caused or alleged to be caused, directly or indirectly, by the information contained in this newsletter.

ED SLOTT’S IRA ADVISORis published monthly

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Acknowledgments

Thank you to Sarah Brenner and Jeremy Rodriguez for your consistent attention to detail writing, editing and reviewing each issue. You are truly the best in the business and have earned the national recognition as America's IRA Experts! Don Korn, thank you for the work you put into working with our Guest Experts.

Our IRA Queen is Retiring! 😢 A special thank you to Beverly DeVeny for your dedication and hard work over these past fifteen years with Ed Slott's IRA Advisor. We are certainly going to miss you, but hope you enjoy your retirement – this is what you've been working toward your whole life!

And to all of our subscribers, thank you for your readership and loyalty every month. We wish you and your loved ones a happy, successful, and healthy New Year!

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