Check back frequently for updates and guidance on all these new changes.
"The IRS releases
substantial Cost of Living Adjustment to IRAs for 2024". See tables below.
"IRA Update (IRS Notice 2023-54): Required Minimum Distributions to IRA Owners and Beneficiaries"
IRS Notice 2023-54 allows IRA owners who were born
in 1951 and were unaware the RMD age increased to 73, and took a 'mistaken' 2023 RMD between January 1 and July 31,
2023 to roll the RMD amount back into the IRA to avoid taxes. The 60-day and once-per-12-month rollover rule does not
apply to the RMD amount. Any amount taken above the RMD amount must rollover the regular rollover qualifications before
the RMD rollover. This notice also clarified that beneficiaries of IRA owners who died beginning in 2020 and were in
RMD status, will not be penalized if they do not take their single life expectancy death distributions in 2021, 2022 and 2023.
"2023 IRA Annual 2-day Live Stream Event" - August 15-16, 2023:
Including 2023 Cost of Living Adjustments, New Federal Withholding Requirements (W-4R) and the Newly Enacted
SECURE Act 2.0 effective January 1, 2023, Distributions to beneficiaries and much, much more! Registration
is now open through www.bankwebinars.com
Act 2.0 signed into law December 29, 2022
Required Minimum Distribution age to 73 for those born between 1951 and 1959.
Raises Required Minimum Distribution age to 75 for those born after 1959
New W-4R Federal
W-4P will no longer be used for an IRA client to choose to opt out or choose a percentage of federal withholding.
From January 2023 forward, the W-4R will replace the W-4P
and be used as follows:
'On-Demand' Nonperiodic Payments - An IRA Distribution Form with a W-4R must
be completed and signed for every IRA distribution where the client is not choosing the default 10% federal income tax withholding.
On line 2 of the W-4R the client can choose 0-100% federal income tax withholding. If that form is not signed by the
client for each withdrawal, the bank must default to 10% federal income tax withholding.
'Scheduled' Automatic Payments (monthly, quarterly, annually, etc.) When a client sets up a scheduled payment
from an IRA beginning in 2023, they must make the federal withholding election on the 2023 W-4R when setting up the schedule.
The bank must annually notify these clients by sending them an Annual Notice of Federal Withholding no more than 6 months
before the scheduled payment date that they have the right to change their withholding election on file by completing a new
Existing clients set up on "Scheduled" payments
who previously signed a W-4P do not have to sign the new W-4R unless they change their federal withholding election.
IRS 50% Excise Tax Reduced for Excess Accumulations (under-distributing your RMD amount)
The IRS has reduced the penalty for not taking the full amount of an RMD from a 50% penalty
to a 25% penalty effective for 2023 RMDs.
If the client corrects
the amount within a reasonable period of discovering the error - usually by the tax-filing deadline including extensions -
the penalty may drop as low as 10%.
The client can still apply for a waiver of the penalty from the IRS in certain situations.
IRA Notice 2022-53 - The New Proposed
Beneficiary Payout Options released on February 24, 2022 that were supposed to take effect for 2022 beneficiary payouts
has been postponed to take effect no earlier than 2023.
IRA SECURE Act Amendments - IRS has postponed mandatory amendments to customers until December
IRA regular contribution deadline for Traditional, Roth,
Coverdell ESAs and Health Savings Accounts for 2022 is Tuesday, April 18, 2023.
12/31/2021 IRS has released new Uniform,
Joint and Single Life Expectancy Chart for use in calculating distributions effective for 2022.
Check with your processor to make sure they are updating
your life expectancy calculation tables to be used beginning for 2022 distributions.
The Secure Act of 2019 is now a
law and effective January 1, 2020
On December 20, 2019 the Secure Act of 2019 was signed into law with
major changes to IRA contributions, RMDs for owners and beneficiaries and Annual RMD Notice changes. The revisions are summarized
- Nonspouse Beneficiaries of IRA owners who died 1/1/2020 or later
are no longer allowed to take distributions over the Single Life Expectancy method. Unless the beneficiary
meets one of the exceptions of spouse, disabled, minor child, chronically ill or nonspouse beneficiaries less than
10 years younger than the owner, the Inherited IRA must be closed by December 31st of the 10th year after the owner dies. There are no "required" distributions in the
first 9 years but the account must be paid out by the 10th year after the owner's death.*
* The Proposed Regulations released
February 2022 will require some nonspouse beneficiaries can to take SLE payouts in years 1-9 instead of being optional.
I have revised my 2022-2023 IRA Training Manual (aka the "Red Book"). It is
available for a discounted price of $115 if you attend the Webinar or it is included in your seminar registration fee if you
attend a live training class. Please click on the "IRA Manual Order" tab to complete your order and the
"IRA Training" tab to see my full 2023 schedule of live and virtual IRA Training Seminars and Webinars.
Minimum Distributions to Qualified Charities Have Been Extended Permanently Effective December 18, 2015
The Consolidated Approriations Act of 2016 was signed into law on Friday, December 2015. One
of several provisions regarding IRA changes was the ability for 70.5 year old IRA accountholders and beneficiaries of IRAs
who have attained the age of 70.5 or older to use their RMD amount plus more up to $100,000 per year to make tax exempt charitable
contributions directly from an IRA to qualified charities has been made permanent by this Act effective immediately.
The following procedure
must be followed in order for the tax exemption to take affect:beginning in the calendar year of 2015 and beyond:
1. IRA account owners
and beneficiaries of IRAs who have attained the age of 70.5 or older will instruct the financial institution to take a distribution
from their IRA and have a bank check or cashier's check made payable directly to a Qualified Charity. The financial
institution can mailt the check directly or the IRA accountholder can mail it to the charity.
2. The financial institution will code the distribution as either a "normal distribution"
if coming from an IRA owner's account (IRS code "7" in box 7 of the 1099-R) or a "death distribution"
if coming from an Inherited IRA (IRS code "4" in box 7 of the 1099-R). The should NOT be coded as
an IRS Code "F" - "Charitable Gift Annuity"
The IRA accountholder will take the tax exemption on the IRA distribution line of his her tax return (line 4a and 4b
of the 1040 form) and put the letters "QCD" next to 4b to take the exemption. See the 1040 instructions for
IRA ROLLOVERS WERE CHANGED IN 2015
Effective January 1, 2015, the new definition of the "once-per-12 month" rule applies to the IRA accountholders
"aggregate" IRAs - NOT per IRA, NOT per plan type and NOT per financial institution. Once an accountholder
has taken money out of ANY of their IRA plans and rolled those fund over, the accountholder cannot do any more rollovers from
any of his/her IRAs for the next 12 months - starting from the date of the distribution. Any additional distributions will
be ineligible for rollover during that 12 month period. This does not apply to QP to IRA rollovers or conversions from Traditional
or SEPs to Roth IRAs. Additional IRA to IRA movement has to be done as direct IRA to IRA non-reportable "transfers".
August 24, 2016 IRS releases 11 exceptions when the financial institution may accept
late rollovers (past 60 days) if the accountholder "self-certifies" the exception.
The accountholder will sign a "self-certification" letter provided by the financial
institution choose the exceptions that apply. The bank will report the late rollover in box 13a of the 5498 as a "postponed
contribution" - not in box 2 as a "rollover" contribution. In box 13c of the 5498 the financial institution
will use the code "SC" for "Self Certification".