2016: Beware of the New 60-Day IRA Rollover Rules

The IRS changed the rules for IRA rollovers and not everyone is catching on. Taxpayers can only perform one 60-day IRA rollover in a 12-month period, no matter how many IRAs they own. Joe Anderson, CFP® & Alan Clopine, CPA go over this new rule and share how you can avoid getting hit with high tax bills in YMYW podcast 54. Original publish date August 6, 2016 (hour 2). Note that content may be outdated as rules and regulations have changed.
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00:00 - Intro
01:04 - “[We made a] 7-minute video on how to plan your finances in your 20’s and 30’s. The sooner you start, the better off you’ll be.”
04:41 - “We’ve been talking about costly retirement mistakes, and this is a relatively new one [60 day rollover rule]. It’s indirectly rolling more than one IRA in a 12-month period - it’s no longer allowed.”
08:11 - “It’s the direct rollover where the IRS won’t withhold taxes but if you select rollover, they will.”
12:19 - “If you’re pulling money out of your retirement account for your own purposes, whatever they might be, how do you expect your retirement accounts to grow with compound rates of return if you’re taking money out?”
16:54 - “The truth is, taxes don’t stop when your paycheck does - in fact, now you start tapping your retirement accounts and it comes with all new rules and opportunities.”
23:19 - “There are ways around the 10% penalty, but it’s not nearly as flexible as if you just wait until age 59 ½.”
27:10 - “A lot of you who are taking your required minimum distribution or that are going to be taking your distributions might not need to spend it…you don’t have to take that money in cash if it’s in an IRA. You can take shares and put it in your brokerage account.”
31:09 - “There’s a potential tax-saving feature called net unrealized appreciation.”
33:18 - “If you take money out of an IRA before age 59 ½, you have to pay a 10% penalty. If you don’t take your required minimum distribution at 70 ½, the IRS charges you a 50% penalty.”
IMPORTANT DISCLOSURES:
• Investment Advisory and Financial Planning Services are offered through Pure Financial Advisors, LLC, a Registered Investment Advisor.
• Pure Financial Advisors LLC does not offer tax or legal advice. Consult with your tax advisor or attorney regarding specific situations.
• Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
• Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.
• All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. As rules and regulations change, content may become outdated.
• Intended for educational purposes only and are not intended as individualized advice or a guarantee that you will achieve a desired result. Before implementing any strategies discussed you should consult your tax and financial advisors.
CFP® - The CERTIFIED FINANCIAL PLANNER™ certification is by the Certified Financial Planner Board of Standards, Inc. To attain the right to use the CFP® designation, an individual must satisfactorily fulfill education, experience and ethics requirements as well as pass a comprehensive exam. Thirty hours of continuing education is required every two years to maintain the designation.
CPA - Certified Public Accountant is a license set by the American Institute of Certified Public Accountants and administered by the National Association of State Boards of Accountancy. Eligibility to sit for the Uniform CPA Exam is determined by individual State Boards of Accountancy. Typically, the requirement is a U.S. bachelor’s degree which includes a minimum number of qualifying credit hours in accounting and business administration with an additional one-year study. All CPA candidates must pass the Uniform CPA Examination to qualify for a CPA certificate and license (i.e., permit to practice) to practice public accounting. CPAs are required to take continuing education courses to renew their license, and most states require CPAs to complete an ethics course during every renewal period.

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Enjoy the Your Money, Your Wealth podcast archives, episodes 1 through 189 (2016-2018) posted once a day - here is episode 54. Note that content may be outdated as rules and regulations have changed. Keep comments civil, respectful, and non-spammy to see them published.