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  • Answer count
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    March 8, 2013
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    October 24, 2014
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AskKen's Answers
1 2 3 4 5 ... 28 next>>
 

My understanding is that I can take money out of my IRA and put it back within 60 days and will not be taxed or penalized on the withdrawal...correct?

Hi Kevan,

Yes, this is technically correct. The IRS allows for what they call 60-day rollover which gives you the option of taking a distribution and replacing it within 60 days without penalty. You should note that you are responsible for replacing the entire original distributed amount within 60 days, and the consequences for not doing so can be significant. Any amount not replaced is considered a taxable distribution in the year it is received and is also subject to a 10% penalty if you are under age 59½.

So while it is possible to take money out of your IRA and replace it, there are a number of potential pitfalls to doing so. Because of this, you should consult with your tax advisor before moving forward with any plan to remove assets from your IRA.

Ken
1 week ago
by
AskKen
 

Can I use funds from my rollover IRA to increase my traditional IRA account balance?

I have $1500 in a traditional IRA and would like to increase the amount so I can invest money into a Fidelity mutual fund. Mutual funds usually have a minimum higher than $1500. I will also continue to invest in the traditional IRA in the future.
Thanks for your question. There are a couple of ways you could approach this that will help you achieve your goal. If you haven’t already done a rollover, you can roll old workplace plans, such as 401(k)s, into an existing IRA to help increase the existing account’s balance.

If you already have a rollover account, then you can also move money from the Rollover IRA to your Traditional IRA without any tax implications. To learn more about how to do this from an outside account or between your Fidelity accounts, visit this page: https://www.fidelity.com/customer-s...

Ken
1 week ago
by
AskKen
 

Can a retired person with a working spouse contribute to a spousal IRA?

Hi David,

Yes, as long as the retired or non-working spouse is under age 70½ (for a Traditional IRA; there are no age limits on Roth IRAs) then an employed spouse can contribute to a Spousal IRA but must have the income to support those contributions. The employed spouse’s earned income must be at least as much as the contribution to all IRAs that you both have. To be eligible, you must also file a joint tax return.

The type of IRA and how much you can contribute depend on the working spouse’s income and the non-working spouse’s age. To learn more, visit our IRA Center at https://www.fidelity.com/retirement... and select the account type you are interested in for details.

Thanks.

Ken
1 week ago
by
AskKen
 

I have already named beneficiaries for my Fidelity IRAs. When I die, how do they contact Fidelity -- phone number? email? snailmail address? -- to

Thank you for your question, Dianne. It’s good that you have named beneficiaries for your IRAs, and hopefully you have done this for all your accounts that allow naming of beneficiaries. Many people don’t realize that certain assets, such as retirement accounts, life insurance policies, and annuities, pass to the beneficiaries named on those assets, and not according to the provisions of their will or trust. This means that the beneficiary designations on those accounts will overrule whatever is stated in your will or trust.

That’s why it’s crucial to keep your beneficiary designations up to date as the circumstances in your life change. This is something that should probably be revisited once a year, or with each major life change, such as a marriage, divorce, birth of a child, or death of a spouse.

To answer your specific question, in the event of your passing, your beneficiaries can call Fidelity’s Inheritor Services group at 800-544-0003. We will be happy to help them with the inheritance process.

Ken
2 weeks, 1 day ago
by
AskKen
 

Can I see online how much I have withdraen y-t-d from each IRA to see where I am vis-a-vis the MRD?

Thank you for your question about tracking your minimum required distributions (MRDs).

We’ve made this easy for you – simply visit the Retirement Distribution Center (RDC) at Fidelity.com/RDC.

In the RDC, you will see what we have estimated your MRD to be for each account, and you can track what you have taken from those accounts.

If you select the account name, information is displayed on how the MRD estimate was calculated for each account – using the prior year-end balance, and life expectancy factor.

I hope this helps.

Ken
2 weeks, 4 days ago
by
AskKen
 

Inheriting approx $30,000 taxable IRA. Could use the cash to pay down house and other projects. Is there a 10% penalty?

Thank you for your question about your Inherited IRA assets. For this discussion, I will assume you inherited as a non-spouse beneficiary of the original owner.

I’ll start with the easy answer first. There is no 10% early withdrawal penalty for Inherited IRAs from a non-spouse, even if the original owner was under age 59½. The distributions get coded as “death distributions,” one of the exceptions for the 10% early withdrawal penalty. However, you will still have to include any IRA withdrawal in your adjusted gross income, which could have significant tax consequences.

If you have inherited a Roth IRA, you need to be aware of the 5-year rule for Roth IRA distributions. If the account has been open for less than 5 years, the 5-year rule penalty may apply to distributions of earnings from that account.

To answer your question about whether you should use the money for paying down your house and other projects, you may want to read our Fidelity Viewpoints® article on spending versus saving the inherited assets: https://www.fidelity.com/retirement...

There are a number of things to consider, so we suggest that you consult with your tax advisor.
I hope this helps.

Ken
2 weeks, 4 days ago
by
AskKen
 

IRA Proceeds at Death

I am 72 years old and with drawing money from my IRA according to the government schedule. My wife is 66 and listed as my beneficiary. Our question is how will the proceeds go to my wife when I die?

Example:
1. Will she have to completely withdraw the balance and pay taxes on the full amount?
2. Can she transfer the balance to her IRA without paying taxes at this time?
3. Can she continue to take my current withdrawals?
4. Can we make our current IRA's joint accounts?

Thank you for your assistance,
Dennis
Thank you for these questions about your IRA and what happens to it after your passing.
I’ll start with your fourth question – can you make the current IRA a joint account? The answer to this is no; IRA stands for Individual Retirement Arrangement and according to the IRS, these must be owned by one individual.

Now onto your other questions.

If you have your wife listed as your primary beneficiary and she is your sole beneficiary, then she can assume the account and put it into her own IRA after your death. She will have to finish taking any minimum required distributions (MRDs) you have not completed for your account for the year of your death. Taxes would be due on those distributions if applicable.

The remaining balance can then go into her own IRA and she can wait to start taking her MRDs until she turns 70½ years old. As she takes those MRDs, they will be taxed as applicable.
We have information on Fidelity.com about inheriting an IRA that may be helpful to read.
https://www.fidelity.com/retirement... and https://www.fidelity.com/retirement...

I hope this helps you.

Ken
4 weeks ago
by
AskKen
 

Inherited IRA distributions

I have two inherited IRA from my father. I am required to take an RMD each year. One is much smaller and only invested in a money market. One is larger and well invested. Can I add up the amounts required to be taken in a particular year and then take the total amount from the smaller IRA? Thank you.
Thanks for your question. If your two Inherited IRAs were inherited from the same person, you may aggregate the two minimum required distributions (MRDs) and take the distribution from one Inherited IRA. This is the only situation that allows for aggregating MRDs; usually they must be taken from each Inherited IRA.

Hope this helps you.

Ken
4 weeks ago
by
AskKen
 

What instructions should I leave for my beneficiaries so they can claim their inheritance (IRAs) once I die?

Thank you for your question. It can sometimes be difficult to discuss matters surrounding one’s death, but it’s a good idea to have these conversations. First of all, make sure that you have indeed named beneficiaries for your IRAs and other retirement accounts, and that this information has been kept up-to-date to reflect any changes in your life.

Second, it is always wise to work with an estate attorney to set up a formal will or trust. If you have one trusted person who can serve as your executor, you can give that person a list of all your accounts, and copies of the beneficiary information for those accounts. You should also make sure that person knows the exact location of your will or trust documents. Our Inheritor’s Checklist may come in handy for you as a guide for what needs to be gathered by your beneficiaries and/or executor after your passing. https://www.fidelity.com/estate-pla...

Hope this helps you.

Ken
4 weeks ago
by
AskKen
 

can i pull money from my Rollover IRA for tuition

My daughter is going away to collage in Aug and we have to pay for her tuition. Can I pull money from my Rollover IRA with out penalty? does that qualify for hardship withdrawl? If so, and I have the funds sent to me electronically how do I state thats what the money is for?
Hi Sarah,

Yes, you can take a distribution from your IRA for use in covering qualified education expenses. The distribution will still count as income in the year it is taken, but because the IRS would regard this as “an immediate and heavy financial need” you can avoid the 10% early distribution penalty. Qualifying expenses include tuition, fees, books, supplies, and equipment required for enrollment or attendance at an eligible educational institution.

If the expenses are equal to or greater than the amount of the distribution, then usually no additional tax or penalty is due. Usually you will have to file Form 5329 (found here http://www.irs.gov/pub/irs-pdf/f532... ) to show how much, if any, of your early distribution is subject to the 10% additional tax.

Having said that, I would caution you to not draw too heavily on your retirement savings for your daughter’s education. Even though retirement is still a few years away for you, the money you withdraw will no longer be working for you, and will be hard to replace. Also, a distribution from an IRA will be counted as income and could reduce the amount of financial aid your daughter might have received. Finally, remember that your daughter likely has more years to pay back loans than you do to save for retirement.

Ken
1 month, 2 weeks ago
by
AskKen