Individual Retirement Accounts Hold $40 Trillion
Close Your Eyes And Tap Your Heels Together 3 Times…
There’s No Account Like An Ira Account, Unless It’s A 401(K)…
NOTE: You have stumbled upon one more in our continuing series answering your Frequently Asked Questions about traditional and ROTH Individual Retirement Accounts. Most middle-class Americans rely on these accounts for retirement security. These are the questions folks like you ask folks like me over and over again. So if you think they are boring, ask more interesting questions! As if there were anything more interesting than retirement security.
I Just Like Watching It Grow…Why Do I Have To Withdraw $$$ From My Ira?
You Earned The Money. You Saved The Money.Now You Have To Spend The Money.
Growing Old Is Like Being Increasingly Penalizedfor For A Crime You Have Not Committed
— Pierre Teilhard De Chardin
Middle Class Michigan has billions invested in traditional Individual Retirement Accounts, Simplified Employee Plans (SEP) and Savings Incentive Match PLan for Employees (SIMPLE). Those billions cannot stay there forever. You must start pulling your money out at age 72. Happy Birthday! Nobody cares if you do not want to take the money. Does not matter that you are still working. The Law says “Thou Shalt Take Thy Required Minimum Distribution (RMD)!”
How much to take? You have an IRA custodian, the company running your IRA. Your custodian tells the taxman that you must take the RMD. Your custodian also tells you how much you must take (or offers to calculate it). Your custodian told you this last January. Remember? It was in that flood of financial mail you always get at the beginning of the year. Let’s hope you didn’t throw it out…
Somebody Died And Left You An Ira… Now What?
Books Are The Treasured Wealth Of The World And The Fit Inheritance Of Generations And Nations
— Henry David Thoreau
You did not get a book. You were named beneficiary on an IRA. By somebody you did not marry. You have until New Year’s Eve in the year after that generous person’s death to empty that inherited IRA account.
Love & Marriage, Go Together Like A Horse & Carriage
Your spouse dies. You are named IRA beneficiary. You did not roll over the IRA into one of your own. You can wait to take distributions until (what would have been) your dearly departed’s 72nd year.
Different Strokes For Different Folks
IRA Custodians are like snowflakes… All different. Distribution options vary widely. You do not like your IRA custodian? You can arrange a “custodian-to-custodian” transfer. It can be a pain, but worth it!
And what if you are not a human? What if the IRA is left to a charity or trust or estate? Special Rules for you! The IRS is ready to help with Publication 590-B. Check it out! Fascinating reading.
Never forget! There is a 50% Penalty Tax on top of any regular income tax if you fail to take a Required Minimum Distribution. You do not want to need Form 5329. But if you just made an innocent mistake, IRS might forgive the penalty. But don’t count on it.
I Want A Roth Ira Like Everybody Else. But I’m Stuck With This Stupid Traditional Ira. What Can I Do?
Calm Down… You Can Convert! After You Pay The Taxes.
You can convert pretty much any traditional IRA, SEP IRA, or 401(k) to a Roth.
SIMPLE IRAs are different. You must wait for 2 years. If you do not wait, there is a 25% penalty. So do not be a simpleton and do wait the 2 years.
You can only convert your employer plan if eligible to take a distribution.
I Want My Money Now! From My Roth. How?
You Earned It. You Paid Taxes On It. Now You Want It.
Roth IRAs are great because you can take the money out tax-free! That’s because you paid tax on the money when it was going in. Except for the money the money earned. You have 3 kinds of money in a Roth IRA.
Contributions: Money you paid tax on, then put into the Roth.
Conversions: Money you had in another IRA or 401(k), then paid tax on, then put into the Roth.
Earnings: Money that your Contributions and Conversions earned while in the Roth.
You can take your Contribution back at any time. You can withdraw your Conversion money at any time if you are over 59 ½. Why not? You already paid the tax on it. Technically, you take out Contributions first, then Conversions.
But what about those sweet, sweet tax-free Earnings? You can have those:
1. 5 years after setting up your Roth, and,
2. You are 59 ½ or Dead or Disabled, or,
3. First Time Home Buyer Exception.
10% Penalty Tax on Earnings if you are under 59 ½. 10% Penalty Tax on Conversions if you are under 59 ½ and your Conversion money was in the Roth for less than 5 years.
Everything Is Easy Until It Isn’t!
When The Going Gets Tough, They Call For The Sons Of Bitches
— Fleet Admiral Ernest J. King, Usn
Most folks want to work and save and enjoy. They do not live their lives raking through the Internal Revenue Code or the Bridges Eligibility Manual or the Social Security Act or any of the other Niagara Falls torrent of rules and regulations spewing out of the Government. Desperately and without hope seeking some semblance of common sense. Trying to keep head above water. No, most normal, well-adjusted, happy, healthy people wisely wish to wander on the sunny side of life.
Aren’t you glad there is an abnormal, mal-adjusted, neurotic fanatic like me to focus like a laser beam on the stuff that drives most people crazy? Stop the madness? I don’t think so… Only by digging deep do we find the nuggets of knowledge that keep you from Nursing Home Poverty. That allow you to receive some payback for all the taxes you paid in. That deliver dignity and respect.
Peace of mind and security are waiting for everyone who knows what work really is. It is a choice. Despite what “everybody else” says.
Well, here you are. Now you know. No excuses. Get the information, insight, inspiration. It is your turn. Ignore the message? Invite poverty? Or get the freely offered information. To make wise decisions. For you. For your loved ones.
Happy Days Are Here Again…
It Is Morning In America
Everything’s Coming Up Roses
All Good News All The Time
Can’t Get Enough Of This Wonderful Stuff
Your ring-side seat to the glorious success that is the United States of America today! Amazingly wonderful, super, duper, wonderfulness like you have never seen! Cherry-picking only the very best, for your prideful pleasure.
Making Every Boy’s Dream Come True
You already knew that in today’s America every little boy can dream of growing up to be a champion female track star, weightlifter, or mixed martial artist. Shamefully, the ranks of 4-star female admirals in uniformed federal service have always been tightly shut. No longer! Thanks to the brave courageousness of the courageously brave, one of the few remaining doors to young boys’ dreams has been battered down. Without serving a minute of military service, former pediatrician and political health bureaucrat Rachel Levine has bravely vaulted courageously to be one of the few 4-star flag rank, admiral general officers of America. Courage!
Back in 2014, the U.S. Navy promoted Michelle Janine Howard to full Admiral. Four stars. After 32 years of active duty including extensive sea time. First woman. First African American. First woman captain of a U.S. Navy ship. But. Born a woman. So, y’know… no biggie.
Boat Parades Are Back!
Spontaneous Outpourings Of Joy, Affection & Respect For America, From The World
You may recall a new phenomenon that arose during the recent political pugilism.
Boat Parades! Enthusiastic Americans took to the waterways to celebrate affection, respect, and admiration for their choice. In the best traditions of American democracy, light-hearted conglomerations of watercraft arose spontaneously in good-natured advocacy. A water-wonderful time was had by all!
And now the world has chosen to honor American Greatness with a boat parade for all of us! Handsome ships from around the world, flying every flag, have gathered off our mighty port cities to celebrate us! Packed with containers, they refuse to land. Why? They prefer steaming back and forth to salute you and me with affection and good spirit. Nothing says “We Love You, America!” like a boat parade. And “We Love You, too, World!”
Finally, Gasoline Prices We Can Be Proud Of!
For almost four years Americans suffered the stark, staring, humiliation of gas prices that belonged in the 1970’s. The traumatic embarrassment of $2 gas. Sometimes less. Oh, the humanity!
More painful to all right-thinking people was the effect on Russian oil oligarchs, oil barons, oil sheiks and the Canadians. Thoughtlessly, we deprived them of their chokehold on America. Think how they must have felt! All right-thinking people burned with shame…
But all is right again! It was super easy for Administration Wise Ones. Barely an inconvenience. Simply shut down a few pesky American pipelines. Revoke a few permits, leases, approvals… And now? Europe still on top. But American Oil Prices and Dependence are on the upswing. Yay for us! Thank you Thank you Thank you…