Don't give your nest egg away to the IRS!

Perhaps your retirement is on the horizon. Or you're changing jobs. Or are about to turn 70.5 years old....

Whatever is going on with your retirement account, IRAs, 401(K)s & Other Retirement Plans is for you! Make sense of the rules that govern distributions from retirement plans – and avoid the stiff taxes and penalties that lurk in the fine print.

In plain English, this book discusses all common types of retirement plans, including 401(k)s and other profit-sharing plans, Keoghs, IRAs and tax-deferred annuities. It covers:

tax strategies before and at retirement

penalties for taking money out early

minimizing taxes

distributions you must take

distributions to your heirs

The 8th edition is completely updated with the latest tax rates, tables and methods for calculating required distributions. It also reflects the Pension Protection Act of 2006, a huge update to various retirement programs.

With IRAs, 401(K)s & Other Retirement Plans as your guide, you'll know the rules, avoid the penalties and save for your future like a pro.

This is not a mystery novel. It is a book about how to take money out of your retirement plan. We are not promising that you will stay up all night breathlessly turning each page to see what happens next. Nonetheless, you will find this book useful -- perhaps even surprising.

Let's start with the basics. There are many kinds of retirement plans and many possible sources for owning one. You might have a retirement plan at work, an IRA that you set up yourself, or a plan or IRA you've inherited. Or you might have all three. You might still be contributing to a plan, or you may be retired. No matter what your situation, you will find information in this book to help you through the minefield of rules.

There are many reasons to take money out of a retirement plan. You might want to borrow the money for an emergency and pay it back -- or not pay it back. Maybe you quit your job and you want to take your share of the company's plan. Perhaps you're required by law to withdraw some of your retirement funds because you've reached a certain age.

Whatever your situation, you probably have a lot of questions about your plan -- and how to take money out of it. This book can answer:

How do I know what kind of retirement plan I have? (See Chapter 1.)
Do I have to wait until I retire to get money out of my plan or my IRA? (See Chapter 3.)
Can I borrow money from my 401(k) plan to buy a house? (See Chapters 3, 4, and 5.)
What should I do with my retirement plan when I leave my company or retire? (See Chapter 2.)
When do I have to start taking money out of my IRA? (See Chapter 5.)
How do I calculate how much I have to take? (See Chapter 6.)
Can I take more than the required amount? (See Chapter 6.) What happens to my retirement plan when I die? (See Chapters 7 and 8.)
Can my spouse roll over my IRA when I die? (See Chapters 7 and 8.)
What about my children? Can they put my IRA in their names after I die? Do they have to take all the money out of the account right away? (See Chapters 7 and 8.)
If I inherit a retirement plan, can I add my own money to it? Can I save it for my own children, if I don't need the money? (See Chapters 7 and 8.)
Am I allowed to set up a Roth IRA? Should I? (See Chapter 9.)
Can I convert my regular IRA to a Roth IRA? Should I? (See Chapter 9.)
How is a Roth 401(k) plan different from a Roth IRA? (See Chapter 10.)

To help you answer these and other questions, we include many examples. They guide you through the decision-making process and take you through calculations. You will also find sample tax forms that the IRS requires, along with instructions for how to complete them.

This book contains tables to help you calculate distributions. It also contains sample letters and worksheets you can use to communicate with the IRS or with the custodian of your IRA or retirement plan. We've even included some important IRS notices so you can read firsthand how IRS personnel are thinking about certain critical issues.

The tax rules for pensions, IRAs, 401(k)s, and other types of retirement plans are notoriously complex, which can be all the more frustrating because they are important to so many people. The good news is that help is here: This book makes the rules clear and accessible.

 

Don't give your nest egg away to the IRS!

I. How to Use This Book

1. Types of Retirement Plans
Qualified Plans
Individual Retirement Accounts
Almost-Qualified Plans
Nonqualified Plans

2. An Overview of Tax Rules
Taxation Fundamentals
General Income Tax Rules for Retirement Plans
Income Tax on Qualified Plans and Qualified Annuities
Special Income Tax Rules for Tax-Deferred Annuities
Special Income Tax Rules for IRAs

3. Early Distributions: Taking Your Money Out Before the Law Allows
Exceptions to the Early Distribution Tax
Calculating the Tax
Reporting the Tax
Special Rules for IRAs

4. Substantially Equal Periodic Payments
Computing Periodic Payments
Implementing and Reporting Your Decision
Modifying the Payments

5. Required Distributions: Taking Money Out When You Have To
Required Distributions During Your Lifetime
Death Before Required Beginning Date
Death After Required Beginning Date
Special Rules for Tax-Deferred Annuities
Special Rules for Roth IRAs
Penalty
Reporting the Penalty
Waiver

6. Required Distributions During Your Lifetime
Required Beginning Date
Computing the Required Amount
Designating a Beneficiary
Special Rules for Annuities
Divorce or Separation

7. Distributions to Your Beneficiary If You Die Before Age 70½
Determining the Designated Beneficiary
Distribution Methods
Spouse Beneficiary
Nonspouse Beneficiary
No Designated Beneficiary
Multiple Beneficiaries, Separate Accounts
Multiple Beneficiaries, One Account
Trust Beneficiary
Estate as Beneficiary
Annuities
Divorce or Separation
Reporting Distributions From IRAs

8. Distributions to Your Beneficiary If You Die After Age 70½
Administrative Details
Spouse Beneficiary
Nonspouse Beneficiary
No Designated Beneficiary
Multiple Beneficiaries, Separate Accounts
Multiple Beneficiaries, One Account
Trust Beneficiary
Estate as Beneficiary
Annuities
Divorce or Separation

9. Roth IRAs
Taxation of Distributions
Early Distribution Tax
Ordering of Distributions
Required Distributions

10. Roth 401(k) Plans
Taxation of Distributions
Early Distribution Tax
Ordering of Distributions
Required Distributions

Appendixes

A. IRS Forms, Notices, and Schedules

Form 4972, Tax on Lump-Sum Distributions
Tax Rate Schedule for 1986
Form 5329, Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts
Form 5330, Return of Excise Taxes Related to Employee Benefit Plans
Form 5498, IRA Contribution Information
Form 8606, Nondeductible IRAs
Revenue Ruling 2002-62

B. Life Expectancy Tables

Table I: Single Life Expectancy
Table II: Joint Life and Last Survivor Expectancy
Table III: Uniform Lifetime Table
Table IV: Survivor Benefit Limits

Index

"Few resources are as valuable when it comes to financial planning in later life."

 

"An explanation of the complicated rules on withdrawal, written for ordinary people."

 

"Belongs on the bookshelf of anyone with an IRA, 401(k) or other type of qualified retirement plan. When the inevitable questions come up, here's where you'll find the answers."

 

Twila Slesnick is an Enrolled Agent who specializes in tax and investment planning for retirees and prospective retirees, and does pension plan consulting for individuals and small businesses. She has conducted numerous seminars throughout the U.S. in the areas of retirement and tax planning. Slesnick has been featured on television and radio programs across the country and in publications including Money Magazine, U.S. News & World Report, Newsweek and Consumer Reports. She is the author (with John Suttle) of IRAs, 401(k)s and Other Retirement Plans: Taking Your Money Out (Nolo). Slesnick has a bachelor’s, master’s and Ph.D., all from the University of California, Berkeley. She lives in Dublin, California.

 

IRAs, 401(k)s & Other Retirement Plans by Twila Slesnick
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