Stay tuned for next fridays video which explains all of this relative to ABLEs

@chrisdime I would have opened an ABLE account but with the complicated rules of qualification was not diagnosed with autism until the age of 32 and what you could use money for and the annual contribution limits I chose not to. Also could have opened a Special Needs Trust but because HUD counts entire distributions as income I chose not to. Most HUD housing programs except HUD Section 8 11 for disabilities ( housing program I am in since 2011) has an inflation adjusted asset limit of $103,000; implemented in 2024 with a $100,000 asset limit. I inherited $325,000 from my brother's estate in 2020. I pay 30% of my employment and investment income from taxable accounts for my monthly rent.

@@martinguldnerAutisticSwanGuru Thank you for sharing some of your story with me. I was not aware that Housing and Urban Development (HUD) counted ALL distributions as income (and counts assets in a trust as yours with a limit of $100k). While this may not solve all of these challenges starting in 2026, if your disability was diagnosed to have begun BEFORE age 46, you'll be permitted to open an ABLE account. This would mean (barring other circumstances) that you should be able to open and fund an ABLE account in 2026 at $19,000 (or whatever the gift limit is).

@chrisdime yes HUD housing program rules can be very difficult to navigate. HUD only counts assets in your own name adjusted for inflation in 2025 $103,000 not retirement accounts or Special Needs Trust in the asset limit; but count the whole regular distributions as income from retirement accounts and trusts. Once my brother passed away in 2020 I did my own research and consulted with two different Special Needs Trust attorneys. I concluded since I work full time not on Medicaid or Social Security disability. That it was best to have the Assets in my name versus opening a Special Needs Trust. Because I will be taxed at a lower rate with qualified dividend income and only having my HUD housing program only use the dividend and interest income in calculating my rent payments.

Great point!

Great point! Personally all my retirement is also Roth for this very reason. Keep spreading the good word on this!

My pleasure! Hopefully folks are finding it helpful.

This is a great point!

This is a great question! Unfortunately, I am not an expert relative to the nuances of various Visas and how that may or may not affect one's ability to make retirement account contributions. However, from what I can gather online, it's permissible for the H4 spouse to make a Spousal IRA contribution (but the investment custodian/institution will have their own rules and paperwork). Here are the general rules that apply to taxpayers: 1) Relative to taking a tax-deduction on funding a Traditional IRA: A Non-Active Participant (aka a spouse without a 401k) who is married to an Active Participant (aka spouse WITH a 401k), the 2024 MAGI thresholds for MFJ are $230k-240k. 2) If the non-earning spouse is under 50 years old by Dec 31, 2024, then their maximum contribution (and deduction) is $7000. If 50+, then $8000. Does that help answer your question?

@chrisdime I asked this question to multiple people and expecting this answer by my own research. Noone else other than you could confirm the same. Thanks for your response.

@@madhumangalgarg3524 Glad to hear it's helpful! I have a cheat sheet of tax nuances on my desk, but if you're looking for more authority on the subject here is a link to the IRS' website with a breakdown. "Married filing jointly with a spouse who is covered by a plan at work" if your MAGI is less than the limit, they are permitted a full deduction. www.irs.gov/retirement-plans/plan-participant-employee/2022-ira-contribution-and-deduction-limits-effect-of-modified-agi-on-deductible-contributions-if-you-are-not-covered-by-a-retirement-plan-at-work *that said, i am not a CPA and must always recommend you speak with a tax professional on the matter

Yes! One of the most frustration things that employer plans will do for folks that have an After-Tax 401(k). Literally dealt with this a Lockheed Martin client in Dec 2024. Employer plans have this control and oftentimes comes down to the expense of permitting ad-hoc roth conversions (not rollovers) intra-year.

@@chrisdime What is a ad-hoc roth conversion? And how is that different than roth rollover? Would be great to get a definition of each.

@@jamesminhtran5964 Thank you for asking for clarification on this as I would hate to have you make any mistakes. A Roth Conversion is where you move money from a Non-Roth Retirement Account (ex. Pre-Tax 401k, Traditional 401k, After-Tax 401k) and move it into a Roth Account (ex. Roth 401k, Roth IRA). A rollover would generally refer to moving money from a Retirement Account to another (like-kind) Retirement Account (ex. Old Traditional 401k to Traditional IRA, old Roth 401k to Roth IRA). An ad-hoc Roth Conversion, refers to "whenever you want" roth converting your After-Tax Account into your Roth 401k. I made this term up, but ad-hoc is Latin and generally refers to "using something for a specific purpose". Does that help?

@@chrisdime Yes, that is clear. thank you!

Thank you for the feedback and glad to hear it was a clear explanation!

I'll do my best to answer your questions in order to the best of my knowledge. Technically the SEC would like me to advise you to hire a tax professional and direct your questions to them. 1) There are not options to keep inherited roth money compounding tax free (in a roth ira) after the 10yr RMD period. The account must reach $0. I guess you could theoretically use these proceeds and FUND a Roth IRA. 2) Beneficiaries cannot roll inherited roth IRA money into their own Roth IRA unless they are the surviving spouse 3) Relative to Roth Conversions BEFORE the decedent passed, fortunately the 5-year seasoning rule doesnt apply. The 5-year seasoning rule for Roth Conversions (timestamp 07:14 link below) only applies to Roth IRA owners looking to Roth Convert and THEN withdrawal money BEFORE 59.5 (income taxes would NOT apply, but a 10% penalty may apply to the original owner). Once someone passes the beneficiary of said Roth IRA (whether 59.5 themselves or not) will never face a 10% early withdrawal penalty (because they have no choice). Does this help answer your questions? Roth Seasoning -> kzbin.info/www/bejne/g4fclYmhpsiYgrs

Great question! The pro-rata rules ALWAYS apply to any pre-tax money in an IRA. You dont get to "NOT" pro-rata aggregate IRA money (unless it's in an inherited IRA). Best practice is to Roth Convert Non-Deductible IRA money ASAP to avoid taxes on IRA gains in the future. You can Roth Convert in Year 1 or Year 2 or Both, but the longer you allow money to grow in a Traditional IRA, the more income taxes you can expect to pay when you Roth Convert that growth. Now if you already have an existing pre-tax IRA balance, you may NOT want to pursue back door Roth IRAs for his very reason. Does that help address your question?

@@chrisdime I believe so. Thank you. I believe I will just keep the after-tax traditional ira from year 1 that I had to recharacterize because I don't want to pay those taxes now and will pay them when my income is less in retirement. I am making a new traditional ira for year 2 that I will "backdoor" before I invest so I don't have any growth to pay taxes on for year 2 if that makes sense.

@@bradleygrothaus3960 Unfortunately, opening a second IRA to "backdoor into" to try to isolate your other IRA will not be permitted by the IRS. The IRS will aggregate all of your IRAs together whether you have 1 or 100 IRAs. Depending on how large the "not-yet-taxed IRA Growth" is, it may be the simplest solution to just pay the conversion taxes, get it all in a Roth IRA, and then not worry about this ever again and free you up to conduct successive annual backdoor roth iras. Btw this is exactly what I did a few years ago and now I only have Roth money for retirement. It could also depend on how far away retirement is too. Like if retirement is 2 years away, maybe just let things accrue as is, but if you're 30 I wouldnt want to deal with this for another 30 years.

Glad to hear it was helpful!

Very similar yes. Technically different loan products, however. Generally, what I have found is that Margin Loans permit you to borrow IN ORDER TO invest in additional securities, whereas SBLOCs cannot be used to invest in additional securities. However, SBLOCs are permitted to lend above 50% of the account balance, whereas margin is limited to 50%.

Great question! Unfortunately, this would be a question for your tax professional (of which the SEC would not consider me). Personally, I simply plugged their 1099 onto my return (when gains were in excess of the threshold).

Good question! I don't see any motivation for WA State to increase the exemption.

Great feedback! You could also look into the SEPP distributions no matter how early you retire as a method of getting money from your 401k prior to 59.5 (without penalty). Link -> kzbin.info/www/bejne/f4bOe42Jnd6Jntksi=4MOSan7nMYFZLG6p

Those are staples in the geriatric diet!

I'm sorry to hear about your folks passing. I do appreciate you sharing how you've organized things, which seems like a good setup!

I agree that the tax code does not always seem very rational. Do you mind sharing why your 401(k) plan disallows you to contribute to the plan?

@@chrisdime I'm above the income level for highly compensated, a level which is not applied consistently from one company to another. For example, a good friend of mine makes more than double my income at his (different) employer, and he is not blocked by the HCE rule, but my compensation (less than half his) at my company crosses the threshold and prevents me from participating. My company's plan also disallows after tax contributions, which I would otherwise make to set up a mega back door Roth. Just seems to me that an income cap on contributing to a 401k, if desirable as a policy, should be based on an objective and consistently applied compensation number...not one that varies by company, as is the case with Roth contribution eligibility.

My understanding (and experience) is that "rolled over" funds from a prior employer 401k DO COUNT towards the available balance for conducting a 401(k) loan. I am literally sending a client a $100k IRA to 401(k) rollover check this week to do this very move. However, before we did this I had him call the 401(k) company and CONFIRM that this would satisfy the $100k balance needed to do a $50k loan (as of today his 401k is not at $100k). I think employers can dictate the "rolled in" funds don't count towards the available balance for a 401(k) loan, but I have never experienced this. Does that help?

This is wonderful news and eases the accounting! Do you mind sharing what resource or authority you're pulling this from? Thanks!

@chrisdime , I don't recall exactly where. But every article that I have read this have been stated. But it have never made it clear. If the time starts when you open the account or have money invested. So I just assume that you have to invest for it to start the clock.

That's interesting, so say this April 2025, someone were to make a Roth IRA contribution for tax year 2024, that contribution would start the 5-year clock all the way back to January 1st, 2024? 1 year and 4 months earlier?

@mdknauss , I just opened a Roth IRA with Vanguard on December 20th of 2024. So since the time clock starts January 1st of the year you made your first contribution. January 1st of 2029 , my Roth IRA would be considered opened for five years. I just verified this with an agent from Vanguard today 12/26/2024.

I wish there was and per the SECURE Act, the government was supposed to be working on creating this database. At this time this repository of information does exist.

Great questions! 1) Rollover and Contributions are two separate moves. You can Rollover $1M from Roth 401k to Roth IRA and still do a Roth IRA contribution of $7000. 2) Any contributions you make to said Roth IRA are withdrawalable as soon as you want without taxes and penalties. Roth IRA ordering rules first have you withdrawing all Roth IRA Contributions. Does that help?

Far simpler and elegant solution is to just contribute $7,000 year to Roth IRA for next 20+ years for $140,000 worth of Roth IRA contributions from which you can easily withdraw.

1) I don't know this for sure, but my gut says using your SEPP Traditional IRA for Roth Conversions would NOT be permitted. I am highly confident that this would not be allowed, but I could be wrong. 2) You do not have to add all IRAs together. You establish a SEPP on 1 x IRA, but you can have an infinite number of other IRAs. My understanding of SEPP treatment is like a virus that has attached itself to a single IRA. If you quarantine that IRA away from all the rest, then you can still do whatever you want with your various IRAs that are not infected (ie. Rollovers, Roth Conversions, etc.). But if you co-mingle this IRA and try to transfer it away in pieces or roth convert it, that would not be permitted. As always, I would recommend speaking with a tax professional on this specifically if you're going to pursue it. Hope that helps!

Great question and this is a super confusing topic (even for advisors). The 10 Year Rule applies to NEDBs (link below) and See-Through Trusts where the beneficiary is an NEDB. You are correct that EDBs have different options (link below). However, trusts (that are not see-through) have even different rules (link below). After watching the below explainers, let me know if you still have questions as ultimately the 10-year rule applies in most cases (other than EDBs). However, there are some exceptions that cause different treatment. NEDB Explainer -> kzbin.info/www/bejne/Z4bKnIiFarSgY7csi=_bJnSuJofAU6Uoju EDB Explainer -> kzbin.info/www/bejne/nZjOnaKql7-CkKcsi=j-seNzZ1If1bdACQ NDB/Trusts Explainer -> kzbin.info/www/bejne/nZzRiGafm5WcgJosi=49oAivixgYBBH8Cz

This is a good question! It's my understanding that if you sell the (eventually) inherited home any gain will be considered long term. And it sounds like you're already tracking the step-up as well. "Generally, if you disposed of property that you acquired by inheritance, report the disposition as a long-term gain (or loss) regardless of how long you held the property." - IRS Publication www.irs.gov/pub/irs-prior/i8949--2023.pdf It doesn't sound like you and your wife wouldn't satisfy the ownership AND use requirements to benefit from the $500k gain exclusion unless you owned that property for 2 years after your mother-in-law passes. Does this help answer your questions?

This does !! Thank you

Thank you for the feedback!

The original owner will have a Required Beginning Date (RBD) based on their birthday (link below). That will dictate when someone needs to start making withdrawals from their account. If that original owner passed away before or after their RBD, that will dictate whether the beneficiary needs to take out distributions in years 1-9 OR if they can wait until the 10th year. Technically, the company holding the IRA has no obligation (and oftentimes will not accept the compliance risk) to advise you on what to do. For that customized experience/service you would probably want to work with a private advisor. Feel free to get in touch on my website if that would be something helpful to discuss in more detail. RBD based on Birthday -> irahelp.com/slottreport/ira-rmd-age-made-easy/

Yes you can! You are allowed designate a beneficiary on your inherited IRA so that if ever you pass away who you designate will get whatever is in your account.

Great clarification! If you go to the IRS's website it states, "The taxpayer must select an interest rate that is not more than the greater of [the 5% or 120% of the fed rate]." I interpret this to mean "one of these numbers will be higher than the other and that's the ceiling number you can use, but you can use anything lower than that" *highly recommend speaking with a tax professional if you're going to proceed with this approach