A Safer Retirement and Environment – What We’re Implementing to Help Keep You Safe: READ MORE

Here at Pivotal Financial, we are adhering to state and local guidelines in order to protect both the health and safety of clients and staff. Keeping our clients and staff safe is our highest priority and we’re taking all appropriate measures to ensure a safe environment. Should you prefer to not meet face-to-face, we are continuing to serve our clients through virtual settings such as Zoom or phone calls.

We look forward to continuing to help individuals and families achieve their ideal retirements.

Pivotal Financial
(615) 732-6212

CLOSE

 

UNWANTED RMDS AND USING IRAS FOR HIGHER EDUCATION: TODAY’S SLOTT REPORT MAILBAG

By Ian Berger, JD
IRA Analyst

Question:

I had taken an RMD in January 2020 from an IRA account. Then in July, I returned a portion back to the same IRA. Now I want to return another portion back to the IRA.

Are multiple transactions for reversal allowed?

Thanks for your quick reply in advance.

Piyush

Answer:

Hi Piyush,

You are allowed to pay back an IRA distribution with multiple partial rollovers. This includes an unwanted 2020 RMD. Normally, each rollover from a single distribution must be made within 60 days of receipt of the funds. But for 2020, the IRS has waived the 60-day deadline for unwanted RMDs. However, payment(s) must be returned by August 31, 2020. So, you better hurry!

Question:

My son is attending college. I plan on using my IRA to pay off his school debt. I’m old enough to avoid penalty, but do I get any tax break for using it for education?

Jeff

Answer:

Hi Jeff,

There is no tax break for paying off college debt if your withdrawal is from a traditional IRA. Traditional IRA distributions are always taxable (unless they are ultimately rolled over). For those under 59 ½, the 10% early withdrawal penalty can be avoided for IRA withdrawals used for higher education expenses paid in the same year as the withdrawal was made. But the withdrawals will still be taxable.

https://www.irahelp.com/slottreport/unwanted-rmds-and-using-iras-higher-education-todays-slott-report-mailbag

 

Ready To Take

THE NEXT STEP?

 

For more information about any of our products and services, schedule a meeting today.

Or give us a call at (615) 732-6212

Investment advisory services are offered through Foundations Investment Advisors, LLC and is a SEC registered investment advisor.