QUESTION:

I have a client who is age 52 and is being placed on hospice due to his battle with cancer. I understand that there is a provision in the SECURE 2.0 Act that allows individuals to withdraw from their IRAs prematurely without the 10% penalty if their condition is expected to result in death within 7 years. Can my client qualify for this exception?

ANSWER:

You are correct that SECURE 2.0 created a new exception for pre-59½ IRA withdrawals for a terminal illness. To qualify for the exception, your client must obtain a certification by his physician that describes the illness and includes a specific statement that his illness is reasonably expected to result in death in 84 months (7 years) or less. This certification must then be provided to the IRA custodian.

QUESTION:

Can an IRA owner within the 60-day window pay back multiple distributions received at different times but within the 60 days?

ANSWER:

No. Under the “once-per-year” rollover rule, if an IRA owner receives multiple distributions within any 12-month period, he can do a 60-day rollover of only one of those distributions. This rule applies to both traditional IRA-to-traditional IRA rollovers and Roth IRA-to-Roth IRA rollovers. Violating that rule could result in taxes and penalties.

If you have technical questions you would like to have answered, be sure to submit them to mailbag@irahelp.com, to be answered on an upcoming Slott Report Mailbag, published every Thursday.

IRA owners and retirement plan participants trip over the required minimum distribution (RMD) rules all the time. Bad advice is provided, misinformation is freely disseminated on TikTok, and sometimes smart individuals do less-than-smart things. Here is a Top 10 list of common RMD mistakes:

10. Rolling over an RMD. RMDs are not eligible to be rolled over. This happens most frequently when company plan assets are rolled over to an IRA. Doing the rollover first with the idea to take the plan RMD from the IRA later will not work. If the plan RMD is not taken prior to the rollover, you have an excess contribution in the IRA that needs to be corrected.

9. Spouses combining RMDs. One spouse cannot take an RMD for another spouse, even if they file a joint tax return and report the correct overall RMD income.

8. Not considering liquidity. If your IRA investment is illiquid, that is not an excuse to miss an RMD. The IRS does not care about your cash flow issues.

7. Taking credit for withdrawing more than the RMD in the previous year. Just because you took more than your RMD last year does not eliminate your RMD this year. Taking more last year will reduce the year-end balance resulting in a lower RMD calculation this year, but an RMD still exists.

6. Misunderstanding the still-working exception. This rule can delay RMDs on a plan, but it does not apply to IRAs, nor does it apply to plans at companies at which you no longer work. It also does not apply if you own more than 5% of your company (counting family ownership).

5. Not realizing a delayed first RMD means two RMDs the following year. An IRA owner turning 73 can delay his first RMD until April 1 of the following year (i.e., the “required beginning date”). But if the first RMD is delayed, that means there will be two RMDs due the following year – the delayed RMD by April 1 and the “normal” RMD by 12/31.

4. Thinking your annual qualified charitable distribution (QCD) is limited by the RMD amount. The annual QCD limit (for 2026) is $111,000, regardless of the size of your RMD.

3. Not understanding the RMD aggregation rules. A person’s own IRAs can be aggregated for RMD purposes. IRAs and 401(k) plans cannot be aggregated.

2. Not taking an RMD at all. Missing all or part of an RMD could result in a 25% penalty if the error is not identified and corrected in a timely manner.

1. RMD calculation errors. Be sure to use the proper life expectancy table, age and balance. This is the most fundamental rule and is applicable to all accounts that have an RMD.

If you have technical questions you would like to have answered, be sure to submit them to mailbag@irahelp.com, to be answered on an upcoming Slott Report Mailbag, published every Thursday.

Last week, the Treasury Department made two unexpected announcements regarding Trump Accounts: First, it cleared the way for private foundations to make contributions of publicly traded stock to Trump Accounts. Second, it said that it had automatically opened Trump Accounts for approximately 60 million unenrolled eligible children. Importantly, despite the auto-enrollment, parents of children born between 2025 and 2028 must still proactively elect to receive the $1,000 federal government contribution.

As background, four types of contributions can be made to Trump Accounts: (1) the $1,000 contribution; (2) individual contributions made by parents, grandparents and other persons; (3) employer contributions; and (4) contributions by tax-exempt organizations. However, none of these contributions can be made until a Trump account has been set up.

The IRS had previously maintained that a Trump Account could only be opened by a parent or guardian. However, only about 7 million Accounts had been established as of July 2026. So, without auto-enrollment, tens of millions of children without Trump Accounts would have been shut out from receiving any contributions.

Treasury has now reversed course and sanctioned automatic enrollment. A separate initial Trump Account (an “auto account”) will be established for each eligible child. Contributions can be made to each auto account and invested collectively through a master group trust. However, the auto account can only hold the $1,000 Federal government contribution (once elected) and any contributions made by tax-exempt organizations.

If a parent (or other person) wants to make individual contributions or accept employer contributions, the parent must take steps to “claim” the auto account and move it out of the master trust.

Treasury has also said it will permit tax-exempt organizations (such as private foundations) to make Trump account contributions in the form of publicly traded domestic stock instead of in cash. All other Trump Account contributions must still be made in cash and invested in low-cost U.S. stock index mutual funds or ETFs (exchange-traded funds).

It’s hoped that wealthy business owners with foundations will take advantage of the opportunity to donate company stock to their foundation and then have the foundation contribute the stock to Trump Accounts. This would allow the business owner to claim several big tax breaks and, combined with auto-enrollment, permit more children to receive contributions to their Trump Accounts.

There is no maximum amount for tax-exempt contributions, and they don’t count towards the $5,000 annual limit for individual and employer contributions. Contributions must be made to a targeted group of children (e.g., those residing in a specific geographic area) during the “growth period” (the period before January 1 of the year the child turns age 18).

Stock contributed to any Trump Account generally must be held for at least five years before it can be sold. However, stock held within the master trust for auto Accounts must be sold soon after the end of the five-year holding period.

If you have technical questions you would like to have answered, be sure to submit them to mailbag@irahelp.com, to be answered on an upcoming Slott Report Mailbag, published every Thursday.

QUESTION:

Are there any penalties/consequences/tax issues if I move money from a Roth IRA to start a new Roth IRA at another company?

Thanks,

Ramona

ANSWER:

Hi Ramona,

Roth IRA funds are portable. There are no penalties or negative tax consequences when you move your funds from one Roth IRA to another. For example, the five-year holding period for qualified distributions of earnings does not reset. Instead, it continues on. One caveat – if you are thinking of moving your account, it is best to do a direct trustee-to-trustee transfer. Doing a 60-day rollover is more risky and comes with more rules.

QUESTION:

If a spouse beneficiary dies before retitling or taking any action on an inherited IRA, who inherits the account? Would it be the contingent beneficiaries of the original IRA owner? Or, is it the estate of the spouse beneficiary?

ANSWER:

This is a question that comes up a lot. When an IRA owner dies, the funds immediately belong to the beneficiary. This is true even if no paperwork officially retitling the account is done. Assuming no disclaimer, the contingent beneficiaries no longer matter because the account has been inherited by the primary beneficiary. If the spouse (who is the primary beneficiary in this case) dies before naming their own beneficiary on the account, then the IRA custodial document’s default beneficiary will inherit the funds. Often, the default beneficiary is the estate.

If you have technical questions you would like to have answered, be sure to submit them to mailbag@irahelp.com, to be answered on an upcoming Slott Report Mailbag, published every Thursday.

With the cost of food, energy, healthcare and other basics on the rise, many Americans are facing a cash crunch. For some, their IRA is their largest asset. Therefore, it is not surprising that they may be looking to their IRAs for a quick solution. Why not borrow from your IRA instead of securing a loan? Why not use your IRA as an immediate cash resource and just pay the IRA back later?

This may sound tempting, but you should be cautious as there are rules that make this strategy more complicated than it may seem. Loans from your IRA are not permitted. In fact, taking a loan from an IRA would be considered a prohibited transaction and could result in the entire account becoming an immediate taxable distribution and the retirement savings lost.

You can, however, “borrow” from your IRA funds on a short-term basis by taking a distribution, using the funds as needed, and then replacing them in the IRA via a 60-day rollover. There is nothing in the rules that prohibits you from taking a distribution at any time from your IRA and for whatever purpose you choose. There is also no rule that limits what you can do with the money while it is out of the IRA during the 60-day period. So yes, it is possible to “borrow” money from your IRA by using the 60-day rollover rule, but this is not technically a “short-term loan.”

The 60-Day Rollover Deadline

A major concern with using an IRA for a “short-term loan” is the rollover deadline. An IRA owner does not have unlimited time to complete a rollover. Instead, there is a 60-day window to finalize the transaction. If the funds are not deposited back to an IRA within 60 days, the distribution may be both taxable and subject to penalty.

Life doesn’t always go as planned, and many times IRA owners find themselves unable to meet the 60-day deadline. While anything goes during the 60-day rollover period, it’s a different story when the clock runs out. What you do with the funds during the 60-day rollover period can never undo a timely rollover, but if the deadline is missed, the result is very different. When trying to defend a late rollover to the IRS, what happened during the 60-day period suddenly matters. Also, self-certification of a late rollover will provide no lifeline if your situation does not fit neatly into one of the 12 reasons where self-certification is permitted.

Once-Per-Year Rollover Rule Violations

Another concern when it comes to “borrowing” from your IRA is the once-per-year rollover rule applicable to IRA-to-IRA and Roth IRA-to-Roth IRA rollovers. For purposes of this rule, traditional and Roth IRA rollovers are aggregated. For example, a 60-day rollover of a Roth IRA distribution to another Roth IRA will prevent a 60-day rollover of a traditional IRA distribution, received within 12 months of the date of the Roth IRA distribution, to another traditional IRA. (Note that Roth conversions do not count against the one-rollover-per-year rule.)

This rule prevents IRA owners from rolling over a distribution within 12 months of a prior distribution that was rolled over. Naturally, that is not as simple as it sounds. The 12-month period is a full 365 days. Assume an IRA owner received a distribution on December 15 that she rolled over. She is not eligible to do another 60-day rollover from any IRA to another IRA (or from any Roth IRA to another Roth IRA) until the following December 15. The 12 months begin with the date the funds are received by the account owner.

Proceed with Caution

“Borrowing” from your IRA by doing a 60-day rollover is allowed but best avoided if possible. The risks are high and the ramifications if things do not go as planned could be a tax bill and penalties. What was intended as a short-term loan could easily result in the long-term loss of your hard-earned retirement savings.

If you have technical questions you would like to have answered, be sure to submit them to mailbag@irahelp.com, to be answered on an upcoming Slott Report Mailbag, published every Thursday.

The 72(t) rules (“series of substantially equal periodic payments”) allow a person to tap retirement dollars before age 59½ without a 10% early distribution penalty. However, to gain early access to the funds, the IRA owner must commit to a strict withdrawal plan. For example, the payments must continue for at least five years or until age 59½, whichever period is longer. Also, the payments must be distributed at least annually, and an approved method must be used to calculate the annual distribution amount.

Typically, when IRA owners are in need of funds, a 72(t) schedule is set up on their traditional IRA. While the 10% early withdrawal penalty can be avoided with a 72(t), taxes will still apply. But what if a person had a Roth IRA? Could a 72(t) be established to access Roth funds early?

Yes, but a 72(t) on a Roth IRA doesn’t always make sense. Why not? Because Roth IRAs follow strict distribution ordering rules. Contributions come out first, then converted dollars, and then earnings. A Roth IRA owner always has tax- and penalty-free access up to an amount equal to his total Roth IRA contributions. This is true regardless of age. Since Roth contributions come out first, these dollars are fully accessible – no 72(t) needed.

If any Roth conversions were done, an amount up to the total of all conversions comes out next. AFTER five years, a person has tax- and penalty-free access to those converted dollars, again, regardless of age. Yes, each conversion has its own 5-year clock, but after the clock specific to that conversion has been satisfied, those converted dollars are available for withdrawal penalty-free. (DURING the five-year holding period, distributions of converted funds are subject to the 10% penalty if the individual is under age 59½, unless an exception applies.)

Based on the ordering rules, it seems like a 72(t) on a Roth IRA is merely a way to gain early access to Roth IRA earnings. But if those earnings are touched prior to age 59½, even through a 72(t) program, they would be taxable. All things considered, a 72(t) on a Roth IRA appears to be almost pointless. A person would have to be in a unique situation for a 72(t) on a Roth IRA to make sense.

Such a unique situation recently presented itself. A retired traditional IRA owner, age 55, needed access to his IRA for annual living expenses. The problem was, based on other financial entanglements, he required tax-free income. Yes, a 72(t) on his traditional IRA would allow penalty-free access to the funds, but they would be taxable. This taxable income would negatively impact his other dealings each year going forward.

So, his astute Ed Slott Elite Advisor™ devised a creative plan. The advisor proposed a large Roth conversion in 2026. Yes, this would generate a significant tax hit this year, but the need for tax-free income did not begin until next year. The next step was to initiate a 72(t) on the new Roth IRA, with the first payment scheduled for 2027. Based on the aforementioned Roth IRA distribution ordering rules (and since this person had no Roth IRA contributions), distributions of the converted dollars could begin. The 10% penalty would be avoided, and the annual income over the life of the 72(t) would be tax-free. After five years the 72(t) could be stopped, and the then-60-year-old would have full access to all his Roth IRA funds. Brilliant.

If you have technical questions you would like to have answered, be sure to submit them to mailbag@irahelp.com, to be answered on an upcoming Slott Report Mailbag, published every Thursday.

QUESTION:

I did a qualified charitable distribution (QCD) in early January of 2026 to cover a portion of my required minimum distribution (RMD), then took the rest of the RMD before I processed a Roth conversion. Am I now allowed to process another QCD if I still keep under the maximum allowed per year?

Kind regards,

Greg

ANSWER:

Greg,

Yes, you can continue to do QCDs in 2026. Even though your entire RMD has been satisfied and you even did a Roth conversion, QCDs are still available. The only limitation is the annual QCD cap ($111,000 in 2026).

QUESTION:

I have an inherited traditional IRA from my mother and I am age 70. I’m told the account must be emptied by the end of 2034 based on the 10-year rule. I am also taking annual required minimum distributions (RMDs) from that account. Is it better that I take out more than the RMD annually so I don’t have a big tax bill in 2034 when all the money must be taken out?

Thank you.

ANSWER:

The 10-year payout rule was created by Congress to accelerate the distribution of inherited IRAs, which in turn expedites the taxation of those dollars. With this shorter payout window, proper tax planning is vital. Annual RMDs within the 10-year period are not designed to deplete the account evenly over the 10 years. So, there could be a large balance remaining which could force you into a higher tax bracket in the 10th year. To avoid this potential problem, you should consider taking distributions over and above the RMD in the remaining years of the 10-year period to level out the taxes due and potentially reduce your overall tax liability.

If you have technical questions you would like to have answered, be sure to submit them to mailbag@irahelp.com, to be answered on an upcoming Slott Report Mailbag, published every Thursday.

One of the mantras we have here at Ed Slott & Company is: “Don’t do 60-day rollovers. Do direct transfers instead.” The reason? 60-day rollovers between IRAs are subject to several rules that have serious tax consequences if not followed.

One of those restrictions is the so-called “once-per-year” rollover rule. That rule prevents you from doing a 60-day rollover of more than one IRA distribution you receive during any 12-month (365-day) period. If you violate this rule, the second IRA distribution is not eligible for rollover. So, it could become taxable and subject to the 10% early distribution penalty. And, depositing that second withdrawal into another IRA is an excess contribution subject to an annual 6% penalty unless timely corrected. To make matters worse, unlike missing the 60-day deadline, a mistake with the one-rollover-per-year rule cannot be corrected by you or waived by the IRS. That’s why we call it a “fatal error.”

The once-per-year rule applies to traditional IRA-to-traditional IRA rollovers and Roth IRA-to-Roth IRA rollovers. It doesn’t apply to company plan-to-IRA rollovers, IRA-to-company plan rollovers, or traditional IRA-to-Roth IRA rollovers (Roth conversions).

The easiest way to explain the rule is to say you can’t do more than one 60-day rollover in any 12-month period. But that’s not really completely accurate. The rule actually kicks in if you receive more than one IRA distribution in a 12-month period – not if you do more than one 60-day rollover within 12 months.

Here are a few examples that illustrate the difference:

Example 1: Jolene received a traditional IRA distribution on September 1, 2025, that she rolled over to another traditional IRA on October 1, 2025. Let’s say Jolene receives a second distribution on August 15, 2026 (within 12 months of her first distribution). She would still violate the once-per-year rule even if she delays rolling over the second distribution until October 2, 2026 (more than 12 months after the first rollover on October 1, 2025).

Example 2: Now assume Jolene receives the second distribution on September 10, 2026 (more than 12 months after the first distribution on September 1, 2025). She would not violate the once-per-year rule even if she rolls over the second distribution on September 25, 2026 (within 12 months of the first rollover on October 1, 2025).

Once again, you can avoid all of this complexity and potential tax problems by doing direct transfers instead of 60-day rollovers when you want to move your IRA funds. You can do as many direct transfers as you like during a 12-month period without any concern about the once-per-year rule.

If you have technical questions you would like to have answered, be sure to submit them to mailbag@irahelp.com, to be answered on an upcoming Slott Report Mailbag, published every Thursday.

Fall is in full swing and October is almost upon us. That means that an important IRA deadline looms just ahead. Here are three transactions you must get done by October 15, 2026.

1. Make a SEP IRA contribution for 2025.

The deadline for making a 2025 traditional or Roth IRA contribution was April 15, 2026. That deadline has long passed. However, employers who are interested in establishing and funding a SEP IRA for 2025 may have a little more time to get this done. The deadline for making a SEP contribution is the business’s tax-filing deadline, including extensions. For some businesses that date is October 15, 2026.

2. Correct a 2025 excess IRA contribution without penalty.

Did you contribute too much to your traditional or Roth IRA for 2025? Maybe your income ended up being higher than you expected and it turned out you were ineligible for the Roth IRA contribution you made. If you made an excess contribution to your traditional or Roth IRA for 2025, you can fix that mistake by withdrawing the contribution, plus net income or loss attributable. Your deadline for getting this done and avoiding the 6% excess contribution penalty is October 15, 2026.

While recharacterization of Roth IRA conversions is long gone, recharacterization of tax year contributions remains an option to correct an excess contribution by moving it to a different type of IRA. The deadline for getting this done for 2025 contributions is also October 15, 2026.

3. Remove an unwanted 2025 IRA contribution.

It’s not too late. You can still change your mind about a 2025 IRA contribution. Have you changed your mind about the type of IRA to which you wanted to make your 2025 contribution? Maybe you contributed to a Roth IRA and now you think a traditional IRA is a better fit, or vice versa. October 15, 2026 is your last chance to recharacterize that contribution to the other type of IRA. If you later discovered that your 2025 traditional IRA contribution was not deductible and you wish you never made the contribution, October 15, 2026 is the deadline to correct this problem. Don’t miss the deadline. If you do, the contribution must remain in the IRA as a nondeductible IRA contribution.

If you have technical questions you would like to have answered, be sure to submit them to mailbag@irahelp.com, to be answered on an upcoming Slott Report Mailbag, published every Thursday.

QUESTION:

I really enjoy reading the Slott Report articles, but I’m confused about the inherited Roth IRA required minimum distributions (RMD) explanations. My understanding was Roth IRAs do not have RMDs even when inherited. Am I mistaken?

Thanks,

Donald

ANSWER:

Hi Donald,

There’s lots of confusion over this issue. Roth IRA owners do not have RMDs while they are living, but beneficiaries of inherited Roth IRAs do have RMDs. Further confusion results because only Roth IRA beneficiaries who are “eligible designated beneficiaries” and elect to stretch RMDs have annual RMDs. Roth IRA beneficiaries who are “non-eligible designated beneficiaries” are subject to the 10-year payout rule, but they do not have annual RMDs in years 1-9 of the 10-year period. However, they must empty the inherited account by the end of the 10th year following the year of death, and this 10th-year distribution is considered their RMD.

QUESTION:

I am age 85. Would it make sense to convert my IRA (worth $1.3 million) to a Roth IRA at this late stage, or am I too old to convert?

I have four children, two of whom are on Social Security Disability Insurance (SSDI). Would the children on SSDI still have to follow the 10-year rule?

Thank you.

ANSWER:

There are no age restrictions for doing Roth conversions. Many older IRA owners choose not to do conversions because there may not be enough time for the tax-free accumulation to offset the additional taxable income resulting from the conversion. However, others who wish to leave a tax-free inheritance to children or grandchildren may find a Roth conversion beneficial at any age. IRA beneficiaries who are “disabled” are “eligible designated beneficiaries” and can therefore stretch RMDs over their life expectancy instead of being subject to the 10-year rule. Beneficiaries on SSDI are automatically considered “disabled.”

If you have technical questions you would like to have answered, be sure to submit them to mailbag@irahelp.com, to be answered on an upcoming Slott Report Mailbag, published every Thursday.