QUESTION:

I have a 401(k) plan with a previous employer that is a mix of pre-tax and Roth money. I’m considering a direct rollover of the 401(k) to an IRA. How would that work since it’s a mix of pre-tax and after-tax funds? Would I need to open separate rollover and Roth IRAs?

Thanks,

Greg

ANSWER:

Greg,

If you do not already have any existing IRAs, you will need to open a traditional IRA and a Roth IRA to receive the 401(k) rollover. The pre-tax funds in the 401(k) will be rolled over to the traditional IRA, and the Roth 401(k) dollars will go to the Roth IRA. If you do have existing IRAs (traditional or Roth), the 401(k) dollars can be rolled over to the respective current IRAs. There is no reason to keep the rollover dollars in a different IRA (traditional or Roth) if you don’t want to.

QUESTION:

What options are available for a non-working spouse to contribute to a traditional/Roth IRA, provided her significant other is employed and has compensation?

Respectfully,

Richard

ANSWER:

Richard,

If a married couple files a joint tax return, the spouse with no compensation can make an IRA contribution based on the compensation from the working spouse who has compensation. The same annual contribution limits apply as do the phaseout ranges for Roth IRA eligibility. Other than this being called a “spousal contribution,” there is no difference between a contribution based on one’s own compensation vs. a contribution based on a spouse’s compensation.

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.

Most of you are probably familiar with the concept of the “required beginning date” (RBD). The RBD is the deadline for taking the first required minimum distribution (RMD) from an IRA or workplace retirement plan. If you’re a traditional IRA owner, your RBD is April 1 of the year following the year you turn age 73 (if born between 1951 and 1959) or age 75 (if born after 1959). If you’re a retirement plan participant, your RBD is usually the same date. However, if you’re still working beyond the year you reach age 73 and you don’t own more than 5% of the sponsoring employer, you can usually delay your RMD until April 1 of the year following the year you eventually retire. This is called the “still-working exception.”

The RBD is also important in applying several other RMD rules. For example, if you’re an IRA beneficiary subject to the 10-year payout rule (a “non-eligible designated beneficiary”), you must take RMDs during years 1-9 of the 10-year period if the IRA owner died on or after his RBD. In addition, if you’re a beneficiary eligible to stretch RMDs over your life expectancy (an “eligible designated beneficiary”), you can instead elect the 10-year rule with no annual RMDs if the IRA owner died before his RBD.

However, although the RBD is often the date that dictates whether an RMD rule applies, it’s not always the deciding factor. For some retirement account rules, your “first RMD year” (usually the year you turn age 73) – not the RBD – is what counts. Here’s one common example that causes lots of confusion: Let’s say you retire in the year you turn age 73. If you want to roll over your 401(k) funds to an IRA in the year of retirement, do you have to take an RMD from the 401(k) before doing the rollover?

Since your RBD isn’t until April 1 of the year after your retirement year, you might think that you shouldn’t have to take an RMD if you do a rollover before that April 1. But this is one of those cases where the “first RMD year” controls – not the RBD. The first funds that are distributed out of the plan in your first RMD year (or any subsequent year) are considered part of the RMD. However, RMDs can never be rolled over. This means that if you want to roll over your 401(k) funds in the year you retire (or after) your age-73 year, you must first take your 401(k) RMD. 

What if you don’t take the RMD first and instead roll it over? Then, you have an excess IRA contribution. But that’s usually not a problem. As long as the rolled-over amount, along with earnings or losses attributable to the excess (net income attributable, or “NIA”), are withdrawn from the IRA by October 15 of the year after the year of the rollover, you won’t have to pay a penalty.

One way to avoid having to take a 401(k) RMD in the year of retirement is to delay your rollover into the following year (no later than April 1). But then you’d have to take two RMDs in that following year – the year-of-retirement RMD and the following-year RMD – before rolling over the rest of your funds.

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.

On April 30, 2026, President Trump signed an executive order to promote retirement savings for American workers. In its aftermath, we have had a flurry of questions about a new savings option called a “Trump IRA.” This is, as the saying goes, “fake news.”

Here are three things you need to know to separate fact from fiction about the new presidential order and its impact on retirement savings.

1. There is no such thing yet as a “Trump IRA.” The executive order did not create a new tax-advantaged account to save for retirement. The President cannot, in fact, do this on his own. Only Congress can change the tax code and create a new savings vehicle. The President, however, can establish a website, and that is what happened. The executive order calls for the establishment of a website (TrumpIRA.org) by January 1, 2027.

2. The new website (TrumpIRA.org) will promote the Saver’s Match. The Saver’s Match is not a newly created initiative. It was already in the works. It was enacted in 2022 as part of the SECURE 2.0 Act and is effective starting in 2027.

The Saver’s Match will replace the current Saver’s Credit and will provide a federal matching contribution of 50% on the first $2,000 of annual retirement contributions (up to $1,000 annually) for eligible lower-income savers. This match is deposited directly into a 401(k), 403(b), or IRA. For single filers, the Modified Adjusted Gross Income (MAGI) phaseout range is between $20,500 and $35,500. For those who are married filing jointly, the MAGI phaseout range is between $41,000 and $71,000. Unlike the current Saver’s Credit, the Saver’s Match is available even for eligible savers who don’t owe federal income tax.

The executive order also says that the new website will list financial institutions that offer IRAs that will accept the Saver’s Match and meet certain other criteria to enhance retirement savings. The website will allow users to filter and select IRAs based on their cost and quality.

3. The new order has nothing to do with Trump Accounts. Trump Accounts are tax-deferred investment vehicles for children under 18, created under the One Big Beautiful Bill Act of 2025. Contributions to these new investment accounts are scheduled to be available on July 4, 2026. More guidance is expected to be released soon to explain more about how exactly these accounts will work, but the executive order does not do this.

Another factor making things even more confusing is that while a Trump Account is subject to special rules until the year the child reaches age 18, at that point it then becomes a traditional IRA, subject to all the normal IRA rules. So, while the account does change from being a Trump Account to being a regular traditional IRA, there never is a point where it is a “Trump IRA.”

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 have a client who is still working, over age 75, and wants to roll her 401(k) into her IRA. She has stopped contributing and wants to move the company stock to her brokerage account using the net unrealized appreciation (NUA) strategy. She has been told that the cost basis will be taxed as ordinary income and the appreciation will be taxed at long-term capital gains rates. Someone mentioned that if there are any monies left in the 401(k) account at the end of the year, it could jeopardize the NUA. Is this correct? 

Mary

Answer:

Hi Mary,

That is correct. To use the NUA strategy, there must be a triggering event and a lump sum distribution. Turning age 59½ is a triggering event, so your client qualifies there. The lump sum distribution requires that the entire account be distributed in one calendar year – either the calendar year in which the triggering event occurs, or any subsequent calendar year. So, if your client takes a distribution of any of her 401(k) funds this year, she must empty the entire account by December 31, 2026.

Question:

I don’t understand the big deal with qualified charitable distributions (QCDs). If my required minimum distribution (RMD) in one year is $10,000 and I give the $10,000 to a charity as a QCD, I reduce my taxable income by $10,000. Assuming I’m in a 30% tax bracket, I’ve saved $3,000 in taxes.

Alternatively, if I give $10,000 of non-IRA funds to a charity, I get a $10,000 charitable tax (itemized) deduction, and since I’m in the 30% tax bracket, I save $3,000 in taxes. So what’s the difference between the two approaches? They both save me $3,000 in taxes.

Answer:

There are several important differences. Many taxpayers are better off taking the standard deduction instead of itemizing deductions. Those people would get no tax benefit from donating non-IRA funds. In addition, if you are in an RMD year, making a QCD can offset the RMD. This will save you taxes on the RMD. But if you donate non-IRA funds, you will still be stuck with taking a taxable 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.

We know that Roth conversions are permanent. Recharacterization of a conversion is no longer allowed. Once the conversion is done, there is no going back. However, recharacterization is still available for IRA contributions. A traditional IRA contribution can be recharacterized to a Roth IRA or vice versa. A contribution can be recharacterized for any reason as long as it can be a valid contribution to the other type of IRA. This means that the person must be eligible to contribute to the type of IRA to which the funds are being recharacterized.

Why recharacterize? There are multiple scenarios where recharacterization could be the proper strategy. For example, an individual who contributed to a traditional IRA and later discovered the contribution was not deductible could recharacterize the contribution to a Roth IRA (assuming Roth IRA eligibility). A person who contributed to a Roth IRA not knowing his income for the year will be above the phaseout limits could recharacterize that contribution to a traditional IRA.

To recharacterize a contribution, the IRA custodian will transfer the funds, along with the earnings or losses (“net income attributable” or NIA), from the first IRA to the second. NIA is determined by a special IRS formula, which is the same formula used to determine NIA when removing an excess IRA contribution. The deadline for recharacterization is October 15 of the year following the year for which the original contribution was made. The recharacterized contribution is treated as if it had always been made to the intended IRA.

While this is a tax-free transaction, both IRAs report the transactions to the account owner and the IRS. The first IRA custodian will report the recharacterized amount, plus NIA, as a distribution on Form 1099-R. The second IRA (the receiving IRA) custodian will generate a Form 5498. On the Form 1099-R, both the recharacterized contribution amount and the NIA (i.e., the current fair market value of the recharacterized amount) are reported in Box 1, Gross distribution, with “0” in Box 2a, Taxable amount. The distribution code will be either an “N” or “R.”

From the Instructions for Form 1099-R for 2025 recharacterizations:

“N—Recharacterized IRA contribution made for 2025. Use Code N for a recharacterization of an IRA contribution made for 2025 and recharacterized in 2025 to another type of IRA by a trustee-to-trustee transfer or with the same trustee.”

“R—Recharacterized IRA contribution made for 2024 or a previous year. Use Code R for a recharacterization of an IRA contribution made for 2024 and recharacterized in 2025 to another type of IRA by a trustee-to-trustee transfer or with the same trustee.”

Form 5498 will report the total amount being recharacterized in Box 4, Recharacterized contributions. Note: If an unwanted (or disallowed) Roth IRA contribution is recharacterized to a non-deductible traditional IRA contribution, be sure to file Form 8606 to claim that basis.

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 SECURE Act completely changed the rules for beneficiary IRA (and workplace retirement plan) required minimum distributions (RMDs). It’s now been more than 6 years since the SECURE Act became law and almost 2 years since the IRS finalized its RMD regulations. Yet there’s still plenty of confusion about how these rules work. To help keep things straight, we present our beneficiary RMD cheat sheet.

Keep in mind that these are the rules for retirement accounts inherited after 2019. Pre-SECURE Act rules applied for accounts inherited before 2020, and those old rules were grandfathered and continue to apply for those accounts. Also note that there are separate rules for successor beneficiaries (beneficiaries of beneficiaries).

Where to Begin

To begin with, we need to answer two questions:

• Did the IRA owner die before or after the required beginning date (RBD) for starting RMDs? The RBD is April 1 of the year following the year the IRA owner reaches age 73 (if born between 1951 and 1959) or age 75 (if born after 1959). A Roth IRA owner is always considered to have died before the RBD.
  
• What kind of beneficiary do we have? An eligible designated beneficiary (EDB) is a surviving spouse of the IRA owner; a minor child (under age 21) of the owner; a chronically-ill or disabled person; or someone who is not more than 10 years younger than the account owner. A non-eligible designated beneficiary (NEDB) is an individual beneficiary who’s not an EDB. A non-designated beneficiary (NDB) is a beneficiary who’s not a person, such as an estate, a charity or a non-qualified trust.

Rules That Apply When a Traditional IRA Owner Dies BEFORE the RBD OR a Roth IRA Owner Dies at Any Time

EDB (other than a minor child): An EDB other than a minor child can either (1) take annual RMDs over the EDB’s life expectancy, or (2) use the 10-year payment rule. If the 10-year rule is elected, the inherited account must be emptied by December 31 of the 10th year following the year of death, but annual RMDs aren’t required during the 10-year period. A surviving spouse EDB can also do a rollover to the surviving spouse’s own IRA (usually not recommended until age 59½).

EDB (minor child): A minor child EDB can either (1) take annual RMDs until the year the child turns age 30 and then empty the inherited account by the end of the following year, or (2) have the 10-year payment rule apply. If the 10-year rule is elected, the inherited account must be emptied by December 31 of the 10th year following the year of death, but no annual RMDs are required.

NEDB: The 10-year rule applies, but annual RMDs aren’t required.

NDB: The 5-year rule applies. The entire account must be emptied by December 31 of the 5^th year following the year of death, but no annual RMDs are required during the 5-year period.

Rules That Apply When a Traditional IRA Owner Dies ON OR AFTER the RBD

EDB (other than a minor child): An EDB other than a minor child can take annual RMDs over the EDB’s life expectancy. But if the EDB is older than the deceased IRA owner, the EDB can use the deceased person’s longer life expectancy in calculating RMDs. A surviving spouse EDB can also do a rollover to the surviving spouse’s own IRA (usually not recommended until age 59½).

EDB (minor child): A minor child EDB can take annual RMDs until the year the child turns age 30 and must empty the inherited account by the end of the following year.

NEDB: The 10-year rule applies, and annual RMDs are required during the 10-year period (based on the beneficiary’s single life expectancy starting in the year after the year of death).

NDB: Annual RMDs must continue over the deceased IRA owner’s remaining single life expectancy assuming the owner had lived (the “ghost 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.

Question:

My spouse and I have a combined six-figure required minimum distribution (RMD) from my two IRAs and her smaller IRA. Our CPA suggested that for 2026 we only withdraw 50% of her smaller RMD, and that I should pick up the balance to fulfill her requirement.

I questioned her about this situation. She said that since we are married filing jointly, I should do it. I have some concerns about this approach.

Thank you,

Tom

Answer:

Hi Tom,

You are right to have some concerns. When it comes to RMDs, spouses are not considered together, even if they are married and filing jointly. Aggregation of RMDs with a spouse is not permitted. You must each take your own RMDs.

Question:

An adult son inherited an IRA from his mother in 2016. He has been taking annual RMDs. This year, it will be ten years since he inherited the IRA. Does the SECURE Act require him to empty this inherited IRA in 2026?

Warm regards,

Carolyn Sue

Answer:

Hi Carolyn Sue,

The SECURE Act does impose a 10-year payout rule on most adult children who inherit IRAs from their parents. However, this rule does not apply to accounts inherited prior to 2020 when the SECURE Act was enacted. This IRA was inherited in 2016. Therefore, the 10-year rule does not apply and annual RMDs can continue.

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 once-per-year IRA rollover rule sounds easy. However, there are many ways to go wrong. One common confusion with this rule occurs when there are multiple distributions or multiple deposits. These two circumstances have very different outcomes.

How the Once-Per-Year Rollover Rule Works

The once-per-year rollover rule says that an IRA owner cannot roll over an IRA distribution that is received within a 365-day period of a prior distribution that was rolled over. Traditional and Roth IRAs are combined for purposes of the once-per-year rule. So, for example, a distribution and subsequent rollover between your Roth IRAs will prevent another rollover of a distribution from your traditional IRA received within one year of the Roth IRA distribution. The bottom line is that an IRA-to-IRA (or Roth IRA-to-Roth IRA) 60-day rollover may not be done if you received a prior distribution within the last year (365 days) that you also rolled over.

The once-per-year rollover rule does NOT apply to rollovers between plans and IRAs or Roth IRA conversions.

One Distribution and Multiple Rollover Deposits

If an IRA owner takes a distribution, she may split the funds and roll them over to multiple IRAs. This could be done on different days and that would not be a problem. Multiple rollover deposits are acceptable for purposes of the once-per-year rollover rule because only one distribution is received even though there is more than one rollover deposit.

Example: Sophie receives a $100,000 distribution from her IRA on June 15. On June 20, Sophie rolls over $75,000 to an IRA. On June 25, she decides to roll over the remaining $25,000 to another IRA. This is not a violation of the once-per-year rollover rule because Sophie received only one distribution. Even though she did two deposits on two different dates to complete her rollover transaction, there are no issues with these transactions.

Multiple Distributions and One Rollover Deposit

If an IRA owner is permitted to take a distribution on one day and roll it over on multiple different days, is the opposite scenario also allowed? Can an IRA owner take multiple distributions on different days and deposit them at one time as one consolidated rollover? The answer is no. Even if all the distributions were taken from the same IRA, this is still not allowed. The reason is that only one distribution is eligible for rollover within a 60-day period.

Example: James takes a $2,000 distribution from his IRA on January 10 and another $30,000 distribution on January 12. His plan is to roll over both distributions on the same day to a new IRA. Unfortunately for James, only one of his IRA distributions is eligible for rollover. This is because the once-per-year rule limits him to rolling over only one distribution within a 365-day period.

Do Direct Transfers Between Your IRAs

Confusion about the impact of multiple deposits or distributions and the once-per-year rollover rule is just one of many reasons why 60-day rollovers should be avoided. If there is no 60-day rollover, then there is no once-per-year rollover rule to worry about. How, then, can you move your retirement funds? The best advice is to directly transfer the funds from one retirement account to another rather than taking a distribution payable to yourself and then rolling it over to another retirement account. You can do as many direct transfers between IRAs annually as you want.

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.

Qualified charitable distributions (QCDs) and required minimum distributions (RMDs) are two separate and distinct transactions. Here are some of the basics of each:

QCDs are only available to IRA owners and beneficiaries age 70½ or older. You cannot do a QCD from a 401(k) plan. The QCD limit for 2026 is $111,000. With a QCD, IRA funds are sent directly to a qualifying charity, and no goods or services can be received for the donation. Assuming all the rules are followed, the amount of the QCD is excluded from the IRA owner’s income. And since charities do not pay tax, the result is that no taxes are ever paid on the donated dollars.

RMDs are forced withdrawals from traditional IRAs (and from the pre-tax portion of a company retirement plan). When a person reaches a certain age (currently age 73), IRA RMDs must begin. The purpose of an RMD is to force a taxable distribution from what has been a tax-deferred pot of money. Congress allows IRA owners to shelter funds for decades. At age 73, it is time to pay the piper. Understandably, many IRA owners are not thrilled about forced withdrawals and a potentially elevated tax bill.

However, by combining the QCD and RMD rules, a person can satisfy their RMD, avoid any taxes due, and donate to charity all at the same time.

Where people get sideways with QCDs and RMDs is when it comes to timing. A common saying is, “Do your QCD before your RMD.” The purpose of this phrase is to ensure a person does not miss the opportunity to offset RMD income with a QCD. Once a normal (non-QCD) RMD is taken, that income cannot be offset with a future QCD. There is no such thing as a “prior-year” QCD or a “retroactive” QCD. If a person takes their RMD, those funds will be taxable.

But the “do your QCD before your RMD” axiom is misleading. If the goal is to offset all or a portion of an RMD, then the QCD and RMD are done simultaneously. We do not have two separate distributions. There is a single distribution that counts as both a QCD and RMD.

Example: Mike, age 75, has an IRA RMD of $10,000. If Mike’s RMD is distributed directly to him, then $10,000 will be included in his taxable income. Mike wants to avoid paying any tax on his RMD. So, he requests that his IRA custodian process a $10,000 QCD to Mike’s favorite charity. Upon the IRA custodian sending the check to the charity, Mike has killed two birds with one stone. Simultaneously, a QCD was completed, and Mike’s RMD was satisfied.

As mentioned, once a normal RMD is taken, a later QCD cannot offset the income from that earlier distribution. Yes, a person can do a QCD after satisfying their RMD, but that later QCD will just be an additional distribution over and above what was already distributed. Keep in mind that QCDs are not done “before” an RMD. When offsetting the income of an RMD with a QCD, a lone transaction simultaneously satisfies both the RMD as well as delivering funds to a charity as a QCD.

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:

When someone under age 59½ uses the “backdoor” method of making Roth IRA contributions, does the 10% penalty apply to subsequent withdrawals if the IRA contribution was non-deductible?

Thank you,

John

ANSWER:

John,

The “backdoor Roth” contribution method involves making a non-deductible contribution to a traditional IRA, and then converting those dollars to a Roth IRA. Backdoor Roth IRA contributions are necessary for anyone with income that exceeds the annual Roth IRA contribution phase-out ranges. If the non-deductible dollars are then withdrawn from the Roth IRA after the conversion, there is no 10% early withdrawal penalty on those specific funds, regardless of a person’s age. However, any earnings on the non-deductible dollars would be subject to the penalty if they are received before the Roth IRA owner turns age 59½ (assuming no exception exists).

QUESTION:

Hello,

I am looking for some direction on how to title a beneficiary IRA. My mother passed away in March of this year at age 94, and my sister and I are 50/50 beneficiaries. The custodian wants to title the account as: “John R. Doe as beneficiary of Jane C. Doe IRA” (implying that Jane has died, rather than explicitly stating the fact). If I recall, the title should include “for the benefit of” and be something like: “Jane C. Doe deceased (3/28/2026) FBO John R. Doe, Beneficiary.” Please provide guidance on the proper title content and format.

Thank you and keep up the great work!

Jim

ANSWER:

Jim,

Sorry for the loss of your mother. As for the “proper” titling of an inherited IRA, there is no universally required method or set format. The deceased IRA owner’s name must remain on the account, and it must be clear that it is an inherited IRA. This is typically accomplished by using the words “beneficiary,” “beneficiary IRA” or “inherited IRA.” Both examples you provided are acceptable, although we prefer a title similar to what you suggested: “Jane C. Doe IRA (deceased 3/28/2026) F/B/O John R. Doe, Beneficiary.”

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.