Tax Planning for Retirees

Roth IRAs

  • § 6.01 Overview of Taxation of Participants in Roth IRAs
  • —–[1] Nontaxable Qualified Distributions
  • —–[2] Taxable Nonqualified Distributions
  • —–[3] Transfers from Traditional IRAs and Certain Other Plans
  • —–[4] TQR Contributions by Beneficiaries
  • —–[5] Nontaxable Transfers between Roth IRAs
  • —–[6] Nontaxable Rollovers of Certain Military Death Payments
  • —–[7] Surviving Spouse Election to Become Owner
  • —–[8] Transfers Incident to Divorce or Legal Separation
  • —–[9] Income Tax Withholding
  • § 6.02 Contributions to a Roth IRA
  • —–[1] Types of Contributions to Fund a Roth IRA
  • —–[2] Roth Conversions
  • ———-[a] Taxation of Roth Conversions
  • —————[i] Taxation of Roth Conversions Generally
  • —————[ii] Passing a Roth Convesion from a Qualified Plan through IRAs
  • —————[iii] Relative Timing of an IRA Roth Conversion and Qualified Plan Rollover
  • —————[iv] Roth Conversion from Qualified Plan with Personal Retention of Investment
  • —————[v] Tracing Funds from a Qualified Plan through an IRA to a Roth IRA
  • —————[vi] Special Treatment of Distributions of Employee Contributions
  • —————[vii] Multiple Rollovers from a Single Distribution by a Qualified Plan
  • —————[viii] Applicability of Substance-Over-Form Doctrines to Roth Conversions
  • ——————–[A] The Substance-Over-Form Doctrine
  • ——————–[B] Step Transactions Not Applicable to Roth Conversions Using IRA as Conduit
  • ——————–[C] Combining Direct and Indirect Roth Conversions
  • ——————–[D] Roth Conversions in Different Tax Years
  • ——————–[E] Lack of Intent to Complete Non-Simultaneous Steps
  • ——————–[F] Step Transactions and the Passage of Time
  • —————[ix] Special Deferral of Tax on Roth Conversions Made in 2010
  • —————[x] Income Tax Withholding and Additional Tax for Premature Distribution
  • ———-[b] Eligibility to Make Roth Conversions
  • ———-[c] Methods for Making Roth Conversions
  • —————[i] Choice of Roth Conversion Methods
  • —————[ii] Requirements for an Indirect Rollover
  • ———-[d] Recharacterization of Roth Conversions
  • —————[i] Recharacterizations of Pre-2018 Roth Contributions and Roth Conversions
  • ——————–[A] Recharacterizations of Pre-2018 Roth Conversions Generally
  • ——————–[B] Recharacterization of a Failed Roth Conversion
  • ——————–[C] Recharacterizations of Regular Contributions to IRAs
  • —————[ii] Requirements for Recharacterization
  • —————[iii] Grant of Additional Time for Recharacterization
  • ——————–[A] Requirements for Grant of Additional Time for Recharacterization
  • ——————–[B] Failure to Recharacterize Not Discovered
  • ——————–[C] Intervening Events beyond Taxpayer’s Control
  • ——————–[D] Unaware of Need for Recharacterization Despite Reasonable Diligence
  • ——————–[E] Reliance on Qualified Tax Professional
  • —————[iv] Denial of Additional Time for Recharacterization
  • ———-[e] Roth Conversions by Surviving Spouses and Other Beneficiaries
  • ———-[f] Failure to meet Roth Conversion Conditions and Potential Mitigation
  • —————[i] Must Meet Conditions for a Roth Conversion for the Year of Distribution
  • —————[ii] Eliminating Excess Contributions by Making Corrective Distributions
  • —————[iii] Eliminating Excess Contributions by Making Ordinary Distributions
  • —————[iv] Eliminating an Excess Contribution by Absorption
  • —————[v] Eliminating Excess Contributions by Recharacterization
  • —–[3] Rollovers from Designated Roth Accounts
  • —–[4] Rollover Contributions Between Roth IRAs
  • ———-[a] Choice of Indirect Rollover or Trustee-to-Trustee Transfer
  • ———-[b] Requirements for an Indirect Rollover
  • ———-[c] Only One Rollover per Year
  • ———-[d] Rollover Available to Beneficiary Who is Surviving Spouse
  • —–[5] Nontaxable Rollovers of Certain Military Death Payments
  • —–[6] After-Tax Contributions from a Qualifying Military Reservist
  • § 6.03 Tax-Free Qualified Distributions from Roth IRAs
  • —–[1] Qualified Distribution Defined
  • —–[2] Excess Contributions
  • —–[3] No Carryover of Five-Year Period from a Designated Roth Account
  • § 6.04 Taxation of Nonqualified Distributions from Roth IRAs
  • —–[1] Nonqualified Distributions in General
  • —–[2] Classification and Taxation of Components of Nonqualified Distributions
  • —–[3] The Ten Percent Additional Tax on Early Distributions
  • ———-[a] Exceptions to the Additional Tax Common to IRAs and Roth IRAs
  • ———-[b] Special Exception for Previously Taxed Components
  • —–[4] Examples Illustrating the Taxation of Nonqualified Distributions
  • § 6.05 Illustrations of Long-Term Tax Savings Afforded by Roth IRAs
  • —–[1] Long-Term Tax Savings Due to Tax Rate Differential
  • —–[2] Long-Term Tax Savings Due to Transfer of High Income Assets
  • —–[3] Transfers to Roth IRAs When Funds Not Needed in Retirement
  • —–[4] Retention of Funds in Both Traditional IRAs and Roth IRAs
  • —–[5] Potential Collateral Benefits of TQR Contributions
  • § 6.06 Transfers of Roth IRAs Incident to Divorce or Legal Separation
  • § 6.07 Surviving Spouse’s Election to Become the Owner of a Roth IRA
  • § 6.08 Inherited Roth IRAs
  • § 6.09 Personal Borrowing While Maintaining a Roth IRA
  • § 6.10 Retiree’s Payment of Roth IRA Expenses
  • § 6.11 Tax-Free Restorative Payments
  • § 6.12 Enhancement of an Annuity Contract on Demutualization of the Issuer
  • § 6.13 Applicability of Community Property Laws to Roth IRAs
  • § 6.14 Arrangements Improperly Shifting Value to a Roth IRA from Related Entities
  • —–[1] Value Shifts to a Roth IRA Generally
  • —–[2] Roth Value Shifts Attacked as Prohibited Transactions
  • —–[3] Roth Value Shifts Attacked by Reallocating Income and Deductions
  • —–[4] Roth Value Shifts Attacked Under the Substance-Over-Form Doctrine
  • ———-[a] IRS Initially Experienced Mixed Results Applying the Doctrine
  • ———-[b] A Serious But Problematic Setback for the IRS in Applying the Doctrine
  • —————[i] The Sixth Circuit Allowed Use of a DISC to Avoid Roth IRA Limits
  • —————[ii] The Summa Court Appeared to Overlook a Significant Fact
  • —————[iii] The Gregory Case Indicates a Lack of Substance in Summa
  • —————[iv] The Summa Decision Reinforced by Two Subsequent Circuit Court Cases
  • ———-[c] The Tax Court Distinguishes the Summa Case
  • § 6.15 Tax Withholding from Distributions Made by Roth IRAs
  • —–[1] Withholding Tax on Nonqualified Distributions from Roth IRAs
  • —–[2] Election to Eliminate Withholding Tax for Nonqualified Distributions
  • —–[3] Roth Conversions
  • § 6.16 Tax on Net Investment Income Not Applicable
    • § 6.17 Estate or Gift Tax Imposed on Roth IRA Benefits
      • § 6.18 Roth IRA Contributions by Retirees Working Part-Time

» Chapter 7 – DESIGNATED ROTH ACCOUNTS