Sarah Brenner, JD
Director of Retirement Education

Each year it is a Thanksgiving tradition here at the Slott Report to take a moment to give thanks for the rules that are helpful to retirement savers. There are many times when rules governing retirement accounts can seem illogical, confusing, and maybe even unfair. However, there are other rules that work well and give us the tools necessary to not only save for a secure retirement but maybe even get a few tax breaks along the way.

Here are a few retirement account rules for which we are thankful in 2024:

All Things Roth!  – Who doesn’t love tax-free savings? With Roth accounts, qualified distributions in retirement are tax-free. The Roth IRA first became available in 1998. Since then, Roth savings opportunities have grown. Roth employee deferrals are now common, Roth employer contributions accounts are now available, and millions of retirement savers have done Roth conversions. Roth savings continue to grow under the recent SECURE Act and SECURE 2.0 and for this we are thankful.

New Rules for Spouse Beneficiaries – Believe it or not we are feeling thankful for the IRS. The SECURE 2.0 Act upended the rules for spouses who inherit retirement accounts and left confusion in its wake. This year the IRS stepped in and provided some much-needed guidance. The recently released regulations provide unexpected clarity on the new rules and expand the advantages to spouse beneficiaries of retirement accounts.

The NUA Strategy – In 2024, with the markets booming, many individuals have seen substantial growth in their retirement plan balances. If the account includes company stock, then it can be a good strategy to distribute that stock in-kind to a nonqualified account to take advantage of lower capital gains rates on the net unrealized appreciation (NUA). For this tax break, we are grateful!

Portability. Nowadays people change jobs frequently. The days of staying in one job for life and retiring with a pension are long gone. We give thanks for the rules which recognize the increased mobility of the workforce and allow more portability between retirement plans. Rollovers from plans to IRAs and trustee-to-trustee transfers between IRAs allow us to protect and maximize our retirement savings.

Qualified Charitable Distributions – A QCD allows an IRA owner to move funds from her IRA to charity tax-free. A QCD is a great way to get a tax break for giving if you are charitably inclined and use the standard deduction. A QCD can also satisfy an RMD. What is not to like? We are grateful for this tax break that not only helps the IRA owner but also contributes to the greater good.

Happy Thanksgiving from all of us at the Slott Report!

https://irahelp.com/slottreport/what-we-are-thankful-for-at-the-slott-report/