IRAs: The Basics
Have you ever noticed sometimes when the IRA Guru leaves the financial institution it is without notice or training for a replacement??!! On the first day of training, you feel like someone placed you on the top of a mountain and told you to work your way down. In other words, you have NO IDEA where to go or what they are talking about. Everything just sounds foreign to you. It’s true. IRAs are a different world from the other accounts at your bank. Oh, they may look similar, but the rules, regulations, and IRS reporting build the complications to the point where you feel like you are falling off of a cliff!! And, just when you finally find your footing, they change the rules again!
While it may take years to build a confidence level where you can answer almost any question thrown your way, the goal of this IRA Basic webinar is to supply you with the basic tools to help you on your descent into the IRA world.
IRAs: Rollovers and Transfers
One of the most misused and abused language in the IRA World is using the words "rollover" and "transfer" interchangeably. Not only that, but it is also one of the most frequent mistakes financial institutions make when reporting these transactions to the IRS resulting in unnecessary bills sent to bank customers.
Rollovers and Transfers have been confusing to IRA administrators since their inception. Financial institutions think they can make up their own policies, rules, and definitions of what they will call a "rollover" vs. a "transfer". That's not the way this works. The IRS has very clear definitions of the difference between these two movements of IRA money. Everyone must understand these rules so the debit side reporting matches the credit side reporting and cancels out the taxability of the transaction. It's not rocket science. It's a 3-piece puzzle with clear answers.
2023 IRA Beneficiary Designations and Payouts
What are the current beneficiary payout options - 5 years? 10 years? Life Expectancy Payouts? None of the above? The SECURE Act, which became effective January 1, 2020, significantly shortened most beneficiary payout options. A 40-year-old son of an IRA owner who died before 2020 with a balance of $500,000 could spread that income over approximately 45 years minimizing their income each year. If the owner died beginning in 2020, that same son would now have to claim that $500,000 in income in a 10-year period, most likely bumping up to a higher tax bracket. This webinar is going to delve into the different types of beneficiaries - spouse vs. nonspouse, and individual vs. entity beneficiaries to apply the rules correctly. The Proposed Regulations that were released in February 2022, and the IRS Notice 2022-53 that postponed the Proposed Regulations until at least 2023, will be thoroughly discussed. We will put the pieces of the puzzle together to lower the confusion on these tricky areas of IRA accounts.
IRAs: Auditing Your IRA Files
After we have absorbed all the basic rules, it’s time to check everything we – and those who came before us – have done to the IRA files. There are increased IRS Penalties for Incorrect IRA Reporting to the IRS!! The IRS is losing patience – especially with financial institutions that do not complete the IRA 1099-R and 5498 IRS forms correctly. How many mistakes do you think are sitting in your IRA files right now? Do you have signed applications? Are the beneficiaries current? Are distributions being calculated correctly? Have all the required amendments been sent out? The bank examiners and auditors are zeroing in on incorrect IRA files and writing the banks up for errors. Not to mention the legal problems for the bank if the beneficiary payouts are not done correctly. Whether you have paper IRA files or electronic IRA files, let’s sort out the required ‘stuff’ from the junk.
IRA Update - Annual Review for Banks
Well, it happened again!! In true form, Congress passed and signed into law a major bill right before Christmas break and made many of the provisions effective a week later. Some of these provisions will change the IRA rules and regulations for 2023 including a new IRA Distribution age.
IRAs have always been the most difficult bank product to learn and keep up with. One reason is that as the interest rates went down, many IRAs were transferred into the stock market and investment companies to get a better return. This left the bankers with very little practice in opening and maintaining IRAs. Presently, since the stock market can be unpredictable and as the interest rates increase, many retail banks are seeing the more conservative investors transfer the money into a guaranteed interest rate product at the bank. While this may give the bankers more experience in dealing with IRAs, it also increases the anxiety about making sure the proper information is given out to the customers.
2023 brings some of the largest Cost of Living Adjustments we've had to IRAs in over 20 years. The IRS has also gotten very serious about IRA Distribution forms and the new W-4R being signed for every IRA distribution for the IRA owner to opt-in or out of federal income tax withholding. You will learn all the latest rules and regulations included in this vital training.
IRA Annual Reporting Requirements to the IRS
"It's all about the reporting!" - I say about 1000 times a year. Why do we have to do it this way instead of an easier way? Because it's all about the reporting. Whether setting up a new IRA or handling transactions on existing IRAs, it is so important that you check the correct box and 'use the correct transaction code description so that the IRS reporting matches what the client is indicating on their taxes. It's not okay just knowing your job on the front end without knowing the results of your actions on the back end - most specifically the IRS reporting. This webinar will review the most common reporting mistakes made by financial institutions on both Traditional and Roth IRAs.