By Andy Ives, CFP®, AIF®
IRA Analyst
Last week in Chicago, the Ed Slott and Company team hosted another successful 2-day advisor training program. A sellout crowd of over 260 financial professionals from across the country joined us for some intense IRA and retirement plan education. Topics included all things Roth, net unrealized appreciation (NUA), naming trusts as IRA beneficiaries, the new qualified charitable distribution (QCD) 1099-R reporting codes, 10% penalty exception rules, creditor/bankruptcy protection rules, and the list goes on. Additionally, we clawed through the weeds of the One Big Beautiful Bill Act (OBBBA) and the sections of the law that impact Roth conversions. We also provided an overview of the new “Trump Accounts,” of which the finer details are still to be ironed out.
Between each session, participants were welcome to approach us and ask any questions they might have. As expected, inquiries continued at breakfast, lunch, in the elevator and through the lobby! This is complicated material. As presenters and hosts, we fully expect to get bombarded with questions. It is our pleasure to discuss targeted issues, ask probing questions, make recommendations, and send people down the proper path with a smile and a handshake. If it weren’t for the positive energy from each and every participant, seminars like this would not be nearly as enjoyable. Interestingly, some inquiries repeated themselves. Here are some of the more popular questions:
Do inherited Roth IRA beneficiaries have to take annual RMDs (required minimum distributions) or not? The answer is: It depends. If the Roth IRA beneficiary qualifies as an eligible designated beneficiary (EDB), then he has a choice. He can choose to take lifetime “stretch” RMDs based on his own single life expectancy, OR he can choose the 10-year payout rule. If he chooses the latter, there will be no annual RMDs in years 1 – 9 of the 10-year period, but the account will need to be emptied by the end of year ten.
What if a person turned age 73 this year, but died before taking her RMD? Does her IRA beneficiary still have to take the year-of-death RMD? In fact, there is no RMD to take. Since this person just turned age 73 in 2025 but then passed away, she never made it to her required beginning date (RBD), which was April 1, 2026. Since she did not make it to the RBD, then RMDs were never “turned on.” A person takes her first RMD in anticipation of making it to the RBD. But if that person dies prior to the RBD, then there is no year-of-death RMD to take.
Can you explain the pro-rata rule? The pro-rata conversation requires an example, so here is a link to a recent Slott Report pro-rata rule article: irahelp.com/pro-rata-not-double-tax.
Additional popular questions pertained to the tax reporting of Roth retirement plan matching contributions, RMD aggregation rules, and when IRA payouts to a trust beneficiary can be impacted by the high trust tax rates. It was our pleasure to answer every inquiry to the best of our ability. We look forward to the next 2-Day IRA Workshop, which will be held virtually on September 17 and 18 and in-person on February 12-13 in Las Vegas.
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.
https://irahelp.com/last-week-in-chicago/