Hi there, Arnold. Thanks for reaching out! We appreciate your interest in Fidelity. You can read about how Fidelity handles Simplified Employee Pension Plans, also known as SEP IRAs, at the link below. SEP IRA: www.fidelity.com/retirement-ira/small-business/sep-ira?ccSource=se_sep_mp_open_acct_pg Please let us know if you have any specific questions about the account or Fidelity. We're always happy to help!
At 31:48 you talk about a "5-year aging rule", something that's usually referred to as a 5-year clock, on Roth IRA conversions. That 5-year rule only matters if you are younger than 59 1/2 when you want to take a non-qualified distribution. In that case you might owe a penalty. However, if you are already 59 1/2 and you have had a Roth IRA open and funded for at least 5 tax years, then all of your Roth IRA distributions are qualified and therefore no taxes or penalties are due on any money you withdraw even if you just did your first Roth IRA conversions the day before.
22:25 The $17k gifting limit per child is such that dad can give Kid #1 a $17k gift and mom can also give Kid #1 a $17k gift? Then if this is done on December 31st, they could both repeat their giving the next day?? This would allow a gift transfer of $68k in as little as two days.
Hey, Ron! We see you are interested in learning more about gift tax rules. We want to share an article that dives a little deeper into gifting and limitations for 2024. Check it out here: Lifetime Gifting: www.fidelity.com/viewpoints/wealth-management/insights/lifetime-gifting Thanks for engaging with our video today; feel free to come back with any questions that may come up!
Hi Renee, great question! Required Minimum Distributions are based on the account balance at the end of the year. Taking distributions before the required age won't typically eliminate your RMD completely, but it may lower the required amount if the account balance is lower due to the distributions. Learn more about RMDs and view more frequently asked questions here: www.fidelity.com/building-savings/learn-about-iras/rmd#faqs You can use the RMD calculator on our website to see what your RMD will be if you have an idea of what your account balance will be at the time they're required. RMD Calculator: digital.fidelity.com/prgw/digital/rmd/#/rmdform Feel free to reach out if you have any other questions!
If you optimize asset location by placing your fixed income in Traditional (pre-tax) accounts, market declines shouldn't present much of a problem for RMDs because fixed-income assets tend to be less volatile than stock market assets. I retired at 56 and all of my fixed income is in my (pre-tax) 401(k), except for a few months of spending cash sitting in a taxable money market fund. In most historical scenarios bonds under perform stocks over long periods - usually outperforming inflation by only a few basis points. This means small Roth conversions should be able to lower my pre-tax balance in 2023 dollars over time, reducing my future RMDs. The lower volatility of bonds and other fixed income also means I don't need to worry too much about market fluctuations during RMDs, especially since I suspect by the time I'm 75 my pre-tax account will be 100% bonds. My 401(k) is already 67% fixed income with my Roth IRA and taxable accounts all stock, with a de minims amount in cash. (And no, I'm not interested in annuities.)
I listen to a lot of RUclips and webinars in these topics. This was SUPERB - in content, organization, understandability, credibility. Thanks so much.
Thanks for listening, Kathryn.
Make sure to subscribe for more Fidelity content in the future!
Very informative 👏
How are SEP accounts handled? Same as 401 (k)s, or something else?
Hi there, Arnold. Thanks for reaching out! We appreciate your interest in Fidelity.
You can read about how Fidelity handles Simplified Employee Pension Plans, also known as SEP IRAs, at the link below.
SEP IRA: www.fidelity.com/retirement-ira/small-business/sep-ira?ccSource=se_sep_mp_open_acct_pg
Please let us know if you have any specific questions about the account or Fidelity. We're always happy to help!
At 31:48 you talk about a "5-year aging rule", something that's usually referred to as a 5-year clock, on Roth IRA conversions. That 5-year rule only matters if you are younger than 59 1/2 when you want to take a non-qualified distribution. In that case you might owe a penalty.
However, if you are already 59 1/2 and you have had a Roth IRA open and funded for at least 5 tax years, then all of your Roth IRA distributions are qualified and therefore no taxes or penalties are due on any money you withdraw even if you just did your first Roth IRA conversions the day before.
22:25 The $17k gifting limit per child is such that dad can give Kid #1 a $17k gift and mom can also give Kid #1 a $17k gift? Then if this is done on December 31st, they could both repeat their giving the next day?? This would allow a gift transfer of $68k in as little as two days.
Hey, Ron! We see you are interested in learning more about gift tax rules. We want to share an article that dives a little deeper into gifting and limitations for 2024. Check it out here:
Lifetime Gifting: www.fidelity.com/viewpoints/wealth-management/insights/lifetime-gifting
Thanks for engaging with our video today; feel free to come back with any questions that may come up!
so if we are already using our retirement in our 60's before RMD; when we reach 73 have we already satisfied RMD's if we were already withdrawing 4%?
Hi Renee, great question!
Required Minimum Distributions are based on the account balance at the end of the year.
Taking distributions before the required age won't typically eliminate your RMD completely, but it may lower the required amount if the account balance is lower due to the distributions.
Learn more about RMDs and view more frequently asked questions here: www.fidelity.com/building-savings/learn-about-iras/rmd#faqs
You can use the RMD calculator on our website to see what your RMD will be if you have an idea of what your account balance will be at the time they're required.
RMD Calculator: digital.fidelity.com/prgw/digital/rmd/#/rmdform
Feel free to reach out if you have any other questions!
If you optimize asset location by placing your fixed income in Traditional (pre-tax) accounts, market declines shouldn't present much of a problem for RMDs because fixed-income assets tend to be less volatile than stock market assets.
I retired at 56 and all of my fixed income is in my (pre-tax) 401(k), except for a few months of spending cash sitting in a taxable money market fund. In most historical scenarios bonds under perform stocks over long periods - usually outperforming inflation by only a few basis points. This means small Roth conversions should be able to lower my pre-tax balance in 2023 dollars over time, reducing my future RMDs.
The lower volatility of bonds and other fixed income also means I don't need to worry too much about market fluctuations during RMDs, especially since I suspect by the time I'm 75 my pre-tax account will be 100% bonds. My 401(k) is already 67% fixed income with my Roth IRA and taxable accounts all stock, with a de minims amount in cash. (And no, I'm not interested in annuities.)
🤍