1. IRA-to-IRA Rollovers and Roth IRA-to-Roth IRA Rollovers Mistakes:

• Using 60-day IRA rollovers instead of using transfers to move IRA funds
• Once-per-year rule is for all IRAs and Roth IRAs
• IRS has no authority to correct these mistakes
• New client rollover mistakes - not asking about prior rollovers 
• Not knowing the exceptions to the once per-year IRA rollover rule

2. Non-Spouse Rollovers are NOT Permitted

• Non-spouse beneficiary cannot do a rollover
• Taking a lump-sum distribution
• Putting a decedent’s IRA funds into your own IRA
• Paying out the entire IRA to a trust beneficiary

3. Spousal Rollovers Mistakes:

• Spousal rollover before age 59½
• Forgetting to do the spousal rollover at age 59½
• Not naming a successor beneficiary of the inherited IRA

4. 401(k) Rollovers to IRAs Mistakes:

• Not reviewing all options (IRA rollover is not the only option.
• Receiving a distribution personally and being subject to 20% withholding
• Not knowing the creditor protection of IRAs in your state
• Not first asking about the NUA (net unrealized appreciation) tax break
• Rolling over highly appreciated company stock to an IRA
• Not allocating the after-tax portion (basis) to a Roth IRA tax free

5.After-Tax Rollovers From Plans to IRAs and Roth IRAs Mistakes:

• Not being aware of the allocation rules that allow the tax-free Roth conversion of after-tax plan funds
• Failing to allocate pre-tax and after-tax amounts to the correct account
• Taking only after-tax funds out for taxfree Roth conversions (generally won’t work)
• Rolling over all funds to a traditional IRA (rules do not apply to IRA distributions)
• Choosing to receive all funds personall

6.Roth Conversions (Technically IRA-to-Roth Rollovers) Mistakes:

• Not advising on the income impact of a Roth conversions (other taxes may be triggered or tax benefits lost)
• RMDs (required minimum distributions) cannot be converted
• Choosing to receive all funds personally
• SIMPLE IRA cannot be converted until after 2 years
• Inherited IRAs cannot be converted, but inherited company plan funds can

7. In-Plan Roth Rollovers (401(k) to Roth 401(k) Conversions) Mistakes:

• Not asking if in-plan conversions are available in the plan
• Not estimating the taxes due on the conversion
• Not checking first if a Roth IRA conversion is available

8. Rollovers to Any Retirement Account (60-Day Rule) Mistakes:

• Losing track of the 60-day deadline
• Not knowing about the 20% mandatory withholding from plans
• Not knowing about the self-certification procedures for late rollovers
• Depositing the funds into a non-IRA account
• Choosing a 60-day rollover instead of a transfer

9. QDRO Rollovers in Divorce (From Plans Only) to ExSpouse as Alternate Payee Mistakes:

• Rolling over all of a qualified domestic relations order (QDRO) distribution to an IRA and then taking an IRA distribution before age 59½
• Remember! A QDRO distribution is a 10% penalty exception, but only on distributions from the plans!
• Not knowing that an IRA rollover voids the 10% penalty exception
• Not knowing that QDROs do not apply to IRAs

10. Rollovers From IRAs Back to Plans Mistakes:

• Rolling over basis into the company plan
• Only pre-tax funds can be rolled to the plan
• Failing to convert remaining IRA basis to a Roth IRA
• Not asking if your plan accepts IRA rollovers
• Not first checking plan restrictions on accessing funds (Funds are now subject to plan rules.)

Frank Oliver is a member of Ed Slott’s Master Elite IRA Advisor Group and is dedicated to helping diligent savers enter the second half of retirement with a plan to help avoid tax and distribution planning risks that can wipe away the sacrifice and hard-earned money made during their working years.

Frank attends regular trainings and conferences to stay up to date on the changing tax laws and evolving strategies to best help Colorado retirees avoid potential tax hikes and help reduce their tax bills in retirement.

Get access to Oliver Wealth Management's Exclusive Ed Slott Master Elite IRA Toolbox below for tools, strategies and resources to help you develop your IRA and retirement tax minimization strategy.

Content provided by Ed Slott and Company, LLC © 2022. Click here to see original document.

Advisory services offered through Change Path, LLC a Registered Investment Adviser. Change Path, LLC and Oliver Asset Management are unaffiliated entities. Licensed Insurance Professional. Respond and learn how financial products, including life insurance and annuities can be used in various planning strategies for retirement. The information contained herein is based on our understanding of current tax law. The tax and legislative information may be subject to change and different interpretations. We recommend that you seek professional tax advice for applicability to your personal situation.