Transfers, Rollovers, and Distribution Rules
Chapters in this video
- 0:00 Carla's $20,000 rollover mistake
- 1:09 Direct vs 60-day rollover and the 20% withholding trap
- 3:06 Eligible paths, tax-exempt 457(b), and the SIMPLE IRA 2-year lockout
- 4:43 RMDs at age 73 and the April 1 double-distribution trap
- 6:41 Early withdrawal penalty exceptions and the Rule of 55
- 8:12 Rapid-fire exam recap
What this video covers
- Why a 60-day rollover from an employer plan triggers a mandatory 20% federal withholding, and what the participant has to do to roll over the full balance
- The difference between a trustee-to-trustee (direct) rollover and a 60-day rollover, including the once-per-12-months limit on individual retirement account (IRA) to IRA 60-day rollovers
- Which plans can roll into which, including the tax-exempt 457(b) trap and the SIMPLE IRA two-year lockout
- The Setting Every Community Up for Retirement Enhancement (SECURE) 2.0 required minimum distribution (RMD) age of 73, the April 1 first-year rule, and the two-distributions-in-one-year tax trap
- The 25% RMD penalty (reduced to 10% if corrected within 2 years) and why RMDs can never be rolled over
- How the 10% early withdrawal penalty exceptions split between IRAs and employer plans, including first-time home purchase, higher education, and the Rule of 55
- Why governmental 457(b) plans have no 10% early withdrawal penalty at all
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