Ed Slott IRA and Tax Updates for 2025

https://amzn.to/4msRo2kIn this episode of Protecting and Preserving Wealth, we dive into key updates from the Ed Slott Master Elite IRA Advisors Conference, focusing on critical tax changes and planning pitfalls that impact retirees and IRA holders. Bruce Hosler shares his takeaways after nearly two decades of attending these elite sessions. We break down three essential areas that our listeners need to understand heading into the 2025 tax season.

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⏱️Chapters & What You'll Learn
(00:00) Intro & Updates Overview
(00:39) New 1099-R Reporting for QCDs
(06:52) Why Form 8606 Matters for IRA Basis
(09:48) The One-Rollover-Per-Year Rule Explained
(12:48) Catastrophic Mistakes to Avoid
(17:07) Closing Thoughts & How to Get Help

We start with updates to Form 1099-R, particularly how it now includes specific codes to identify Qualified Charitable Distributions (QCDs). For years, these weren’t clearly reported, and many taxpayers were unknowingly taxed on charitable gifts from their IRAs. Now, codes like 7, 4, and K will help distinguish between standard distributions, inherited IRAs, and alternative asset IRAs. We emphasize the importance of notifying your tax professional even with these new codes, and we recommend completing QCDs early in the year to avoid confusion with required minimum distributions (RMDs).

Next, we highlight the critical role of IRS Form 8606 in tracking the basis in IRAs, especially when nondeductible contributions are involved. Filing this form annually ensures that when distributions occur, the IRS has a current record of your cost basis. Without this, you could be taxed on amounts that should be non-taxable. Even if no contributions or conversions are made, we advise clients to file this form to maintain a consistent paper trail and protect their tax-free amounts.

Lastly, we cover the “one rollover per year” rule. This rule applies on a rolling 12-month basis—not a calendar year—and breaking it can trigger catastrophic tax consequences, including making an entire IRA taxable. We stress that rollovers should always be handled via trustee-to-trustee transfers. Bruce cites a costly real-world example from the Ed Slott conference where a misunderstanding led to a client facing taxation on a $3 million IRA. We also clarify which types of transfers are exempt from the one-per-year rule, such as 401(k) to IRA rollovers and Roth conversions.

You should always avoid costly mistakes by working with experienced professionals, and ensure your documentation is current. For those seeking guidance, we’re available in both Prescott and Scottsdale, and online at hoslerwm.com.

For more information about anything related to your finances, contact Bruce Hosler and the team at Hosler Wealth Management: Visit us online at https://www.hoslerwm.com/

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