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Roth IRA Investing, RMD Age Change and more | Client Q&A

AdMail Podcast
3 Minute Read

In this week’s episode, IRA Financial’s Adam Bergman Esq. answers questions about investing with a Roth IRA when you have a 401(k) plan, an in-kind distribution of an apartment building and the chances of raising the RMD age again.




Question 1 from Joseph Z in Midland, TX: Hi Adam – thanks for doing the year-end webinar. If I work full time and participate in my employer’s 401(k) plan can I still do a Roth IRA to buy Bitcoin?

For obvious reasons, you cannot invest in Bitcoin with your workplace plan because of the inherit risk. In fact, you can’t invest in any alternative assets, like real estate, either. You have a select menu of investment types, all of the traditional variety. Therefore, if you want to invest in Bitcoin, you need to look outside of that plan.

However, nothing is stopping you from opening a Roth IRA, unless you earn too much money. If you earn more than the annual limits set forth by the IRS each year, you cannot directly contribute to a Roth IRA. However, you can do a backdoor Roth. You do this by contributing to a traditional (pre-tax) plan and then converting it to a Roth. Obviously, you will pay taxes on the amount you convert.

The last thing to consider if where you open up the IRA. Most banks and regular financial institutions will limit what you can invest in. Therefore, make sure you find the right custodian for your IRA, such as IRA Financial Trust, that allows for Bitcoin investments. Only then, can you use your Roth IRA for Bitcoin.

Question 2 from Vivian V in Miami, FL: Great webinar – thanks so much Adam. I want to take an in-kind distribution of an apartment I own in my 401(k) plan. Can you just go through the procedures?

No mater what you invest in with your retirement funds, you can always take an “in-kind” distribution. If you own a house in your 401(k), or in Vivian’s case, an apartment building, you can distribute it from the plan to yourself.

First, you need to get the building appraised to place a value on the asset you wish to distribute from your 401(k). Once that is done, you can “quick claim” it, to move it from your 401(k) plan to your personal name. You will then have to 1099 the amount that the building was valued at. That amount will be added to your 1040 and taxes will need to be satisfied.

One thing to keep in mind is when you decide on the distribution. In Vivian’s case, she was wondering about doing this in December. As Mr. Bergman advises, she could wait until the new year to worry about the tax bill, since those won’t come due until the following April. If done in December, you only have a few months until you file your taxes.

Question 3 from David T in Sioux City, IA: The Secure Act 2.0 includes a provision of moving the RMD age to 75 – what are the chances that gets passed? Thanks again for doing the year-end tax planning webinar.

One of the key components of the original SECURE Act of 2019, was pushing back the age for which you must start withdrawing from most retirement plans from age 70 1/2 to 72. That gave Americans an extra 18 months to enjoy the tax benefits of saving in a retirement plan. The new SECURE Act 2.0, wants to go even further and push it to age 75. After all, people are living longer and should have extra time to save for retirement.

Of course, Mr. Bergman is keen on this idea. We all eventually have to receive a visit from the tax man, but allowing Americans to save longer and push required distributions further down the line is a big plus. Obviously, if you need money from the plan, you can take it whenever you want. But the choice should be yours for as long as possible.

AdMail – Keep it Coming

We hope you enjoyed the latest episode of AdMail. Mr. Bergman will continue to respond to questions each week so long there is a demand for them! If you have any questions for him, email him at [email protected].

As with his other podcasts, you can check out AdMail on SoundCloud. Be sure to subscribe to know when the next one pops up! Thanks for listening and have a great day, Self-Directed Nation!

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