Retirement Planning, Elder Law, and Senior Finance

8/17/2022 | By Rocky Mengle

Rocky Mengle of Kiplinger’s Personal Finance warns readers of four common retirement IRA mistakes, including conversions, indirect rollovers, RMDs, and “second half” planning.

Millions of Americans use IRAs to save for retirement, but most don’t understand how IRAs work. As a result, mistakes are made, and opportunities are lost.

To help you get the most out of your IRA, we asked IRA expert Ed Slott, founder of, about the most common blunders and how to avoid them.

Four common retirement IRA mistakes

Not planning for the “second half”

Slott sees retirement planning as a game with two halves. You accumulate wealth in the first half and withdraw it in the second. “Many people only play the first half of the game” and concentrate solely on stashing away as much money as possible, Slott says. But with retirement saving, “it’s not how much you have; it’s how much you can keep after taxes.”

With traditional IRAs, “you’re really growing an account that will one day be shared with the government at some future tax rate, which may be higher because we’re in really low rates right now,” Slott notes. To prepare for the second half of retirement, “have a plan to get that money out at the lowest possible tax costs.”

Converting to a Roth all at once

If you think your tax rate will be higher in retirement, converting a traditional IRA to a Roth IRA now could lower the total tax owed on those funds. A Roth conversion, however, comes with a tax bill on your next return – which scares off some people.

senior man on laptop at home - photo by Volodymyr Melnyk, Dreamstime. Rocky Mengle of Kiplinger’s Personal Finance warns readers of four common retirement IRA mistakes, including conversions, indirect rollovers, RMDs, and “second half” planning.

The “mistake” those people often make is thinking they have to convert the entire account at once. “You can do partial conversions,” says Slott. A good plan for many people is to “start a series of smaller, annual conversions over time, so little by little you’re whittling down the growing tax bill in your IRA and building up in tax-free territory in a Roth.”

Doing indirect rollovers

If you take money out of an IRA and the check is in your name, you have 60 days to roll that money over into another retirement account before it’s considered taxable income. That’s called an indirect rollover. For IRA-to-IRA transfers, only one indirect rollover is allowed per year. “Nobody should be doing those kinds of rollovers,” says Slott. Instead, “you should be doing only direct rollovers, where the money moves from one retirement account to another directly, without anyone touching the money in between.”

Related: Consolidating retirement accounts

If you do an indirect rollover and break the rules, you could have a taxable distribution, be hit with a 6% excess contribution penalty, and be slapped with a 10% tax if you’re under age 59 ½.

Forgetting to account for all RMDs

You must start taking RMDs – required minimum distributions – once you’re 72 years old. This is a “big problem area,” Slott says. For instance, people sometimes miss an RMD or don’t take it for all of their accounts. Other people miscalculate and don’t withdraw enough money. These can be costly mistakes – you could be stuck with a 50% penalty, though Slott notes you can ask the IRS for a penalty waiver.

Related: How to lower taxes on your RMDs

© 2022 The Kiplinger Washington Editors, Inc. Distributed by Tribune Content Agency, LLC.

Rocky Mengle

Rocky Mengle is tax editor at For more on this and similar money topics, visit