One strategy I don't see mentioned yet - consider using a Qualified Charitable Distribution (QCD) if you have any charitable intentions. Once you're 70.5, you can donate up to $105,000 directly from your IRA to charity without counting it as taxable income. This can be especially powerful for reducing your AGI which affects everything from Medicare premiums to how much of your Social Security gets taxed.

This is such a comprehensive discussion! As someone who went through this exact scenario two years ago, I'd add one more consideration: timing your withdrawals around your state tax situation. If you're in a high-tax state now but planning to move to a no-tax or low-tax state in retirement, it might be worth accelerating some withdrawals after you move. Also, don't overlook the Net Investment Income Tax (NIIT) - that additional 3.8% tax on investment income kicks in at $200k MAGI for single filers. Large brokerage withdrawals with significant gains could push you into this territory. One last tip: if you have a Health Savings Account, maximize those contributions now while you're still working. HSA money can be withdrawn penalty-free for medical expenses at any age, and after 65 it can be withdrawn for any purpose (taxed as ordinary income, like an IRA). Given healthcare costs in retirement, having that tax-free bucket for medical expenses can be incredibly valuable.

This is a really common source of confusion, and you're smart to get clarity before closing! I dealt with this exact issue when I bought my small business two years ago. The key thing to understand is that the AFR applies when the loan is actually "made," which legally happens at closing when the promissory note is executed and funds are disbursed - not when you sign the purchase agreement. The purchase agreement is just a contract to buy; the actual debt instrument doesn't exist until closing. This actually works in your favor because it gives you flexibility. You can use the AFR from the closing month OR any of the three months prior to closing. So if you close in May, you could choose from February, March, April, or May's AFR - whichever is most favorable. A few practical tips from my experience: - Document your AFR selection clearly in the promissory note with language like "interest at 4.2% per annum, being the long-term AFR for April 2025" - Track the monthly AFR rates leading up to closing so you can make an informed choice - Consider adding language to your purchase agreement that preserves your right to select any AFR within the allowable window in case closing gets delayed The 0.5% difference you mentioned could be substantial over the life of the loan, so it's definitely worth getting this right. Your attorney is correct that either approach could work, but using the closing date (or months prior) is the technically correct interpretation under IRS regulations.

As someone who went through this exact AFR timing question during my business acquisition last year, I can confirm what others have shared - you definitely want to use the AFR from closing month or the three months prior, not from when you signed the purchase agreement. The IRS is very clear that the "making" of a loan happens when the promissory note is executed and funds change hands, which is at closing. The purchase agreement is just that - an agreement to potentially create a loan later. What really saved me was understanding that you get to CHOOSE which of the four allowable months to use (closing month plus three prior). I tracked AFRs for several months leading up to our closing and ended up saving about 0.4% by using a rate from two months before closing instead of the closing month rate. One thing I'd strongly recommend: make sure your purchase agreement includes language preserving your right to select any AFR within the allowable window. We almost got caught when our closing was delayed by three weeks and rates had jumped. Having that flexibility built into our agreement was a lifesaver. The exact language we used in our promissory note was: "Interest shall accrue at 4.15% per annum, representing the long-term Applicable Federal Rate for March 2024 as published by the Internal Revenue Service." This made our AFR selection crystal clear for tax purposes. Given that you mentioned a potential 0.5% difference on a substantial loan, getting this timing right could save you thousands over the loan term. Definitely worth the extra attention to detail!

Don't forget that if your income was only $5,500 in 2019, you were only eligible to contribute that amount (or your earned income, whichever is less) to your Roth IRA, not the full limit which was $6,000 that year. A lot of people miss this detail - you can only contribute up to 100% of your earned income if it's less than the annual limit.

Just wanted to add a few practical tips for filing your Form 5329s based on my experience with a similar situation: 1. Mail each Form 5329 separately with its own check for the penalty amount. Don't combine years into one envelope - it can cause processing delays. 2. Calculate interest on the penalties using the IRS underpayment rates for each quarter since the original due dates. You can find these rates on the IRS website. Include the interest payment with each form. 3. Keep detailed records of everything - copies of forms, payment receipts, certified mail receipts if you use them. The IRS processing times have been longer lately. 4. Consider getting a transcript of your account after filing to confirm everything was processed correctly. You can request these online through the IRS website. The good news is that by self-correcting, you're avoiding much harsher penalties that could apply if this were discovered during an audit. The 6% excise tax is really quite reasonable compared to other IRS penalties.

Tax pro here. This is absolutely a systemic change in IRS processing this year. The 570/971 combo is their standard procedure when a return gets flagged for verification. What's different in 2024 is the volume and the targeting criteria. They're focusing heavily on returns with credits, income disparities from previous years, and self-employment income. Most will clear automatically. Don't call unless your 570 has been there more than 45 days. And definitely don't file an amended return while these codes are active - that will only delay things further.

This is incredibly helpful - thank you everyone for sharing your experiences! I just checked my transcript this morning and sure enough, there's a 570 code dated yesterday. I was about to panic until I found this thread. Based on what I'm reading here, it sounds like this is just part of their new verification process this year. I do have both W-2 and 1099 income like @Tasia mentioned, so that might be what triggered it. Going to follow @Ellie's advice and wait it out rather than calling immediately. Will keep an eye on the mail for any notices. It's such a relief to know this is happening to so many people and most are getting resolved within a few weeks. I'll update this thread if anything changes with my situation!

This exact same thing happened to me two years ago! Super frustrating when you're expecting direct deposit and suddenly get switched to a paper check with no clear explanation. From my experience and what I learned after digging into it, the most common reasons are: - Bank account name doesn't exactly match your tax return name (even one letter or punctuation difference can trigger it) - Your bank rejected the deposit for security reasons (large amounts, new account, etc.) - If you used tax software and paid fees from your refund, it creates a temporary bank account that sometimes causes issues - Random IRS system glitches (their systems are notoriously outdated) The waiting game is the worst part - you really can't do anything until their stated timeframe passes. I'd suggest calling your bank to see if they have any record of rejecting an ACH transfer, just to get some peace of mind about what might have happened. At least you know the refund is approved and on its way! Hang in there - the check should hopefully arrive closer to the February 27th date rather than taking the full month some people experience.

This is such a common frustration! I went through the exact same thing last year. The IRS switched my refund from direct deposit to paper check despite having the correct banking information. From what I've learned, there are several reasons this can happen - your bank might have rejected the deposit due to security protocols, there could be a tiny mismatch in your name between your tax return and bank account (even one letter or hyphen can trigger it), or it could just be their ancient computer systems glitching out. The most frustrating part is how the "Where's My Refund" tool gives you basically no useful information about WHY it happened. Just that vague "couldn't be fulfilled" message that tells you nothing. Since you mentioned you used TurboTax and paid fees from your refund, that's very likely the culprit. When you do that, they create a temporary bank account to handle the transaction, and if there's any processing delay, that temporary account gets closed before the IRS tries to deposit your refund. Unfortunately, there's really nothing you can do but wait for the paper check. The good news is your refund is approved and on its way! Most people seem to get their checks within 2-3 weeks of the mail date, so hopefully yours arrives closer to February 27th rather than taking the full month. Just make sure your mailing address is current with USPS in case you need to forward mail.