Dear Liz: I have $160,000 in a 403(b) retirement plan and I’m 70. I know I have to start taking required minimum distributions (RMDs) at age 73. Should I transfer the funds to a Roth IRA or can I start taking the RMD from the 403(b) and leave the remainder to grow?
Answer: You can take your RMDs from the 403(b). Transferring the money to a Roth IRA would be known as a conversion, and that could make the entire amount taxable.
Late-in-life conversions can make sense if future RMDs will push you into a higher tax bracket than you are now, or if you’re willing to pay the tax bill to provide future tax-free income to your heirs. (Roths don’t have RMDs, so the account can be passed intact to your beneficiaries, who will usually have 10 years to drain the account.) Conversions can have other consequences, such as raising Medicare premiums, so a tax pro’s advice should be sought before proceeding.
Dear Liz: My question has to do with a bulletin put out by the Social Security Administration last year requiring people with Social Security income to submit the name of a person to be their advanced designation representative. It also said that you need to submit a name for your ADR annually. Many people probably don’t know about this. But can you clarify? Is it just a preliminary or mandatory requirement? If mandatory then what are the consequences if you don’t designate someone?
Answer: When someone is a minor, incapacitated or otherwise unable to manage their own Social Security benefits, the Social Security Administration names a representative payee to handle the funds.
The voluntary Advanced Designation of Representative Payee program allows you to nominate people you trust to perform this role should you become incapacitated. You can choose up to three people as possible representative payees. You can change your nominations at any time and Social Security will ask you to review your choices annually to make sure you’re still comfortable with them (because, as we know, situations and people’s capacities can change over time).
If you do opt into the advanced designation program, your nominees won’t be a shoo-in. Social Security will prioritize your choices, but will still conduct a full evaluation to ensure they can handle the job.
Dear Liz: You wrote that people could contribute up to five times the annual gift tax exclusion to a 529 college savings plan without having to file a gift tax return. That is incorrect. People can contribute that much without the gift reducing their lifetime gift and estate tax exemption amounts, but they must file annual gift tax returns to report the gift.
Answer: Thank you for the correction.
To recap, few people will ever have to pay gift taxes, but gifts over the annual exclusion amount (which is $18,000 in 2026) usually require filing a gift tax return. Gift taxes aren’t owed until the amounts in excess of the annual exclusion total more than the giver’s lifetime gift and estate tax exemption amount (which in 2026 is $15 million).
Generous givers can “superfund” a 529 college savings plan by contributing up to five years’ worth of annual exemption amounts at once. In 2026, that would be $95,000. To keep the gift from counting against your lifetime limit, however, you must file gift tax returns annually to indicate the gift is to be spread over multiple years.
It’s also important to know that any other gifts you make to the same beneficiary during the five-year period will reduce the allowance for 529 gifting. And if the giver dies during the five-year period, some of the gift will be added back into their estate.
There are other rules that apply to superfunding a 529, so anyone considering this option should discuss their situation with a tax pro and likely will want to consult an estate planning attorney as well.
Liz Weston, Certified Financial Planner®, is a personal finance columnist. Questions may be sent to her at 3940 Laurel Canyon, No. 238, Studio City, CA 91604, or by using the “Contact” form at asklizweston.com.
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