Let me tell you about my favorite book on individual retirement accounts (IRAs) and 401(k) plans: The Retirement Savings Time Bomb…and How to Defuse It by Ed Slott.

Here are the reasons I like it so much and refer to it often.

It makes a dry subject interesting

I’m continually amazed at how the author takes dull, technical rules and turns them into entertaining, informative advice. Reading the rules on IRA distributions and taxation could put a valium to sleep. Somehow Ed Slott explains them so that they make sense, while keeping the reader interested.

Now granted, I’m interested in this subject because it relates to what I do for a living. But I think even casual readers would enjoy reading this book.

It’s practical

By the time you’ve read the book, you’ll understand the important rules about rollovers, early distributions, required minimum distributions, designated beneficiaries, Roth plans, and so on.

Knowing the rules is useless, though, if you don’t know how they relate to you. That’s where Slott’s book really shines. He relates the rules to practical questions about whether you should roll over a 401(k) into an IRA, how and why to name a designated beneficiary, the consequences of early withdrawals, reasons to insure an IRA, and other issues that probably never occurred to you.

It gives great advice

As you might guess from the title, Slott believes that many people don’t do enough to protect the value of retirement plans from taxation, forced distributions, and other problems. He shows the reader the many ways things and go wrong and offers this observation about those with large IRAs who stand to lose much of it to estate and income taxation:

“Why do IRA owners let their savings fall into such an abyss? The reasons can be summed up in a single word: admiration.

“Rather than doing whatever it takes (even—oh, horror of horrors!—spending some money) to keep their accounts from being sacked and pillaged by the IRS after they’re gone, they just sit there admiring how much the balance is.”

He then presents different approaches to help you keep from losing the value of retirement accounts, and making sure that your beneficiaries can get the maximum benefit from it after you’re gone. The book offers five chapters devoted to protecting your retirement savings:

Step #1: Time It Smartly

Step #2: Insure It

Step #3: Stretch It

Step #4: Roth It

Step #5: Avoid the Death Tax Trap

If you have an IRA, 401(k), or 403(b) retirement plan, I highly recommend that you read this book. You’ll learn things you need to know about how to make the most of it and how to avoid mistakes that could rob it of its value. And you’ll enjoy the read.


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