If you haven’t made all the contributions to your traditional Individual Retirement Arrangement that you want to make – don’t worry, you may still have time. Here are the top 10 things the Internal Revenue Service wants you to know about setting aside retirement money in an IRA.
If you make eligible contributions to an employer-sponsored retirement plan or to an individual retirement arrangement, you may be eligible for a tax credit. Here are six things you need to know about the Retirement Savings Contributions Credit:
1. Income Limits The Savers Credit, formally known as the Retirement Savings Contributions Credit, applies to individuals with a filing status and income of: (more…)
Some taxpayers may have needed to take an early distribution from their retirement plan last year. The IRS wants individuals who took an early distribution to know that there can be a tax impact to tapping your (more…)
REMINDER: RMDS ARE BACK FOR 2010
This is just a reminder that there are required minimum distributions (RMDs) for 2010 from defined contribution plans (401(k), 403(b), 457 type plans) and from IRAs.
The suspension of RMDs has not been extended – as of the release of this update.
Individuals who turned 70 1/2 in 2009 will calculate their RMDs for 2010 as though there was no suspension last year. They do not have to take the 2009 RMD before April 1, 2010. (more…)
We have a variety of Financial Calculators on our WEB page. We have the following categories of calculators:
Home Financing, Personal Finance, Retirement Finance, Savings Finance, Business Finance & Tax Estimators
Check them out and I believe you will find them very useful.
On May 17, 2006 President Bush signed into law the Tax Increase Prevention and Reconciliation Act of 2005 that, starting in 2010, eliminates the $100,000.00 limitation from conversions from a regular IRA to a Roth IRA. This law also has a special provision for conversions made in 2010 that allows one-half of the amount includable in the taxpayer’s gross income as a result of the conversion to be added to the 2011 income and one-half in 2012. Roth IRA Advantages: Growth in a Roth ITA is tax-free Withdrawals from a Roth IRA are tax-free after five years, or age 59 ½ if later No required Minimum Distributions Beneficiaries do not pay income taxes when they inherit your Roth IRA Beneficiaries may continue tax-free growth and to receive tax-free distributions over their life expectancies For more details, please email your questions to: plrcpa@bellsouth.net
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I attended a two conference with Ed Slott, a national known expert on IRAs last Thursday and Friday.
He brought to our attention the many problem areas in IRA plans. Some of his top recommendations are as follows:
Ed Slott IRA Planning ConferenceCharitably Inclined – Qualified charitable distributions (QCDs) are still in effect for 2009. IRA owners age 701⁄2 and older can transfer up to $100,000 of IRA money directly from an IRA to a qualifying charity. Those who are most willing to give to charity are also those who may not need their RMDs for this year.
It will usually pay for them to roll the money back into an IRA and give to the charity from there. The IRA owner does not include the QCD in income, nor does he receive a tax deduction for the donation.
But tax-wise this works out better than if he withdrew the funds from his IRA and donated them to charity. He would receive a tax deduction for the funds donated, but he would also have to include the distribution in income. That would increase his adjusted gross income which in turn could cause deductions, exemptions, tax credits and other tax benefits to be lost. This would increase the overall tax bill. It will pay for him to roll the unwanted RMD back into an IRA and transfer the funds to the char- ity from the IRA.
The higher your income, the more it makes sense to use the QCD approach.
