Posts Tagged ‘IRA’

Five Tax Changes for 2009

by P. Lewis Robinson
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Feb
3

As you get ready to prepare your 2009 tax return, the Internal Revenue Service wants to make sure you have all the details about tax law changes that may impact your tax return.

Here are the top five changes that may show up on your 2009 return.

1. The American Recovery and Reinvestment Act

ARRA provides several tax provisions that affect tax year 2009 individual tax returns due April 15, 2010. The recovery law provides tax incentives for first-time homebuyers, people who purchased new cars, those that made their homes more energy efficient, parents and students paying for college, and people who received unemployment compensation.

2. IRA Deduction Expanded (more…)

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RMDs for 2010 from Retirement Accounts

by P. Lewis Robinson
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Jan
12

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…)

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Special Charitable Contributions for Certain IRA Owners

by P. Lewis Robinson
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Nov
15
 

IRS Tax Tip 2009-23

As an alternative method for donating to a charity, certain taxpayers may transfer funds from their IRA to an eligible charitable organization. Here are ten things taxpayers who are thinking about making such a donation will need to know.

1. The IRA owner must be age 70 ½ or older.

(more…)
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Qualified Charitable Distributions from IRAs still in effect for 2009

by P. Lewis Robinson
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Oct
30

Charitably 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.

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Can 2009 required minimum distributions (RMDs) that were received and were not required be undone?

by P. Lewis Robinson
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Oct
27

The 2009 required minimum distributions (RMDs) from plans and IRAs was suspended by the passage of the Worker, Retiree and Employer Recovery Act of 2008 (WRERA).

Even though the RMDs were suspended for 2009, some people received them anyway. In general, when a taxpayer receives a distribution from a qualified retirement account or an IRA, that distribution is eligible for rollover to another retirement account within 60 days of the receipt of the funds.

Can they be undone?

  1. For those who realized the situation within 60 days, the answer was to simply roll the funds back to an IRA or plan (providing they were eligible) and eliminate the tax bill.
  2. If the 60 day window has expired, the Internal Revenue Service released Notice 2009-82 which grants many IRA owners and plan participants an extension to roll over certain distributions.
  3. The extension is available until the later of November 30, 2009 or until 60 days have passed from the receipt of the distribution
  4. Those who took early distributions, distributions as part of a 72(t) payment plan and normal distributions (after 591⁄2 but before they were required) are unaffected by this Notice.
  5. The IRS relief provision only applies to IRA owners and plan participants who were subject to RMDs in 2009, and not to non-spouse beneficiaries.
  6. “However, because of the one-rollover-per-year rule in § 408(d)(3), which was unchanged by WRERA, no more than one distribution from an IRA in 2009 will be eligible for this rollover relief.”
  7. Only one 60-day rollover per year (12 months) is allowed from each of a taxpayer’s IRAs to another IRA. A rollover occurs when funds are distributed from the IRA, payable to the owner, and then are contributed to another IRA within 60 days.
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The Gift that keeps on giving: the Roth IRA

by P. Lewis Robinson
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Oct
24

Please refer to the link below to an excellent article in the Wall Street Journal on Roth IRAs. I particular encourage you to read this article if your parents have IRAs or Roth IRAs.

Wall Street Journal Article

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