Posts Tagged ‘Retirement’
Posted by William Byrnes on July 10, 2020
Texas A&M University School of Law has launched its online international tax risk management graduate curricula for industry professionals.
Apply now for courses that begin August 23: International Tax Risk Management, Data, and Analytics; International Tax & Tax Treaties (complete list here)
Texas A&M University is a public university, ranked in the top 20 universities by the Wall Street Journal / Times Higher Education university rankings, and is ranked 1st among public universities for its superior education at an affordable cost (Fiske, 2018) and ranked 1st of Texas public universities for best value (Money, 2018).
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Robert Bloink, J.D., LL.M. |
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Hope everyone had a great 4th last weekend! This week we analyze more CARES Act developments in the form of an extension of the RMD waiver to cover all of 2020. This potentially helps account holders who took RMDs prior to the passage of the CARES Act. We also see new proposed regs that define “real property” for the purposes of 1031 exchanges, as well extended deadlines related to opportunity zones.
New Regs Define Real Property for 1031 Exchanges
The 2017 tax reform legislation limited the availability of Section 1031 exchanges to exchanges of real property. Despite this, the important term “real property” had never actually been defined for 1031 purposes. The proposed regulations adopt a new definition of real property and make clear that each separate asset involved in a transaction must be analyzed independently to determine whether it qualifies. For more information on these definitions, visit Tax Facts Online. Read More
IRS Expands RMD Waiver Relief for All of 2020
Despite this, the law was enacted after some taxpayers had already taken their 2020 RMDs early in the year. For those who took RMDs very early in the year, the sixty-day rollover period had already expired. In response, the IRS announced that anyone who took a 2020 RMD is eligible to roll the funds back into their account penalty-free. The sixty-day rollover period was extended through August 31, 2020, so clients still have only a limited period of time in which to act. Further, the rollover does not count toward the otherwise applicable “one rollover per twelve-month period” rule or the restriction on rollovers for inherited IRAs. For more information on the RMD rules, visit Tax Facts Online. Read More
Key Deadlines for Opportunity Zone Investments Extended
As is the case with many deadlines this spring and summer, the IRS has extended several key deadlines that apply to opportunity zone investments. For taxpayers whose last day of the 180-day investment period within which to make a QOZF investment was on or after April 1, 2020 and before December 31, 2020, the last day of the 180-day period is extended to December 31, 2020. QOFs that failed to satisfy the 90 percent investment rule for a period ending on or after April 1, 2020 and on or before December 31, 2020 will not be subject to a penalty (i.e., the failure is disregarded). Similarly, the 30-month substantial improvement period for tangible property that is used prior to being acquired is suspended between April 1, 2020 and December 31, 2020. For more information on opportunity zones and extended deadlines, visit Tax Facts Online. Read More
Byrnes & Bloink’s Tax Facts Offers a Complete Web, App-Based, and Print Experience
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Posted by William Byrnes on December 6, 2019
Texas A&M University School of Law has launched its International Tax online graduate curriculum for tax professionals. Apply now for Jan 13 – April 19 transfer pricing courses. Texas A&M University is a public university and is ranked 1st among public universities for its superior education at an affordable cost (Fiske, 2018) and ranked 1st of Texas public universities for best value (Money, 2018). To apply for the inaugural cohort opportunity, contact Jeff Green, Graduate Programs Coordinator, T: +1 (817) 212-3866, E: jeffgreen@law.tamu.edu or contact David Dye, Assistant Dean of Graduate Programs, T (817) 212-3954, E: ddye@law.tamu.edu. Texas A&M Admissions website: https://law.tamu.edu/distance-education/international-tax
| Final Regulations Confirm: No “Clawback” for Gifts Made Under Expanded Transfer Tax Exemption
The 2017 tax reform legislation significantly expanded the transfer tax exemption, which applies to exempt both lifetime and postmortem gifts from transfer taxes. However, the new provision is set to sunset after 2025, leading many taxpayers to question whether large gifts made while the provision is effective would be exempt once the exemption reverts to the much lower $5 million (as adjusted for inflation) limit. In general, the exemption applies first to gifts made during life and then to the individual’s remaining estate. Under the final regulations, estates are allowed to compute the available estate tax credit using the higher of the basic exclusion amount that applied to gifts made during life or the basic exclusion amount applicable on the date of death. Essentially, this rule provides certainty that taxpayers can make large gifts now (i.e., gifts that exceed the $5 million exemption) without generating transfer tax liability if the exemption amount is reduced in the future. For more information on the estate tax, visit Tax Facts Online. Read More |
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| Court Finds Prudent Process Sufficient to Overcome DOL Fiduciary Liability
Many retirement plan sponsors and advisors have been left in uncertainty since the DOL fiduciary rule was vacated. A September 2019 case involving a DOL fiduciary enforcement action may shed light on resolution of fiduciary issues in the retirement plan context. In this case, the court found that retirement committee members were not liable under ERIA for a failure to monitor the committee’s investment manager more closely. The committee here had implemented processes and procedures, including regular meetings and reports, and acted in accordance with those procedures. After the DOL initiated action, the court agreed that the committee was entitled to rely upon those procedures. Once an error or problem arose and the committee became aware—or reasonably should have become aware—of the issue, the committee correctly increased its oversight until the issue was resolved. Here, that issue was that the committee’s instructions with respect to investments were not being followed. Once the committee noticed, they stepped up oversight. Importantly, this ruling shows that a prudent process is often sufficient to avoid fiduciary liability even if a decision results in investment losses. For more information on the fiduciary standard, visit Tax Facts Online. Read More |
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| IRS Cracking Down on Syndicated Conservation Easements
In recently released IR-2019-182, the IRS announced that it has substantially increased resources to crack down on syndicated conservation easements. Under the IRC, a special rule allows taxpayers to take a deduction for donations of qualified conservation easements (an exception to the general rule prohibiting deductions for donations of less than an entire interest in property). A qualified conservation easement is a contribution of real property including a restriction (granted in perpetuity) for the use of the property, which must be used for conservation purposes. Syndications are often set up to purchase real property for conservation easements. Most syndications involve tiers of pass-through entities so that investors in the entities can more fully use the charitable deduction (which is subject to an adjusted gross income cap like any other charitable deduction). Often, the actual deduction will far exceed the amounts invested—sometimes because inflated property values are used. These and substantially similar arrangements are now classified as listed transactions, which must be disclosed to the IRS. Clients should be made aware of this increased potential for enforcement across several IRS divisions. For more information on the requirements for claiming a conservation easement deduction, visit Tax Facts Online. Read More |
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2020’s Tax Facts Offers a Complete Web, App-Based, and Print Experience
Reducing complicated tax questions to understandable answers that can be immediately put into real-life practice, Tax Facts works when and where you need it….on your desktop, at home on your laptop, and on the go through your tablet or smartphone. Questions? Contact customer service: TaxFactsHelp@alm.com| 800-543-0874
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Posted in Retirement Planning, Taxation | Tagged: CFP, financial planning, income tax, Retirement, tax facts | Leave a Comment »
Posted by William Byrnes on November 20, 2019
Texas A&M University School of Law has launched its International Tax online curriculum for graduate degree candidates. Admissions is open for Jan 13 – April 19 transfer pricing courses. Texas A&M University is a public university and is ranked 1st among public universities for its superior education at an affordable cost (Fiske, 2018) and ranked 1st of Texas public universities for best value (Money, 2018). To apply for the inaugural cohort opportunity, contact Jeff Green, Graduate Programs Coordinator, T: +1 (817) 212-3866, E: jeffgreen@law.tamu.edu or contact David Dye, Assistant Dean of Graduate Programs, T (817) 212-3954, E: ddye@law.tamu.edu. Texas A&M Admissions website: https://law.tamu.edu/distance-education/international-tax
| Final 401(k) Hardship Distribution Rules Take Effect January 1, 2020
Plan participants and sponsors should note that the final regulations governing 401(k) hardship distributions take effect in 2020. As of 2020, participants who take a hardship distribution must now be permitted to continue to make deferrals within the six months following the hardship distribution. While some aspects of the new rules are optional, this new requirement is mandatory with respect to qualified plans. For more information on hardship distributions, visit Tax Facts Online. Read More |
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| IRS Releases Proposed Regs on Accounting for Advance Payments
The IRS has released proposed regulations implementing changes made by the 2017 tax reform legislation that impact the tax treatment of advance payments. The regulations generally adopt the rules contained in Revenue Procedure 2004-34— the approach in place prior to tax reform. For more information on the tax treatment of advance payments, visit Tax Facts Online. Read More |
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| IRS FAQ Provides for Specific Identification in Transactions Involving Virtual Currency
The recently released FAQ on the tax treatment of virtual currency confirms that transactions in bitcoin and other forms of virtual currency will be taxed as transactions in property. The guidance goes further and answers the question of whether taxpayers should identify particular virtual currency that is part of a transaction. For more information on the tax treatment of bitcoin, visit Tax Facts Online. Read More |
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2020’s Tax Facts Offers a Complete Web, App-Based, and Print Experience
Reducing complicated tax questions to understandable answers that can be immediately put into real-life practice, Tax Facts works when and where you need it….on your desktop, at home on your laptop, and on the go through your tablet or smartphone. Questions? Contact customer service: TaxFactsHelp@alm.com| 800-543-0874
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Posted in Retirement Planning, Taxation | Tagged: financial planning, Retirement, taxfacts | Leave a Comment »
Posted by William Byrnes on August 5, 2019
2019’s Tax Facts Offers a Complete Web, App-Based, and Print Experience
Reducing complicated tax questions to understandable answers that can be immediately put into real-life practice, Tax Facts works when and where you need it….on your desktop, at home on your laptop, and on the go through your tablet or smartphone. Questions? Contact customer service: TaxFactsHelp@alm.com| 800-543-0874
Tuition Waiver for International Tax Online Courses (more information here)
Texas A&M University School of Law will launch August 26, 2019 its International Tax online curriculum for graduate degree candidates. Admissions is open for the inaugural cohort of degree candidates to pilot the launch of the Fall semester introductory courses of international taxation and tax treaties, and provide weekly feedback on content, support, and general experience in exchange for waiving the tuition and providing the books free. Texas A&M University is a public university of the state of Texas and is ranked 1st among public universities for its superior education at an affordable cost (Fiske, 2018) and ranked 1st of Texas public universities for best value (Money, 2018).
IRS Expands List of Preventative Care Coverage Not Subject to HDHP Deductibles
Pursuant to the executive order directing the agencies to expand the use of HSAs and HDHPs for individuals suffering from certain chronic conditions, the IRS has released Notice 2019-45, which expands the definition of “preventative care” to include certain treatments and medications related to chronic illnesses. Generally, HDHPs may now provide these forms of care on a pre-deductible basis without jeopardizing the plan’s status as an HDHP and the participant’s ability to use HSA funds in connection with that HDHP. The agencies have indicated that they will review the new list, which includes items deemed to be “low cost”, every five to ten years. The new table, contained Notice 2019-45, includes items such as glucometers for patients suffering from diabetes and beta blockers for patients suffering from congestive heart failure. For more information on HDHPs, visit TaxFacts Online. Read More |
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IRS Releases Premium Tax Credit-Related Inflation Adjustments for 2020
The IRS has released the Affordable Care Act (ACA) premium tax credit-related inflation adjusted numbers for use in 2020. In 2020, the percentage used to determine whether an individual is eligible for employer-sponsored health insurance that is affordable is 9.78% (down from 9.86% in 2019). This means that individuals who contribute more than 9.78% of their household income toward health insurance in 2020, he or she may be eligible for premium tax credit assistance. For more information on determining when health coverage is deemed affordable for ACA purposes, visit Tax Facts Online. Read More |
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IRS Announces Compliance Campaign Directed at S Corps
The IRS has announced that one of the areas it will be focusing its compliance efforts upon in the coming year involves S corporations that were formerly C corporations. The primary issue of focus will be the built-in gains tax. In general, the built-in gains tax applies to C corporations that convert to S status at a time when they have net unrealized built-in gain, and then sell assets within five years after converting to an S corporation. The tax should be paid at the S corporation level, but the IRS has determined that the tax is often not paid. While this does not necessarily mean that audit resources will be directed toward these entities, it does mean that the IRS has determined that it is necessary to dedicate training and resources toward the goal of ensuring proper compliance with the built-in gains tax. For more information on situations where S corporations may be taxed at the entity level, visit Tax Facts Online. Read More |
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Posted in Estate Tax, Retirement Planning, Taxation | Tagged: Retirement, tax facts, Taxation | Leave a Comment »
Posted by William Byrnes on July 26, 2019
2019’s Tax Facts Offers a Complete Web, App-Based, and Print Experience
Reducing complicated tax questions to understandable answers that can be immediately put into real-life practice, Tax Facts works when and where you need it….on your desktop, at home on your laptop, and on the go through your tablet or smartphone. Questions? Contact customer service: TaxFactsHelp@alm.com| 800-543-0874
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William H. Byrnes, J.D., LL.M. and Robert Bloink, J.D., LL.M.
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| Taxpayer Cannot Shield Self-Directed IRA Assets from Bankruptcy Creditors
The 11th Circuit recently confirmed that a taxpayer was not entitled to creditor protection in bankruptcy with respect to a self-directed IRA that he used for impermissible purposes. The issue in this case was not whether IRA funds were used for prohibited personal use, however, but whether the assets left within the IRA could be protected from creditors in bankruptcy. The court ruled that the creditors could access amounts left in the IRA, regardless of whether that IRA continued to be tax-exempt, because the taxpayer failed to properly maintain the IRA by withdrawing funds for prohibited reasons in the past. For more information on the tax treatment of IRA assets in bankruptcy, visit Tax Facts Online. Read More |
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| Proposed Regulations Would Eliminate the MEP “One Bad Apple Rule”
The IRS and Treasury have released proposed regulations that would eliminate the so-called “one bad apple rule” for multiple employer plans (MEPs). Under the one bad apple rule, the entire MEP could be disqualified based upon the actions of only one employer that participated in the plan. To qualify, the plan must have established practices and procedures designed to ensure compliance by all MEP participants. The failure must be isolated to a single employer, and cannot be a widespread issue across the employers. The plan administrator must have a process in place that would provide notice to the employer responsible for the failure, and such notice should include a description of the failure, actions necessary to remedy the failure, notice that the relevant employer has only 90 days from the notice date to take remedial action, a description of the consequences for failure to take the remedial action and notice of the right to spin off the non-compliant employer’s portion of the plan and assets. After providing the initial notice and two subsequent notices, the MEP must notify all participants, stop accepting contributions from the noncompliant party and implement spin off procedures designed to terminate the noncompliant employer’s interests in the MEP. For more information on plan qualification requirements, visit Tax Facts Online. Read More |
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| Considering an Opportunity Zone Investment? Here’s How to Tell the IRS
Now that the IRS has released a significant amount of guidance on the opportunity zone rules, qualified opportunity zone funds are likely to become more common, leading taxpayers to question how to actually defer taxation on their capital gains through the opportunity zone rules. Taxpayers who have made a sale where the proceeds qualify for capital gain treatment may invest all or a part of that gain in a qualified opportunity fund and defer recognizing the gain under the new opportunity zone rules. The taxpayer makes the election on his or her tax return by attaching a completed Form 8949 to the return. For multiple investments occurring on different dates, the taxpayer uses multiple rows of the form to report the deferral election. If the taxpayer has already filed the relevant tax return, he or she will need to file an amended return to make the election. For more information on the opportunity zone rules, visit Tax Facts Online. Read More |
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Posted in Retirement Planning, Taxation | Tagged: financial planning, Retirement, tax planning, taxfacts | Leave a Comment »
Posted by William Byrnes on September 21, 2018
TAX REFORM DEVELOPMENTS
IRS Provides Guidance Updating Accounting Method Changes for Terminated S Corporations
The 2017 tax reform legislation added a new IRC section that now requires eligible terminated S corporations to take any Section 481(a) adjustment attributable to revocation of the S election into account ratably over a six-year period. Under newly released Revenue Procedure 2018-44, an eligible terminated S corporation is required to take a Section 481(a) adjustment ratably over six years beginning with the year of change if the corporation (1) is required to change from the cash method to accrual method and (2) makes the accounting method change for the C corporation’s first tax year. For more information on the rules governing S corporations that convert to C corporation status post-reform, visit Tax Facts Online and Read More. |
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| OTHER IMPORTANT DEVELOPMENTS
IRS Guidance on Interaction between New Association Health Plan Rules and ACA Employer Mandate
The IRS recently released new guidance on the rules governing association health plans (AHPs), which permit expanded access to these types of plans, and the Affordable Care Act (ACA) employer mandate. The guidance provides that determination of whether an employer is an applicable large employer subject to the shared responsibility provisions is not impacted by whether the employer offers coverage through an AHP. Participation in an AHP does not turn an employer into an applicable large employer if the employer has less than 50 employees. For more information on the employer mandate, visit Tax Facts Online and Read More. |
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OCC Explains Employee Tax Consequences of Employer’s Belated Payment of FICA Tax on Fringe Benefits
The IRS Office of Chief Counsel (OCC) released a memo explaining the tax consequences of a situation where the employer failed to include $10,000 of fringe benefits. The employer paid the FICA taxes associated with the benefits in 2018, although the benefits were provided in 2016. The guidance provides that the payment in 2018 did not create additional compensation for the employee in 2016. If the employer collects the amount of the employee portion of the FICA tax from the employee in 2018, the employer’s payment is not additional compensation. However, if the employer does not seek repayment, the payment of the employee’s portion is additional compensation. For more information on FICA tax issues in the employment benefit context, visit Tax Facts Online and Read More. |
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LITIGATION WATCH
Employer Amendments to VEBA Did Not Result in Adverse Tax Consequences
The IRS recently ruled that an employer could amend its voluntary employees’ beneficiary association (VEBA) to provide health benefits for active employees in addition to retired employees without violating the tax benefit rule or incurring excise taxes. In this case, the VEBA provided health benefits for collectively bargained retired employees. When the VEBA became overfunded, the employer proposed transferring the excess assets into a subaccount for collectively bargained active employees. The IRS found that this proposed amendment would not violate the tax benefit rule because, the new purpose of providing health benefits to active employees under a collective bargaining agreement was not inconsistent with the employer’s earlier deduction. For more information on VEBAs, visit Tax Facts Online and Read More. |
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| Tax Facts Team |
Molly Miller
Publisher |
William H. Byrnes, J.D., LL.M
Tax Facts Author |
Richard Cline, J.D.
Senior Director, Practical Insights |
Robert Bloink, J.D., LL.M.
Tax Facts Author |
Jason Gilbert, J.D.
Senior Editor |
Alexis Long, J.D.
Senior Contributor |
Connie L. Jump
Senior Manager, Editorial Operations |
Danielle Birdsail
Digital Marketing Manager |
Patti O’Leary
Senior Editorial Assistant |
Emily Brunner
Editorial Assistant |
| For questions, contact Customer Service at 1-800-543-0874. |
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Posted in Insurance, Retirement Planning, Taxation, Uncategorized | Tagged: Retirement, tax | Leave a Comment »
Posted by William Byrnes on October 23, 2014
The Internal Revenue Service announced cost of living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2015. Many of the pension plan 
limitations will change for 2015 because the increase in the cost-of-living index met the statutory thresholds that trigger their adjustment. However, other limitations will remain unchanged because the increase in the index did not meet the statutory thresholds that trigger their adjustment. Highlights include the following:
- The elective deferral (contribution) limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan is increased from $17,500 to $18,000.
- The catch-up contribution limit for employees aged 50 and over who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan is increased from $5,500 to $6,000.
- The limit on annual contributions to an Individual Retirement Arrangement (IRA) remains unchanged at $5,500. The additional catch-up contribution limit for individuals aged 50 and over is not subject to an annual cost-of-living adjustment and remains $1,000.
- The deduction for taxpayers making contributions to a traditional IRA is phased out for singles and heads of household who are covered by a workplace retirement plan and have modified adjusted gross incomes (AGI) between $61,000 and $71,000, up from $60,000 and $70,000 in 2014. For married couples filing jointly, in which the spouse who makes the IRA contribution is covered by a workplace retirement plan, the income phase-out range is $98,000 to $118,000, up from $96,000 to $116,000. For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the deduction is phased out if the couple’s income is between $183,000 and $193,000, up from $181,000 and $191,000. For a married individual filing a separate return who is covered by a workplace retirement plan, the phase-out range is not subject to an annual cost-of-living adjustment and remains $0 to $10,000.
- The AGI phase-out range for taxpayers making contributions to a Roth IRA is $183,000 to $193,000 for married couples filing jointly, up from $181,000 to $191,000 in 2014. For singles and heads of household, the income phase-out range is $116,000 to $131,000, up from $114,000 to $129,000. For a married individual filing a separate return, the phase-out range is not subject to an annual cost-of-living adjustment and remains $0 to $10,000.
- The AGI limit for the saver’s credit (also known as the retirement savings contribution credit) for low- and moderate-income workers is $61,000 for married couples filing jointly, up from $60,000 in 2014; $45,750 for heads of household, up from $45,000; and $30,500 for married individuals filing separately and for singles, up from $30,000.
Below are details on both the adjusted and unchanged limitations.
Section 415 of the Internal Revenue Code provides for dollar limitations on benefits and contributions under qualified retirement plans. Section 415(d) requires that the Secretary of the Treasury annually adjust these limits for cost of living increases. Other limitations applicable to deferred compensation plans are also affected by these adjustments under Section 415. Under Section 415(d), the adjustments are to be made under adjustment procedures similar to those used to adjust benefit amounts under Section 215(i)(2)(A) of the Social Security Act.
Effective January 1, 2015, the limitation on the annual benefit under a defined benefit plan under Section 415(b)(1)(A) remains unchanged at $210,000. For a participant who separated from service before January 1, 2015, the limitation for defined benefit plans under Section 415(b)(1)(B) is computed by multiplying the participant’s compensation limitation, as adjusted through 2014, by 1.0178.
The limitation for defined contribution plans under Section 415(c)(1)(A) is increased in 2015 from $52,000 to $53,000.
The Code provides that various other dollar amounts are to be adjusted at the same time and in the same manner as the dollar limitation of Section 415(b)(1)(A). After taking into account the applicable rounding rules, the amounts for 2015 are as follows:
The limitation under Section 402(g)(1) on the exclusion for elective deferrals described in Section 402(g)(3) is increased from $17,500 to $18,000.
The annual compensation limit under Sections 401(a)(17), 404(l), 408(k)(3)(C), and 408(k)(6)(D)(ii) is increased from $260,000 to $265,000.
The dollar limitation under Section 416(i)(1)(A)(i) concerning the definition of key employee in a top-heavy plan remains unchanged at $170,000.
The dollar amount under Section 409(o)(1)(C)(ii) for determining the maximum account balance in an employee stock ownership plan subject to a 5 year distribution period is increased from $1,050,000 to $1,070,000, while the dollar amount used to determine the lengthening of the 5 year distribution period remains unchanged at $210,000.
The limitation used in the definition of highly compensated employee under Section 414(q)(1)(B) is increased from $115,000 to $120,000.
The dollar limitation under Section 414(v)(2)(B)(i) for catch-up contributions to an applicable employer plan other than a plan described in Section 401(k)(11) or Section 408(p) for individuals aged 50 or over is increased from $5,500 to $6,000. The dollar limitation under Section 414(v)(2)(B)(ii) for catch-up contributions to an applicable employer plan described in Section 401(k)(11) or Section 408(p) for individuals aged 50 or over is increased from $2,500 to $3,000.
The annual compensation limitation under Section 401(a)(17) for eligible participants in certain governmental plans that, under the plan as in effect on July 1, 1993, allowed cost of living adjustments to the compensation limitation under the plan under Section 401(a)(17) to be taken into account, is increased from $385,000 to $395,000.
The compensation amount under Section 408(k)(2)(C) regarding simplified employee pensions (SEPs) is increased from $550 to $600.
The limitation under Section 408(p)(2)(E) regarding SIMPLE retirement accounts is increased from $12,000 to $12,500.
The limitation on deferrals under Section 457(e)(15) concerning deferred compensation plans of state and local governments and tax-exempt organizations is increased from $17,500 to $18,000.
The compensation amount under Section 1.61 21(f)(5)(i) of the Income Tax Regulations concerning the definition of “control employee” for fringe benefit valuation remains unchanged at $105,000. The compensation amount under Section 1.61 21(f)(5)(iii) is increased from $210,000 to $215,000.
The Code also provides that several retirement-related amounts are to be adjusted using the cost-of-living adjustment under Section 1(f)(3). After taking the applicable rounding rules into account, the amounts for 2015 are as follows:
The adjusted gross income limitation under Section 25B(b)(1)(A) for determining the retirement savings contribution credit for married taxpayers filing a joint return is increased from $36,000 to $36,500; the limitation under Section 25B(b)(1)(B) is increased from $39,000 to $39,500; and the limitation under Sections 25B(b)(1)(C) and 25B(b)(1)(D) is increased from $60,000 to $61,000.
The adjusted gross income limitation under Section 25B(b)(1)(A) for determining the retirement savings contribution credit for taxpayers filing as head of household is increased from $27,000 to $27,375; the limitation under Section 25B(b)(1)(B) is increased from $29,250 to $29,625; and the limitation under Sections 25B(b)(1)(C) and 25B(b)(1)(D) is increased from $45,000 to $45,750.
The adjusted gross income limitation under Section 25B(b)(1)(A) for determining the retirement savings contribution credit for all other taxpayers is increased from $18,000 to $18,250; the limitation under Section 25B(b)(1)(B) is increased from $19,500 to $19,750; and the limitation under Sections 25B(b)(1)(C) and 25B(b)(1)(D) is increased from $30,000 to $30,500.
The deductible amount under Section 219(b)(5)(A) for an individual making qualified retirement contributions remains unchanged at $5,500.
The applicable dollar amount under Section 219(g)(3)(B)(i) for determining the deductible amount of an IRA contribution for taxpayers who are active participants filing a joint return or as a qualifying widow(er) is increased from $96,000 to $98,000. The applicable dollar amount under Section 219(g)(3)(B)(ii) for all other taxpayers (other than married taxpayers filing separate returns) is increased from $60,000 to $61,000. The applicable dollar amount under Section 219(g)(3)(B)(iii) for a married individual filing a separate return is not subject to an annual cost-of-living adjustment and remains $0. The applicable dollar amount under Section 219(g)(7)(A) for a taxpayer who is not an active participant but whose spouse is an active participant is increased from $181,000 to $183,000.
The adjusted gross income limitation under Section 408A(c)(3)(B)(ii)(I) for determining the maximum Roth IRA contribution for married taxpayers filing a joint return or for taxpayers filing as a qualifying widow(er) is increased from $181,000 to $183,000. The adjusted gross income limitation under Section 408A(c)(3)(B)(ii)(II) for all other taxpayers (other than married taxpayers filing separate returns) is increased from $114,000 to $116,000. The applicable dollar amount under Section 408A(c)(3)(B)(ii)(III) for a married individual filing a separate return is not subject to an annual cost-of-living adjustment and remains $0.
The dollar amount under Section 430(c)(7)(D)(i)(II) used to determine excess employee compensation with respect to a single-employer defined benefit pension plan for which the special election under Section 430(c)(2)(D) has been made is increased from $1,084,000 to $1,101,000.
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Posted in Taxation | Tagged: 401(k), pension plans, Retirement | Leave a Comment »
Posted by William Byrnes on July 14, 2014
Indexed variable annuities (IVAs) and structured annuities are two relatively new types of hybrid annuity products that are causing rampant confusion in today’s annuity marketplace. Used properly, these products can perform a significant role in a client’s portfolio, making it more important than ever to understand the nuances of these two annuity types.
The investment options offered by IVAs and structured annuities are extremely varied — in terms of opportunities for both market participation and downside protection — making the issue of client suitability particularly important. Today’s clients are looking for a customized product.
So it is time to begin asking: When it comes to IVAs and structured annuities, which product is the right fit? Read the answer of Professor William Byrnes and Robert Bloink at LifeHealthPro
Because of the constant changes to the tax law, taxpayers are currently facing many questions connected to important issues such as healthcare, home office use, capital gains, investments, and whether an individual is considered an employee or a contractor. Financial advisors are continually looking for updated tax information that can help them provide the right answers to the right people at the right time. For over 110 years, National Underwriter has provided fast, clear, and authoritative answers to financial advisors pressing questions, and it does so in the convenient, timesaving, Q&A format.
“Robert Bloink, Esq., LL.M., and William H. Byrnes, Esq., LL.M., CWM®—are delivering real-life guidance based on decades of experience. The authors’ knowledge and experience in tax law and practice provides the expert guidance for National Underwriter to once again deliver a valuable resource for the financial advising community,” added Rick Kravitz.
Anyone interested can try Tax Facts on Individuals & Small Business, risk-free for 30 days, with a 100% guarantee of complete satisfaction. For more information, please go to www.nationalunderwriter.com/TaxFactsIndividuals or call 1-800-543-0874.
If you are interested in discussing the Master or Doctoral degree in the areas of financial services or international taxation, please contact me: profbyrnes@gmail.com to Google Hangout or Skype that I may take you on an “online tour”
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Posted in Retirement Planning, Wealth Management | Tagged: annuities, Annuity, Annuity (US financial products), Retirement | Leave a Comment »
Posted by William Byrnes on June 30, 2014
When it comes to retirement income planning for most clients, less is not more, and the contribution limits placed on traditional tax-preferred retirement vehicles have many of these clients searching for creative ways to ensure a comfortable retirement income level. Enter the health savings account (HSA), which, though traditionally intended to function as a savings account earmarked for medical expenses, can actually function as a powerful retirement income planning vehicle for clients looking to supplement their retirement savings.
For the strategy to work, however, it is important that your clients understand the rules of the game, and the potential penalties that can derail the substantial tax benefits that an HSA can offer.
The HSA income strategy …
Read William Byrnes & Robert Bloink’s analysis of an unconventional retirement planning tool on LifeHealthPro
If you are interested in discussing the Master or Doctoral degree in the areas of international taxation or anti money laundering compliance, please contact me profbyrnes@gmail.com to Google Hangout or Skype that I may take you on an “online tour”
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Posted in Retirement Planning, Taxation | Tagged: Health care, HSA, Retirement | Leave a Comment »
Posted by William Byrnes on May 30, 2014
Creative use of Social Security timing strategies can be key to securing comfort in retirement, and timing benefits so that your client can receive a lump sum payment during retirement can unlock many options for the older client. For those nearing retirement age, this seldom-discussed strategy may be needed to ensure longevity protection throughout a long retirement. Read about this Social Security lump sum strategy
If you are interested in discussing the Master or Doctoral degree in the areas of financial planning, please contact me: profbyrnes@gmail.com to Google Hangout or Skype that I may take you on an “online tour”
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Posted in Retirement Planning | Tagged: financial planning, Retirement, Social Security | 1 Comment »
Posted by William Byrnes on May 27, 2014
Roth IRAs usually do not make it into a higher-income client’s retirement planning playbook. The income limits set in place even prevent many upper-middle class clients from contributing to a Roth.
These limits do, in fact, block clients with earnings above the annual threshold level from contributing to a Roth directly, but there is an alternative route to Roths for high-income clients looking to minimize their tax burden in retirement.
Read >Roths for high earners: the strategy < !
Authoritative and easy-to-use, 2014 Tax Facts on Insurance & Employee Benefits shows you how the tax law and regulations are relevant to your insurance, employee benefits, and financial planning practices. Often complex tax law and regulations are explained in clear, understandable language. Pertinent planning points are provided throughout.
Organized in a convenient Q&A format to speed you to the information you need, 2014 Tax Facts on Insurance & Employee Benefits delivers the latest guidance on:
- Estate & Gift Tax Planning
- Roth IRAs
- HSAs
- Capital Gains, Qualifying Dividends
- Non-qualified Deferred Compensation Under IRC Section 409A
- And much more!
Key updates for 2014:
- Important federal income and estate tax developments impacting insurance and employee benefits including changes from the American Taxpayer Relief Act of 2012
- Concise updated explanation and highlights of the Patient Protection and Affordable Care Act (PPACA)
- Expanded coverage of Annuities
- New section on Structured Settlements
- New section on International Tax
- More than thirty new Planning Points, written by practitioners for practitioners, in the following areas:
- Life Insurance
- Health Insurance
- Estate and Gift Tax
- Deferred Compensation
- Individual Retirement Plans
Plus, you’re kept up-to-date with online supplements for critical developments. Written and reviewed by practicing professionals who are subject matter experts in their respective topics, Tax Facts is the practical resource you can rely on.
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Posted in Retirement Planning | Tagged: 401(k), financial planning, IRA, Retirement, Roth IRA | Leave a Comment »
Posted by William Byrnes on April 21, 2014
“The 10,000 baby boomer that reach retirement age each day in America are waking up to the probability that they will outspend their retirement plan designed twenty or thirty years ago, forcing a drastic reduction in quality of life style for the ‘golden years’” revealed William Byrnes, author of National Underwriter’s Tax Facts.
“By example, social security increases since Ronald Reagan’s presidency, when many Baby Boomers crafted their family retirement plans, did not keep up with the actual inflation. Also, baby boomers are outliving their retirement plans by ten or more years”, continued William Byrnes. “Stretching the retirement savings available for an additional twenty years of life expectancy requires correctly managing the complex retirement taxation rules established by Congress and the IRS.”
Robert Bloink added, “Baby boomers retirement taxation questions include: How are earnings on an IRA taxed? What is the penalty for making excessive contributions to an IRA? How are amounts distributed from a traditional and from a ROTH IRA taxed? How is the required minimum distribution (RMD) calculated?”
“By example of managing the retirement taxation rules, if the baby boomer engages in a prohibited transaction with his IRA, his or her individual retirement account may cease to qualify for the tax benefits. Thus, then baby boomer needs to understand what is a prohibited transaction? When can the baby boomer tax pull retirement funds as a loan from a retirement account or policy without it being prohibited?”
“For complex modern families with multiple marriages and various children, a retirement and estate planner should analyze the non-probate assets”, interjected Dr. George Mentz. “Such assets may include the client’s 401k, 403b, 459, annuities, property and joint tenancy, among others. Regarding insurance policy designations, the client may need to reexamine the beneficiaries, contingent and secondary, and percentages among them, based on current circumstances.”
“Because client’s are outliving their life expectancy and thus outliving their retirement planning, and medical expenses certainly factor into retirement planning, long term care for family members must also be addressed,” said William Byrnes. “Moreover, recent press has focused client’s attention on tragic incident and end of life issues, such as a durable power of attorney for health care (DPA/HC), living will, or advance directives that explain the patient’s wishes in certain medical situations. Finally in this regard, a client may require a Limited Powers of Attorney to address situations of incapacity, as well as orderly continuation of immediate family needs upon death.“
Robert Bloink included, “Other important issues to address with the client include pre-marital property contracts/pre-nuptials involving the second marriage(s), IRA beneficiary planning in blended families, spousal lifetime access trust (SLATs), and planning for unmarried domestic partners.”
“Robert Bloink, Esq., LL.M., and William H. Byrnes, Esq., LL.M., CWM®—are delivering real-life guidance based on decades of experience.” said Rick Kravitz. “The authors’ knowledge and experience in tax law and practice provides the expert guidance for National Underwriter to once again deliver a valuable resource for the financial advising community.”
Anyone interested can try Tax Facts on Individuals & Small Business, risk-free for 30 days, with a 100% guarantee of complete satisfaction. For more information, please go to www.nationalunderwriter.com/TaxFactsIndividuals or call 1-800-543-0874.
Authoritative and easy-to-use, 2014 Tax Facts on Insurance & Employee Benefits shows you how the tax law and regulations are relevant to your insurance, employee benefits, and financial planning practices. Often complex tax law and regulations are explained in clear, understandable language. Pertinent planning points are provided throughout.
2014 Tax Facts on Investments provides clear, concise answers to often complex tax questions concerning investments. 2014 expanded sections on Limitations on Loss Deductions, Charitable Gifts, Reverse Mortgages, and REITs.
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Posted in Estate Tax, Retirement Planning, Wealth Management | Tagged: Baby boomer, estate planning, IRA, Retirement | Leave a Comment »
Posted by William Byrnes on March 18, 2014
The IRS reported in Tax Tip 2014-28 that it will pay some taxpayers to save for retirement!
If a taxpayer contributes to a retirement plan, like a 401(k) or an IRA, then the taxpayer may be eligible for the “Saver’s Credit”. The Saver’s Credit can help save for retirement and reduce this year’s tax owed. 5 facts about this credit:
1. The Saver’s Credit is the short name for the Retirement Savings Contribution Credit. It can be worth up to $2,000 for married couples filing a joint return. The credit is worth up to $1,000 for single taxpayers.
2. Eligibility depends on a taxpayer’s filing status and the amount of yearly income. 2013 tax return eligibility for the credit depends on:
- Married filing separately or a single taxpayer with income up to $29,500
- Head of household with income up to $44,250
- Married filing jointly with income up to $59,000
3. Other special rules that apply to the credit include:
- Must be at least 18 years of age.
- Can’t be a full-time student in 2013.
- Can’t be claimed as a dependent on another person’s tax return.
4. The taxpayer must have contributed to a 401(k) plan or similar workplace plan by the end of the year to claim this credit. However, a taxpayer can contribute to an IRA by the due date of a tax return (April 15, 2014) and still have that contribution count for 2013.
5. File Form 8880, Credit for Qualified Retirement Savings Contributions, to claim the credit. Tax software includes this form for e-file.
The Saver’s Credit is in addition to other tax savings for setting aside money for retirement. For example, a taxpayer may be able to deduct contributions to a traditional IRA.
Authoritative and easy-to-use, 2014 Tax Facts on Insurance & Employee Benefits shows you how the tax law and regulations are relevant to your insurance, employee benefits, and financial planning practices. Often complex tax law and regulations are explained in clear, understandable language. Pertinent planning points are provided throughout.
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Posted in Retirement Planning, Taxation | Tagged: 401(k), IRA, Retirement, Saver’s Credit, Saver’s Tax Credit | Leave a Comment »
Posted by William Byrnes on February 3, 2014
This artticle discusses one avenue for retirement planning solutions for small businesses. Financial Planners who have small business clients may consider a discussion on the automatic payroll deduction IRAs as one simple way to help employees save for retirement.
A payroll deduction individual retirement account (IRA) is one simple way for businesses to give employees an opportunity to save for retirement. The program is easy to implement; the employer sets up the payroll deduction IRA program with a bank, insurance company or other financial institution, and then the employees choose whether and how much they want deducted from their paychecks and deposited into the IRA. Depending on the IRA service provider, some employees may also have a choice of investments depending on the IRA provider. Wealth managers can add value to employees and employers by, not only establishing a plan, but by also working with employees to help them manage their IRAs.
Under a payroll deduction IRA, the employee makes all of the contributions, thus there are no employer contributions. By making regular payroll deductions, employees are able to contribute smaller amounts each pay period to their IRAs, rather than having to come up with a larger amount all at once.
One advantage of these accounts is that there is little administrative cost and no annual filings with the government. Moreover, businesses of any size can participate as there is no requirement that an employer have a certain number of employees to set up a payroll deduction IRA.
Another element that makes the program attractive to some small businesses is that the program will not be considered an employer retirement plan subject to Federal requirements for reporting and fiduciary responsibilities as long as the employer keeps its involvement to a minimum.
Here’s how the IRAs generally work: The employer sets up the payroll deduction IRA program with a financial institution, such as a bank, mutual fund or insurance company. The employee establishes either a traditional or a Roth IRA (based on the employee’s eligibility and personal choice) with the financial institution and authorizes the payroll deductions. The employer withholds the payroll deduction amounts that the employee has authorized and promptly transmits the funds to the financial institution. After doing so, the employee and the financial institution are responsible for the amounts contributed.
Generally however, the employer needs to remain neutral with respect to the IRA provider. It cannot negotiate with an IRA provider to obtain special terms for its employees, exercise any influence over the investments made or permitted by the IRA provider, or receive any compensation in connection with the IRA program except reimbursement for the actual cost of forwarding the payroll deductions.
Commonly, any employee who performs services for the business (or “employer”) can be eligible to participate. The decision to participate is left exclusively up to the employee. The employees should understand that they have the same opportunity to contribute to an IRA outside the payroll deduction program and that the employer is not providing any additional benefit to employees who participate.
Employees’ tax-deferred contributions are generally limited to a maximum annual calendar year contribution, for 2014 that maximum is $5,500.00. Additional “catch-up” contributions of currently $1,000.00 a year are permitted for employees age 50 or over, thus a total of $6,500.00 a year for 2014.
Example of time value of money
Saving $500.00 per month, for 20 years, at 6% annual return over that time will provide you $232,176.00 for retirement. See the US government’s Tools and Calculators for Investors
The new Presidential myRA to be established by Treasury in 2014
The new myRA, to be established by Treasury under request of President Obama, is covered previously in this blog at > myRA < Several blog subscribers have emailed me with policy and operational questions about the “myRA“. A vein of questions that I find particularly interesting is whether tax policy rests with the executive instead of Congress? The myRA has a tax benefit (tax exemption during the earnings period) and a cost (no fees to be passed onto the employee, but as the adage goes: “there is no free lunch”). Tax Policy (tax imposition and tax benefit) should be established by Congress as part of the democratic process of establishing a fiscal budget. Yet, this norm is not absolute because Congress handed over of both establishing and enforcing regulation to the Executive (Treasury in this case). Establishing and enforcing the regulations also impacts policy. If you care to comment directly in the blog, do so below or feel free to continue sending me your comments directly.
Authoritative and easy-to-use, 2014 Tax Facts on Insurance & Employee Benefits shows you how the tax law and regulations are relevant to your insurance, employee benefits, and financial planning practices. Often complex tax law and regulations are explained in clear, understandable language. Pertinent planning points are provided throughout.
Organized in a convenient Q&A format to speed you to the information you need, 2014 Tax Facts on Insurance & Employee Benefits delivers the latest guidance on:
- Estate & Gift Tax Planning
- Roth IRAs
- HSAs
- Capital Gains, Qualifying Dividends
- Non-qualified Deferred Compensation Under IRC Section 409A
- And much more!
Key updates for 2014:
- Important federal income and estate tax developments impacting insurance and employee benefits including changes from the American Taxpayer Relief Act of 2012
- Concise updated explanation and highlights of the Patient Protection and Affordable Care Act (PPACA)
- Expanded coverage of Annuities
- New section on Structured Settlements
- New section on International Tax
- More than thirty new Planning Points, written by practitioners for practitioners, in the following areas:
- Life Insurance
- Health Insurance
- Estate and Gift Tax
- Deferred Compensation
- Individual Retirement Plans
Plus, you’re kept up-to-date with online supplements for critical developments. Written and reviewed by practicing professionals who are subject matter experts in their respective topics, Tax Facts is the practical resource you can rely on.
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Posted in Retirement Planning, Wealth Management | Tagged: Byrnes, income tax, IRA, payroll deduction, Retirement, Retirement planning | Leave a Comment »
Posted by William Byrnes on January 30, 2014
A “qualified rollover contribution” can be made from a traditional IRA or any eligible retirement plan to a Roth IRA. Amounts that are held in a SEP or a SIMPLE IRA that have been held in the account for two or more years also may be converted to a Roth IRA.
Read the three page of planning tips from William Byrnes and Robert Bloink’s Tax Facts Online analysis at > Think Advisor <
The new myRA, to be established by Treasury under request of President Obama, is covered previously in this blog at > myRA < Several blog subscribers have emailed me with policy and operational questions about the “myRA“. A vein of questions that I find particularly interesting is whether tax policy rests with the executive instead of Congress? The myRA has a tax benefit (tax exemption during the earnings period) and a cost (no fees to be passed onto the employee, but as the adage goes: “there is no free lunch”). Tax Policy (tax imposition and tax benefit) should be established by Congress as part of the democratic process of establishing a fiscal budget. Yet, this norm is not absolute because Congress handed over of both establishing and enforcing regulation to the Executive (Treasury in this case). Establishing and enforcing the regulations also impacts policy. If you care to comment directly in the blog, do so below or feel free to continue sending me your comments directly.
Authoritative and easy-to-use, 2014 Tax Facts on Insurance & Employee Benefits shows you how the tax law and regulations are relevant to your insurance, employee benefits, and financial planning practices. Often complex tax law and regulations are explained in clear, understandable language. Pertinent planning points are provided throughout.
Organized in a convenient Q&A format to speed you to the information you need, 2014 Tax Facts on Insurance & Employee Benefits delivers the latest guidance on:
- Estate & Gift Tax Planning
- Roth IRAs
- HSAs
- Capital Gains, Qualifying Dividends
- Non-qualified Deferred Compensation Under IRC Section 409A
- And much more!
Key updates for 2014:
- Important federal income and estate tax developments impacting insurance and employee benefits including changes from the American Taxpayer Relief Act of 2012
- Concise updated explanation and highlights of the Patient Protection and Affordable Care Act (PPACA)
- Expanded coverage of Annuities
- New section on Structured Settlements
- New section on International Tax
- More than thirty new Planning Points, written by practitioners for practitioners, in the following areas:
- Life Insurance
- Health Insurance
- Estate and Gift Tax
- Deferred Compensation
- Individual Retirement Plans
Plus, you’re kept up-to-date with online supplements for critical developments. Written and reviewed by practicing professionals who are subject matter experts in their respective topics, Tax Facts is the practical resource you can rely on.
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Posted in Retirement Planning, Wealth Management | Tagged: Byrnes, income tax, Individual Retirement Account, IRA, Retirement, Roth IRA, Traditional IRA | Leave a Comment »
Posted by William Byrnes on January 27, 2014
Q. When are funds in an IRA taxed?
Funds accumulated in a traditional IRA generally are not taxable until they actually are distributed. Funds accumulated in a Roth IRA may or may not be taxable on actual distribution. Special rules may treat funds accumulated in an IRA as a “deemed distribution” and, thus, includable in income.
Read the three page planning tips and analysis of William Byrnes and Robert Bloink at Tax Facts Online > Think Advisor <
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Posted in Retirement Planning, Wealth Management | Tagged: Byrnes, income tax, Individual Retirement Account, IRA, Retirement | Leave a Comment »
Posted by William Byrnes on January 15, 2014
A new product feature has emerged to help clients looking to supplement retirement income or protect against the risk of outliving their assets, and, in an unusual twist, this feature is not attached to an annuity. Insurance carriers have thrown universal life insurance policies into the retirement income game by offering accelerated benefit riders that make it easier than ever for clients to access the value of their policies.
For clients looking to secure life insurance protection, longevity insurance, and a steady stream of retirement income, these new guaranteed income withdrawal riders could be the perfect solution!
Read the full analysis of Professor William Byrnes and Robert Bloink at Think Advisor !
Professor William Byrnes is a full time academic providing unbiased, informative critique to his readers. Subscribers of Tax Facts and of National Underwriters receive weekly strategic industry intelligence such as retirement strategies and client case studies. ThinkAdvisor.com, an industry news site, supports the professional growth and vitality of the Investment Advisory community, from RIAs and wealth managers of all kinds, to independent broker-dealer and wirehouse representatives. We provide unparalleled access to the knowledge, information and critical resources they need to succeed at every stage in their career, including professional development, education and certification, industry news and analysis, reference tools and services, and community networking opportunities.
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Posted in Insurance, Retirement Planning, Wealth Management | Tagged: Business, Cash value, Financial services, insurance, Investment Advisory, life insurance, Retirement, term life insurance | Leave a Comment »
Posted by William Byrnes on November 13, 2013
The most recent shift in the audience for deferred annuity products may come as a surprise to many advisors who are accustomed to selling these vehicles to older clients in pursuit of secure income late in life. Insurance carriers have taken steps to break free of this typical market, in many cases by changing product cost structures to appeal to an expanded (and much younger) client base.
As a result, advisors need to recognize that this new generation of deferred annuity products can be marketed even to clients who are in their 30s, 40s and 50s, erasing the common perception that most annuity purchasers are those stereo typically risk-adverse clients who have already retired. Younger generations have joined the market for secure income, which should have every advisor asking this question: How young is my next annuity prospect?
Read William Byrnes and Robert Bloink’s analysis of indexed variable annuities and how these product offerings may be attractive for certain of your clients at > http://www.thinkadvisor.com/2013/10/21/using-deferred-annuities-to-build-pension-plans-fo <
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Posted in Wealth Management | Tagged: annuities, Annuity, Business, financial planning, Financial services, insurance, Life annuity, life insurance, Pension, Retirement, Wealth Management | Leave a Comment »
Posted by William Byrnes on November 11, 2013
Persistently low interest rates may have created a challenging environment for annuity carriers in recent years, but many clients remain deeply skeptical about the prospect of returning to the more volatile equity markets. Indexed variable annuities (IVAs), while developed to help insurance carriers manage risk more accurately, can represent the perfect solution for these market-shy clients.
IVAs—known to some as structured annuities—offer clients an investment alternative that can provide the stability and many of the product offerings associated with annuity products but also the potential for participation in any equity market gains. However, they also offer substantial downside protection to cushion against potential investment losses.
Read William Byrnes and Robert Bloink’s analysis of indexed variable annuities and how these product offerings may be attractive for certain of your clients at > http://www.thinkadvisor.com/2013/10/14/indexed-variable-annuitiesa-va-product-curveball <
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Posted in Wealth Management | Tagged: annuities, Financial services, Indexed annuity, insurance, Investing, Life annuity, Retirement | Leave a Comment »
Posted by William Byrnes on September 24, 2013
When it comes to lifetime income planning, clients are always looking for the latest and greatest strategy to ensure that their income needs will be met during retirement.
Deferred income annuities are finally experiencing a dramatic growth spurt in the market, which has motivated insurance carriers to design products with features that allow each product to be tailored to meet the individual client’s needs. As the number of carriers offering deferred income annuities expands, a corresponding boost in client demand is expected — especially when clients discover that they can find the income features they have come to expect from an annuity product, but with a level of flexibility in required contributions and income options unique to the deferred income annuity market.
Read William Byrnes and Robert Bloink’s full analysis of this boom in the sales of deferred income annuities at LifeHealthPro: http://www.lifehealthpro.com/2013/09/11/the-benefits-to-clients-from-the-deferred-income-a
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Posted in Pensions, Retirement Planning, Uncategorized, Wealth Management | Tagged: annuities, Annuity, Business, Deferred income, Financial services, insurance, Life annuity, Retirement | Leave a Comment »
Posted by William Byrnes on September 19, 2013
Small business clients who have seen their businesses return to profitability following the economic crisis of the past few years may have secured their continued viability, but many have done so at the expense of personal retirement security. As a result, a vast portion of the baby boomer population is now struggling to play catch up. Unfortunately, traditional retirement savings vehicles, with their strict contribution limits, often are not enough to replace years’ worth of lost savings.
For many baby boomer clients who own small businesses, a new strategy that combines a defined benefit plan with elements of a voluntary 401(k) plan can allow the client to save more than 10 times as fast as a traditional plan, with dramatic tax savings that your clients will have to see to believe.
Read William Byrnes’ full analysis at > Think Advisor <
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Posted in Retirement Planning | Tagged: Business, Defined benefit pension plan, financial planning, Pension, Retirement, Small business | Leave a Comment »
Posted by William Byrnes on August 14, 2013
Provides an overview of private annuities in relation to financial planning. Examines a new concept wealth managers are employing for their clients with regards to private annuities and trusts.
The traditional private annuity is a transaction used by some wealth managers for clients whose circumstances permit. Generally a private annuity transaction occurs where the grantor transfers assets to a third party who pays the grantor an annuity, usually for the life of the grantor.[1]
When a trust is involved with a traditional private annuity, the common transaction may look like this: “The owner of highly appreciated commercial real estate transfers the property to an irrevocable trust in exchange for the trust’s promise to pay an annuity for life. The present value of the annuity equals the fair market value (‘FMV‘) of the property. The trust then sells the property to a third party for a sale price equal to its FMV.” [2] For additional discussion on private annuity contracts see National Underwriter Advanced Markets’ Private Annuity. [3]
The idea behind wealth managers suggesting similar transactions “is that the original transferor can spread his large capital gain over life expectancy by using the irrevocable trust as an intermediary rather than selling directly to the third party (who is presumably unwilling to do a private annuity).” [4]
There are considerations wealth managers must take into account when discussing private annuities with their clients. These may include valuation methods, arms-length transaction consideration, and incidents of ownership. For a detailed discussion of the tax implications of private annuities, please see Tax Facts Q 41. How are payments received under a private annuity Taxed? [5]
It is often the case that a trustee, although not necessarily, will use “the sale proceeds to insure its annuity obligation by purchasing a commercial immediate annuity.” [6]
Planning Concept: Some wealth managers have recently begun to structure private annuities for their clients slightly differently than the traditional method discussed above. Here the idea is a private annuity contract issued from the trust to the grantor who pays valuable consideration for the annuity which carries with it a condition precedent or “contingency”. The condition on the annuity could be the death of the grantor’s spouse. The trustee may “reinsure” the risk with the purchase of life insurance from payment of the annuity in the event the condition takes place.[7] Similar considerations with regards to private annuities should also be considered with private annuities that carry a condition.
In the event the grantor’s spouse does not die in the near future, the premiums paid for the private annuity could generally be considered income to the trust, which may be owned by a second generation. If the spouse does die in the near future, payment of the annuity would create general gain taxation with a tax-free redemption up to basis. [8]
[1] Manning on Estate Planning. PLIREF-ESTPLN s 5:9, 5-30. “§ 5:9 The Private Annuity”.
[2] New York Estate Planning. 33 ESTPLN 13. “Maximizing The Planning Opportunities Of Private Annuities”. 2006.
[3] AUS Main Libraries, Section 2. The Federal Estate Tax, D—Annuities In The Gross Estate.
[4] Id.
[5] Tax Facts Q 41. How are payments received under a private annuity taxed?
[6] Id.
[7] 33 ESTPLN 13
[8] PLIREF-ESTPLN s 5:9, 5-30; 26 U.S.C.A. § 1001.
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Posted in Insurance, Taxation, Wealth Management | Tagged: annuities, Business, Financial services, insurance, Life annuity, Pension, Retirement, Swiss Annuity | Leave a Comment »
Posted by William Byrnes on July 31, 2013
For your high net worth and upper middle class clients, Medicare planning has become a critical component of a well-executed retirement income plan.
New rules put into effect under the Patient Protection and Affordable Care Act (PPACA) can impact these clients’ retirement income planning in ways they might not yet realize by increasing their Medicare premiums proportionally as income increases. The new rules will expand the pool of clients to which these monthly increases will apply.
In today’s environment, it is more important than ever to consider Medicare premiums when planning for retirement expenses.
Medicare Income-Based Premiums … read my analysis at LifeHealthPro – http://www.lifehealthpro.com/2013/05/13/income-based-premiums-triple-medicare-costs-under
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Posted in Retirement Planning, Wealth Management | Tagged: Affordable Care Act, Health care, Independent Payment Advisory Board, insurance, Medicare, Medicare Part D coverage gap, Patient Protection and Affordable Care Act, Retirement | Leave a Comment »
Posted by William Byrnes on December 17, 2012
Your small business clients are faced with the increasing likelihood of higher taxes in 2013 and beyond; those aiming to reduce the slope of the fiscal cliff next year will want to take a closer look at the benefits of a defined benefit plan. …. read our strategy article at http://www.advisorone.com/2012/12/13/fully-funded-retirement-in-10-years-a-db-plan-for
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Posted in Retirement Planning, Uncategorized, Wealth Management | Tagged: Business, Compensation and Benefits, Defined benefit pension plan, Employment, Human Resources, Pension, Retirement, Small business | Leave a Comment »
Posted by William Byrnes on November 30, 2012
An increasing number of your clients are facing the novel possibility of choosing a lump sum payout from their pensions instead of the traditional annuity option. See the full article at –http://www.lifehealthpro.com/2012/08/16/when-clients-get-lump-sum-pension-offers-what-to-a
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Posted in Insurance, Pensions, Taxation, Wealth Management | Tagged: Life annuity, Pension, Retirement, Retirement planning | Leave a Comment »
Posted by William Byrnes on November 28, 2012
One question financial advisors are asking themselves today is whether life settlements have returned to the fold as a viable tool in their clients’ planning strategies. Read the entire article at http://www.lifehealthpro.com/2012/09/05/life-settlements-are-they-back
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Posted in Insurance, Retirement Planning, Taxation, Wealth Management | Tagged: life settlements, Retirement, Retirement planning | Leave a Comment »
Posted by William Byrnes on November 19, 2012
…insurance companies have begun building annuity products in a variety of shapes and sizes, and the latest crop of deferred income annuity products could pave the way for clients seeking to maximize retirement income security in the years leading up to retirement. Read the full article on AdvisorOne – http://www.advisorone.com/2012/11/08/how-new-deferred-annuities-provide-income-early-in
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Posted in Estate Tax, Pensions, Retirement Planning, Taxation, Wealth Management | Tagged: annuities, Financial services, insurance, Life annuity, Pension, Retirement, tax | Leave a Comment »
Posted by William Byrnes on November 15, 2012
Tax (Photo credit: 401(K) 2012)
With the election behind us, it is time for your clients to turn their attention to the looming tax reforms that should take shape over the next two months, and how these reforms can affect their retirement planning. Both arms of Congress will be working to reach a compromise on tax code provisions as basic as income tax rates before Jan. 1, after which the Bush-era tax cuts will expire, and rates could revert to pre-2001 levels.
Though President Obama spent little time discussing his views on tax-favored retirement accounts during his campaign, the plans he did set forth are indicative of the consequences for retirement savings. While this impact may not be immediately apparent to your clients, it is something that they need to consider as they plan for retirement this year and beyond. See the full article on National Underwriters’ Life Health Pro http://www.lifehealthpro.com/2012/11/13/retirement-planning-for-the-next-4-years-under-pre
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Posted in Estate Tax, Tax Policy, Taxation, Wealth Management | Tagged: Barack Obama, Retirement, Social Security, tax | Leave a Comment »
Posted by William Byrnes on March 26, 2012
Want some free marketing material for your annuities business? Look no further than the U.S. Government Accountability Office (GAO), which recently released a report touting annuities for their ability to provide retirement income sufficiency in an increasingly uncertain environment.
The GAO recommends that retirees delay their receipt of Social Security Benefits and either draw down savings and purchase an annuity or select annuity options from their defined benefit (DB) plan instead of electing to receive their benefits in a lump sum.
According to the GAO, the shift from defined benefit pension plans to defined contribution (DC) plans like 401(k)s necessitates a heightened focus on annuities and other options for guaranteeing income during retirement . And even if workers are saving more for retirement through their DC plans, they are still at greater risk than employees with DB pensions.
Read this complete analysis of the impact at AdvisorFX (sign up for a free trial subscription with full access to all of the planning libraries and client presentations if you are not already a subscriber).
For previous coverage of annuities in Advisor’s Journal, see How Much to Allocate to Annuities: A Critical Analysis (CC 11-109) & Drama Over the “Drawbacks” of Annuities (CC 11-62).
For in-depth analysis of the taxation of annuities, see Advisor’s Main Library: A—Amounts Received As An Annuity & B—Amounts NOT Received As Annuities.
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Posted in Wealth Management | Tagged: 401(k), Defined benefit pension plan, GAO, Government Accountability Office, Life annuity, Pension, Retirement, Social Security | Leave a Comment »
Posted by William Byrnes on November 29, 2011
In addition to confirming earlier beliefs, a new academic study about the effects of increase life-spans on savings rates has inspired new intrigue.
The conclusions reached by Optimal Retirement and Saving with Increasing Longevity, by David E. Bloom, David Canning, and Michael Moore are simple enough but need some further discussion: “[A] higher level of wages leads to earlier retirement and increasing savings rates. On the other hand an increase in life expectancy leads to an increase [in] the retirement age, but less than proportionately, while reducing savings rates.”
Consequently, the importance of planning for middle-income families increases. Without a solid plan, many are left working many more years than they hoped or planned.
Read this complete analysis of the impact at AdvisorFX (sign up for a free trial subscription with full access to all the planning libraries and client presentations if you are not already a subscriber).
For previous coverage of retirement values in Advisor’s Journal, see Appealing to Your Affluent Clients’ Retirement Planning Values (CC-11-42).
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Posted in Wealth Management | Tagged: David E. Bloom, Health, Life expectancy, Michael Moore, Pension, Retirement, Retirement planning, Saving | Leave a Comment »
Posted by William Byrnes on November 8, 2011
Last year Congress finally concluded about whether indexed annuities are securities. As a security, indexed annuities were subject to regulation by the SEC by including a provision in the in the Dodd-Frank Wall Street Reform Act that defines indexed annuities as insurance products outside the agency’s jurisdiction.
This year, some states are refusing to take Congress’s “NO” for an answer. In the latest action on the issue, Illinois Secretary of State Jesse White issued an order on May 24 indirectly concluding that indexed annuities are securities under Illinois law.
Read this complete analysis of the impact at AdvisorFX (sign up for a free trial subscription with full access to all the planning libraries and client presentations if you are not already a subscriber).
For previous coverage of indexed annuities in Advisor’s Journal, see Indexed Annuities: Still Insurance (CC 10 42).
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Posted in Wealth Management | Tagged: Congress, Illinois, insurance, Jesse White, Life annuity, Pension, Retirement, Wall Street | Leave a Comment »
Posted by William Byrnes on October 19, 2011
Although at least 25 percent of all US retirement assets are held in personal retirement accounts (IRAs), until now, only limited data existed on asset allocations in IRAs. Consequently, the retirement prospects of retirees owning IRAs have been a mystery.
New developments from the Employee Benefit Research Institute (EBRI) gives us a preview into self-directed accounts like IRAs, providing hard data on the investing behavior of account owners and giving us insight into common problem areas in these accounts.
EBRI’s database includes information on 11.1 million individuals’ 14.1 million individual retirement accounts. Assets in the tracked accounts amount to $732.9 billion.
Read this complete analysis of the impact at AdvisorFX (sign up for a free trial subscription with full access to all of the planning libraries and client presentations if you are not already a subscriber).
For previous coverage of IRAs in Advisor’s Journal, see Maximize IRA Stretch with Individual Inherited IRA Accounts (CC 10-69) and To Convert or Not to Convert, That is the Question (CC 07-40).
For in-depth analysis of IRAs, see Advisor’s Main Library: A – Introduction to Individual Retirement Plans (IRAs).
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Posted in Taxation, Wealth Management | Tagged: Business, Individual Retirement Account, Pension, Retirement, Roth IRA, tax, Traditional IRA, TurboTax | Leave a Comment »
Posted by William Byrnes on October 4, 2011
A commonly known characteristic of annuities is providing retirees retirement income security. However, a more complicated aspect is deciding exactly how much of a retiree’s nest egg should be allocated to an annuity to reduce the person’s probability of outliving their retirement income.
The Employee Benefits Research Institute takes some of the guesswork out of allocation in a study released this month. The study analyzes the impact of longevity and immediate annuities on retirement income adequacy. The study finds that the “optimal level of annuitization and asset allocation that would give a desired level of confidence that people will have enough retirement income, based on the three different types of risk: investment income, longevity, and long-term care.”
The study’s results offer a prescient guide for advisors looking to maximize their client’s retirement success through annuities. Although parts of the study are quite technical, briefly reviewing the results can be enlightening.
Read this complete analysis of the impact at AdvisorFX (sign up for a free trial subscription with full access to all of the planning libraries and client presentations if you are not already a subscriber).
For previous coverage of annuities in Advisor’s Journal, see Drama Over the “Drawbacks” of Annuities (CC 11-62).
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Posted in Wealth Management | Tagged: Business, Financial services, Income, insurance, Life annuity, Long-term care, Pension, Retirement | Leave a Comment »
Posted by William Byrnes on July 27, 2011
A recent Businessweek article highlighting what it calls the “drawbacks” of annuities is the latest in a long line of articles panning the financial products. But do annuities—especially variable annuities—endure justified scrutiny, or are annuities just an easy target of the mainstream media? And, where annuities are the right choice for your clients, how can you counter the negative press to help them make the right investing decision? Read this complete analysis of the impact at AdvisorFX (sign up for a free trial subscription with full access to all of the planning libraries and client presentations if you are not already a subscriber).
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Posted in Wealth Management | Tagged: annuities, Business, Cash flow, Financial services, insurance, Life annuity, Pension, Retirement | Leave a Comment »
Posted by William Byrnes on April 12, 2011
Now more than ever, clients and potential clients are concerned about how they’re going to continue to enjoy the lifestyle they’ve grown accustomed to pre-retirement. Most clients are still looking for the same basic retirement advice from their advisors—advice on how to define and meet their retirement goals.
Following the recent financial crisis, your affluent clients are more likely to gravitate to conservative investment strategies that will preserve their hard-earned principle. But many of them are not clear on the risks of that strategy—they aren’t aware of the opportunities they’re missing.
You can help them reach the retirement they want and find the level of risk appropriate to their long-term goals. Here’s a breakdown of their values and priorities and how you can appeal to them. Read this complete analysis of the impact at AdvisorFX (sign up for a free trial subscription with full access to all of the planning libraries and client presentations if you are not already a subscriber).
For previous coverage of high net worth investors in Advisor’s Journal, see High Net Worth Clients: How to Find Them, How to Service Them (CC 10-07).
For in-depth analysis of investment planning for affluent clients, see Advisor’s Main Library: Investment Planning.
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Posted in Wealth Management | Tagged: Business, Certified Financial Planner, Financial adviser, Financial services, Investing, Investment Advisor, Retirement, United States | Leave a Comment »
Posted by William Byrnes on April 8, 2011
Why is this Topic Important to Wealth Managers? This topic discusses a relatively new form of retirement investment offered by companies to their employees. The topic presents information about target date funds, what they are, who may use them and how they work. The defined contribution retirement market is a prime location for wealth managers to earn fees and commissions. Thus, staying informed about new market updates is provided to give managers an edge when exploring retirement benefits.
The Government Accountability Office recently published a report stating that financial security of millions of Americans in their retirement years will substantially depend on their savings in 401(k) and other defined contribution (DC) plans. [1]The GAO notes, to help ensure adequate financial resources for retirement, participants in DC plans should make adequate contributions during their working years and invest contributions in a way that will facilitate adequate investment returns over time.
To that end, the Pension Protection Act of 2006 (PPA) included various provisions designed to encourage greater retirement savings among workers eligible to participate in 401(k) plans, such as provisions that facilitate plan sponsors’ adoption of automatic enrollment policies. [2]
Under such policies, eligible workers are automatically enrolled unless they explicitly decide to opt out of participation. Because an automatic enrollment program must also include a default investment—a vehicle in which contributions will be invested absent a specific choice by the plan participant—the act also directed the Department of Labor to assist employers in selecting default investments that best serve the retirement needs of workers who do not direct their own investments. Since that time, target date funds (TDF)—that is, investment funds that invest in a mix of assets, and shift from higher-risk to lower-risk investments as a participant approaches their “target” retirement date—have emerged as by far the most popular default investment.
TDFs are designed to provide an age appropriate asset allocation for plan participants over time. However, target date funds vary considerably in asset structures and in other ways, largely as a result of the different objectives and investment philosophies of fund managers. In the years approaching the retirement date, for example, some TDFs have a relatively low equity allocation—35 percent or less—so that plan participants will be insulated from excessive losses near retirement. Other TDFs have an equity allocation of 60 percent or more in the belief that relatively high equity returns will help ensure that retirees do not deplete savings in old age.
TDFs also vary considerably in other respects, such as in the use of alternative assets and complex investment techniques. In addition, allocations are based in part on assumptions about plan participant actions—such as contribution rates and how plan participants will manage 401(k) assets upon retirement—which may differ from the actions of many participants. These investment differences and differences between assumed and actual participant behavior may have significant implications for the retirement security of plan participants invested in TDFs.
Read the analysis at AdvisorFYI
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Posted in Retirement Planning | Tagged: 401(k), Government Accountability Office, Investment, Pension, Pension Protection Act of 2006, Retirement, Target date fund, United States Department of Labor | Leave a Comment »
Posted by William Byrnes on March 2, 2011
SEP is a written plan that allows a business to make contributions toward executive’s retirement and employees’ retirement without getting involved in a more complex qualified plan.
Under a SEP, the business makes the contributions to a traditional individual retirement arrangement (called a SEP-IRA) set up by or for each eligible employee. A SEP-IRA is owned and controlled by the employee, and the business makes contributions to the financial institution where the SEP-IRA is maintained.
SEP-IRAs are set up for, at a minimum, each eligible employee. An eligible employee means an individual who meets all the following requirements: the individual has reached age 21, has worked for the business in at least 3 of the last 5 years, and has received at least $550 in compensation from the business in 2010.
There are three basic steps in setting up a SEP. Read the analysis at AdvisorFYI
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Posted in Retirement Planning | Tagged: Business, Employment, Individual Retirement Account, Internal Revenue Service, Pension, Retirement, SEP-IRA, tax | Leave a Comment »
Posted by William Byrnes on February 15, 2011
Why is this Topic Important to Wealth Managers? Discusses retirement plan investments with regards to client retirement planning. Provides types of investments retirement plans can and cannot make.
What types of investments can a retirement plan make?
Although there is no list of approved investments for retirement plans, there are special rules contained in the Employee Retirement Income Security Act of 1974 (ERISA) that apply to retirement plan investments.
In general, a plan sponsor or plan administrator of a qualified plan who acts in a fiduciary capacity is required, in investing plan assets, to exercise the judgment that a prudent investor would use in investing for his or her own retirement.
In addition, certain rules apply to specific plan types. For example, there are different limits on the amount of employer stock and employer real property that a qualified plan can hold, depending on whether the plan is a defined benefit plan, a 401(k) plan, or another kind of qualified plan.
Read the entire analysis at AdvisorFYI.
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Posted in Retirement Planning | Tagged: 401(k), Business, Defined benefit pension plan, Employee Retirement Income Security Act, Human Resources, Investment, Pension, Retirement | Leave a Comment »
Posted by William Byrnes on February 8, 2011
Recently some wealth managers have established trustee services with regards to retirement accounts. It’s a good fit, generally, when the wealth manager can offer clients information regarding deductible contributions to a retirement account, and further act as a fiduciary vis-à-vis trustee of those funds.
What are the basic requirements in order to act in the capacity as a trustee for IRA and other retirement account purposes?
First, an Individual Retirement Account (IRA) must be a trust created or organized in the United States for the exclusive benefit of an individual or his beneficiaries. Such trust must be maintained at all times as a domestic trust in the United States. The instrument creating the trust must be in writing.
Secondly, the trustee of an IRA trust may be a person other than a bank if the person demonstrates to the satisfaction of the Commissioner of the Internal Revenue Service that the manner in which the person will administer trusts will be consistent with the requirements of the tax code. The person must submit a written application including the information discussed below. Read further at AdvisorFYI
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Posted in Pensions, Trusts | Tagged: Individual Retirement Account, Internal Revenue Service, Retirement, Roth IRA, tax, Trust law, Trustee, United States | Leave a Comment »
Posted by William Byrnes on January 29, 2011
President Obama’s tax compromise—the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (Tax Relief Act)—includes a provision that permits qualified charitable distributions to be made directly from an individual retirement account.
Generally, to make a charitable contribution from an IRA, the account owner has to take a distribution from the account, pay any tax due on the contribution, and then make the charitable contribution. An account owner can also name a charity as a beneficiary of the retirement account. Direct qualified charitable distributions take out the middle step, keeping the distribution out of the taxpayer’s taxable income … Read this complete analysis of the impact at AdvisorFX (sign up for a free trial subscription with full access to all of the planning libraries and client presentations if you are not already a subscriber).
For previous coverage of individual retirement accounts in Advisor’s Journal, see Maximize IRA Stretch with Individual Inherited IRA Accounts (CC 10-69) and The Automatic IRA Act of 2010: Boon for Advisors? (CC 10-56).
For in-depth analysis of individual retirement accounts, see Advisor’s Main Library: IRAs and SEPs.
We invite your questions and comments by posting them in our blog AdvisorFYI or by calling the Panel of Experts.
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Posted in Taxation | Tagged: Barack Obama, Boon, Individual Retirement Account, Internal Revenue Service, Retirement, Roth IRA, tax, Unemployment benefits | Leave a Comment »
Posted by William Byrnes on December 30, 2010
Why is this Topic Important to Wealth Managers? Provides analysis for those wealth managers who may be considering a Roth IRA conversion for their clients. Discusses potential benefits and detriments as well as comparative analysis.
There is a lot of talk of Roth IRA roll-overs this year as 1) the AGI limit on conversions has been lifted, and 2) for conversions in 2010, the tax owed is required as income not in 2010, but rather half in 2011 and half in 2012. And the tax rates will remain stable and low for both these years – signed into law as part of the Obama Tax Cut Compromise (See rates for 2011 and 2012 here).
On its face, many wealth managers have good reason to consider the conversion for their clients this year. But the question becomes, does it make sense, economically?
The crux of the problem lies in the early withdrawal penalties on the IRA, which is 10% if the account owner takes a distribution before age 59 1/2 or past allowable annual distribution limits before age 70 1/2.
Let’s take a look at two examples of situations where conversions may be considered this year (thus one day left….) To read this article excerpted above, please access www.AdvisorFX.com
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Posted in Retirement Planning | Tagged: Adjusted Gross Income, AGI, Individual Retirement Account, Retirement, Roth IRA, tax, Tax rate, Traditional IRA | Leave a Comment »
Posted by William Byrnes on December 7, 2010
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Although IRS-approved retirement plans are intended to allow plan participants to sock away cash for retirement, some emergencies will permit a participant to withdraw plan funds prior to retirement—and there may be options to reduce or eliminate any tax due on the withdrawal.
Serving as a great reminder of the general principals of emergency distributions, the IRS recently ruled whether a qualified plan was permitted to make “unforeseeable emergency distributions” in three fact scenarios. In the first, the plan participant wanted to take an emergency distribution to repair water damage to his home. In the second situation, the participant requested an emergency distribution to pay his nondependent son’s funeral expenses. In the third situation, the participant requested an emergency distribution to pay “accumulated credit card debt.” Read this complete article at AdvisorFX (sign up for a free trial subscription with full access to all of the planning libraries and client presentations if you are not already a subscriber).
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Posted in Taxation | Tagged: Business, Credit card debt, Individual Retirement Account, Internal Revenue Service, Pension, Retirement, Roth IRA, tax | Leave a Comment »
Posted by William Byrnes on October 15, 2010
Many clients with employer-provided retirement accounts can now convert their accounts to Roth accounts thanks to the Small Business Jobs and Credit Act of 2010, H.R. 5297—which was signed into law by President Obama on Monday, September 27. The Act allows 401(k), 403(b), and governmental 457(b)participants to roll all, or a portion, of their account balances into an employer-provided Roth account. Converting from a traditional to a Roth account can have substantial tax benefits for your clients. But because of the complexity of the decision whether to convert, most clients will need their advisor’s assistance when deciding whether to convert their accounts.
For an analysis of the impact of the extension of the Roth Conversion Window, see Advisor’s Journal Small Business Bill Extends the Roth Conversion Window.
For previous coverage in Advisor’s Journal, see Liberalized IRA to Roth IRA Conversion Rules in 2010
For in-depth analysis of the topic of Roth IRAs, see Advisor’s Main Library Section 17.1 IRAs, SEPs and Simple Plans G—Roth IRAs
We invite your questions and comments by posting them in our blog AdvisorFYI, or by calling the Panel of Experts.
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Posted in Taxation, Wealth Management | Tagged: 401(k), 403(b), Barack Obama, Home, Individual Retirement Account, Personal Finance, Retirement, Roth IRA | 1 Comment »
William Byrnes' Tax, Wealth, and Risk Intelligence 