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William Byrnes (Texas A&M) tax & compliance articles

Posts Tagged ‘Roth IRA’

Tax Time Guide: Still Time to Contribute to an IRA for 2014

Posted by William Byrnes on March 18, 2015


IRS logo“Taxpayers still have time to contribute to an IRA for 2014 and, in many cases, qualify for a deduction or even a tax credit”, stated the IRS in this week’s newswire (50-IR-2015). (see 7 Tax Facts for Making IRA Contributions)

Available in one form or another since the mid-1970s, individual retirement arrangements (IRAs) are designed to enable employees and self-employed people to save for retirement. Contributions to traditional IRAs are often deductible, but distributions, usually after age 59½, are generally taxable. Though contributions to Roth IRAs are not deductible, qualified distributions, usually after age 59½, are tax-free. Those with traditional IRAs must begin receiving distributions by April 1 of the year following the year they turn 70½, but there is no similar requirement for Roth IRAs.

see 5 Tax Facts for Year End IRA

Most taxpayers with qualifying income are either eligible to set up a traditional or Roth IRA or add money to an existing account. To count for 2014, contributions must be made by April 15, 2015. In addition, low- and moderate-income taxpayers making these contributions may also qualify for the saver’s credit when they fill out their 2014 returns.

see Can an individual roll over or convert a traditional IRA or other eligible retirement plan into a Roth IRA?

Eligible taxpayers can contribute up to $5,500 to an IRA. For someone who was at least age 50 at the end of 2014, the limit is increased to $6,500. There’s no age limit for those contributing to a Roth IRA, but anyone who was at least age 70½ at the end of 2014 is barred from making contributions to a traditional IRA for 2014 and subsequent years.

The deduction for contributions to a traditional IRA is generally phased out for taxpayers covered by a workplace retirement plan whose incomes are above certain levels. For someone covered by a workplace plan during any part of 2014, the deduction is phased out if the taxpayer’s modified adjusted gross income (MAGI) for that year is between $60,000 and $70,000 for singles and heads of household and between $0 and $10,000 for married persons filing separately. For married couples filing a joint return where the spouse who makes the IRA contribution is covered by a workplace retirement plan, the income phase-out range for the deduction is $96,000 to $116,000. Where the IRA contributor is not covered by a workplace retirement plan but is married to someone who is covered, the MAGI phase-out range is $181,000 to $191,000.

see When Are IRA Funds Taxed?

The deduction for contributions to a traditional IRA is claimed on Form 1040 Line 32 or Form 1040A Line 17. Any nondeductible contributions to a traditional IRA must be reported on Form 8606.

Even though contributions to Roth IRAs are not deductible, the maximum permitted amount of these contributions is phased out for taxpayers whose incomes are above certain levels. The MAGI phase-out range is $181,000 to $191,000 for married couples filing a joint return, $114,000 to $129,000 for singles and heads of household and $0 to $10,000 for married persons filing separately. For detailed information on contributing to either Roth or traditional IRAs, including worksheets for determining contribution and deduction amounts, see Publication 590-A, available on IRS.gov.

see Recharacterizing Roth IRAs Smartly: Use Multiple Roths

Also known as the retirement savings contributions credit, the saver’s credit is often available to IRA contributors whose adjusted gross income falls below certain levels. For 2014, the income limit is $30,000 for singles and married persons filing separate returns, $45,000 for heads of household and $60,000 for married couples filing jointly.

Eligible taxpayers get the credit even if they qualify for other retirement-related tax benefits. Like other tax credits, the saver’s credit can increase a taxpayer’s refund or reduce the tax owed. The amount of the credit is based on a number of factors, including the amount contributed to either a Roth or traditional IRA and other qualifying retirement programs. Form 8880 is used to claim the saver’s credit, and its instructions have details on figuring the credit correctly.

see High-income clients able to fund Roth IRAs?

Tax Facts on Individuals & Small Business

2014_tf_on_individuals_small_businesses-m_1Due to a number of recent changes in the 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 competitive information to help them provide the best answers for their clients and to obtain new clients.  National Underwriter’s Tax Facts series is the only resource written specifically for the financial advisor and producer providing fast, clear, and authoritative answers to pressing questions, and it does so in the convenient, timesaving, Q&A format for which Tax Facts has been famous over 50 years.

Anyone interested can try Tax Facts Online risk-free for 30 days, with a 100% guarantee of complete satisfaction.  Call 1-800-543-0874.

Posted in Retirement Planning | Tagged: , | 1 Comment »

5 Tax Facts for Year End IRA

Posted by William Byrnes on December 11, 2014


Individual Retirement Accounts are an important way to save for retirement. A taxpayer who has an IRA or who may open one soon need to be aware of four key year-end Tax Facts.

1. What is the IRA Annual Contribution Limit for 2014?  A taxpayer can contribute up to a maximum of $5,500 ($6,500 if 50 or older) to a traditional or Roth IRA. If a taxpayer files a joint return with a spouse, each taxpayer may contribute to an IRA even if only one has taxable compensation.  In some cases, the taxpayer may need to reduce the income tax deduction allowed for the traditional IRA contributions.  This income tax deduction reduction applies if one of the spouses has a retirement plan already at work and their combined income is above a certain level.

2. What is the Last Day to Contribute to 2014 IRA Limit? A taxpayer can actually contribute in 2015 toward the 2014 IRA contribution maximum amount allowed, but the last day for such catch up contribution is April 15, 2015 (the date the tax return for 2014 is due).

3. What is the Penalty for Contributing More Than the Limit?  A taxpayer is subject to a six percent tax on the excess contribution above the IRA contribution limit for the year.  Worse though, the tax applies each year that the excess amount remains in the IRA account.  To avoid this penalty, a taxpayer must withdraw the excess amount from the IRA by April 15, 2014, or by the date of any 2014 filing extension.

4. When Must a Taxpayer Begin Taking the IRA Required Minimum Distributions (RMD)?  When a taxpayer reaches age 70½, then a required minimum distribution, or RMD, is required from a traditional IRA.  However, a Roth IRA does not have a RMD.  The RMD is required by Dec. 31, 2014.  But the deadline is April 1, 2015 if the taxpayer reached 70½ in 2014.

When a taxpayer has more than one traditional IRA, then the RMD calculation is required to be made separately for each IRA. But, the total RMD can be withdrawn from just one, or more of them.  The penalty for not taking the full annual RMD amount is a 50 percent excise tax on the RMD amount not withdrawn.

5. What is the Saver’s credit?  The formal name of the saver’s credit is the retirement savings contributions credit. A taxpayer may potentially qualify for this credit if contributing to an IRA or retirement plan. The saver’s credit can increase the tax refund or reduce the tax owed for 2014.

2015_tf_on_indiv_sm_business_cover-mTax Facts on Individuals & Small Business focuses exclusively on what individuals and small businesses need to know to maximize opportunities under today’s often complex tax rules.  It is the essential tax reference for financial advisors, & planners; insurance professionals; CPAs; attorneys; and other practitioners advising small businesses and individuals.

Organized in a convenient Q&A format to speed you to the information you need, Tax Facts on Individuals & Small Business delivers the latest guidance on:
• Healthcare & New Medicare Tax and Net Investment Income tax
• Business Deductions and Losses including Home Office
• Contractor vs. Employee — clarified!
• Business Life Insurance
• Small Business Entity Choices & Small Business Valuation
• Capital Gains & Investor Losses
• Accounting — including guidance on how standards change as the business grows

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Recharacterizing Roth IRAs Smartly: Use Multiple Roths

Posted by William Byrnes on September 11, 2014


International Financial Law Prof Blog –

The benefits of creating a stream of tax-free income during retirement is key to most successful retirement income strategies, and a Roth conversion that allows the client to “undo” the transaction if investments perform poorly is an attractive option for accomplishing this goal. However, despite the benefits that recharacterizing a Roth conversion can offer, this route can sometimes function as a double-edged sword by erasing the gains on successful investments within the account. Despite this, …

Posted in Retirement Planning, Wealth Management | Tagged: | Leave a Comment »

The real Roth conversion question of 401(k) vs. IRA

Posted by William Byrnes on July 7, 2014


For some clients, moving traditional retirement funds into a Roth account may seem like a no-brainer, but once the decision to convert is made, choosing whether to use a Roth IRA or Roth 401(k) can have potentially significant repercussions.

While the typical goal of a Roth conversion — reducing tax liability during retirement — can be achieved with either account, that is where the similarities end.  In order to fully achieve the client’s goals, it is the dissimilarities between these two Roth varieties that can make all the difference.

Read Robert Bloink and WIlliam Byrnes’ analysis of the Roth conversion at 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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High-income clients able to fund Roth IRAs?

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 < !

2013_tf_insurance_emp_benefits_combo_covers-m_2Authoritative 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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9 retirement savings tax tips

Posted by William Byrnes on April 17, 2014


You might be able to muddle through retirement without knowing each and every line of Uncle Sam’s tax code. But you’ll likely give the federal government more than its fair share of your nest egg if you don’t know what William Byrnes, author of National Underwriter’s Tax Facts, calls the big retirement plan tax facts.

Read the USA Today analysis, written by renown financial journalist Robert Powell:  “Stretching the retirement savings available for an additional 20 years of life expectancy requires correctly managing the complex retirement taxation rules established by Congress and the IRS,” says Byrnes, who is also associate dean at the Thomas Jefferson School of Law in San Diego, Calif.

The full analysis is available on USA Today at 9 retirement savings tax tips!

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my newest book: 2013 Tax Facts on Insurance & Employee Benefits

Posted by William Byrnes on November 21, 2012


http://www.nationalunderwriter.com/2013-tax-facts-on-insurance-employee-benefits-269.html

Organized in a convenient Q&A format to speed you to the information you need, 2013 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 2013:

  • Enhanced explanation of the Disclosure Regulations for Retirement Plan Service Providers
  • Expanded section on the taxation of annuities
  • More than 30 new Planning Points, written by practitioners for practitioners, in the following areas:
    • Life Insurance
    • Health Insurance
    • Federal Income Taxation
    • Estate Taxation

Plus, you’re kept up-to-date with online supplements for critical developments.

Posted in Estate Tax, Pensions, Retirement Planning, Taxation, Wealth Management | Tagged: , , , , , , , , | Leave a Comment »

 
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