Retirement Planning
The Time to Consider Roth Conversion Recharacterizations is Now!
If you would like to revisit your 2010 Roth IRA conversion in light of recent stock market declines, time is running out. Even if you have already filed your 2010 tax return, you are allowed to recharacterize (any portion) of a 2010 conversion back from a Roth to a Traditional IRA within six months (October 17, 2011) of the original filing deadline (April 18, 2011). This is one of the few situations where you are able to use 20/20 hindsight and undo something that didn’t work out as advantageously as originally planned. If the value of a Roth IRA is. Read More.
New Law Extends Bush-Era Tax Cuts, Reinstates Estate & Gift Tax
On December 17, 2010, President Obama signed into law the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 , or H.R. 4853 (hereafter, “the Act”). The bipartisan legislation extends for two additional years many of the so-called “Bush-era tax cuts” originally enacted under the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA). Key provisions of the new law extend the individual and capital gains/dividend tax cuts for all taxpayers through 2012, enact a payroll tax cut for 2011, provide a two-year AMT patch, and establish a top estate tax rate of 35 percent with an exclusion of $5 million.
Inflation-Adjusted Retirement Plan Contribution Limits for 2011
Every year, the IRS issues new limits that will apply to retirement plan contributions for the following year. On October 28th, the IRS announced the cost of living adjustments for 2011. Continuing a trend from 2009, there are virtually no changes. Below is a brief list of the 2011 limits, noting whether or not there will be an increase applied:
Prepare Now, You Could Owe More in Taxes Next Year
The package of tax cuts enacted 10 years ago under the Bush Administration is scheduled to expire on December 31st this year. Although there is a tax extenders bill currently under consideration in Congress, any further action has been delayed until after next month’s mid-term elections. As CB&H’s Mark Burger told West Palm Beach’s CBS12 , there are measures individuals can take to prepare for a full sunset. “We’re talking about accelerating income, looking at converting traditional IRAs into Roth IRAs, electing to take the income in 2010 if we see 2011 and 2012 tax rates are higher, defer recognizing losses till 2011 or. Read More.
IRS Issues FAQ Guidance on Benefit Plan Rollovers, Conversions and Contributions
The IRS recently made available some resources to help answer taxpayer questions regarding 2010 rollovers and conversions to Roth IRAs, the calculation of plan contributions for the self-employed, and waivers of the 60-day rollover requirement. Roth Conversions FAQ – 2010 Rollovers and Conversions to a Roth IRA To qualify as a 2010 rollover or conversion to a Roth IRA, a traditional IRA or an employer-sponsored retirement plan must make a distribution in 2010 (or your taxable year beginning in 2010 if you are not a calendar-year taxpayer). The traditional IRA or plan can make the distribution: directly to your new. Read More.
New Small Business Jobs Act Allows Certain 401(k), 403(b) & 457(b) Rollovers to Roth Accounts
On September 27, 2010, President Obama signed into law the Small Business Jobs Act of 2010 , or H.R. 5297 (hereafter, “the Act”). The Act offers taxpayers some new options for retirement savings, including a first-time opportunity that allows participants in 401(k) and other plans to roll over existing balances to certain Roth accounts. Effective immediately, the Act allows 401(k), 403(b), and 457(b) plan participants to roll over certain pre-tax account balances into designated Roth accounts within their plans. With an exception for any after-tax contributions, this rollover will be taxable. Unless the taxpayer elects otherwise, any amount rolled over in 2010 will be included ratably. Read More.