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Saver's
Credit
New for
2002! The
Saver's Credit provides a nonrefundable
tax credit for contributions made
by eligible, low income taxpayers
to IRAs and qualified elective income
deferrals. The plan provides incentives
for lower income individuals to
save for their retirement through
available qualified plans. To qualify,
the taxpayer must have reached the
age of 18 by the close of the year
and cannot be a full-time student
or dependent of another. The credit
ranges from 10% to 50% of the first
$2,000 contributed to a qualified
plan during the year. The credit
gradually phases out as the taxpayer's
income increases and is fully phased
out for joint filers when their
gross income (AGI) reaches $50,000
($25,000 for single individuals
and $37,500 for those filing head
of household).
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Minimum
Required IRA Distributions Reduced
The IRS released regulations in
2002 that substantially simplify
rules for required minimum distributions
(RMD) from IRAs and certain employer-sponsored
defined contribution plans.
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There are new life expectancy
tables that allow smaller
distributions to be taken
over a longer period.
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The calculation of the RMD
has been simplified by eliminating
certain variables
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Rules regarding separate
accounts with different beneficiaries
have been clarified.
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Some flexibility is now available
to change beneficiaries and
split accounts allowing the
heirs to retain more of the
tax-deferred income for a
longer period of time.
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The IRS does not allow IRA owners
to keep funds in a Traditional IRA
indefinitely. Eventually, assets
must be distributed and taxes paid.
If there are no distributions, or
if the distributions are not large
enough, the IRA owner may have to
pay a 50% penalty on the amount
not distributed as required. Generally,
distribution begins in the year
the IRA owner attains the age of
70½.
The Minimum Required Distribution
Rules for IRAs have changed a number
of times in the past few years.
The rules included in this brochure
reflect the changes included in
the Final IRS Regulations, which
are effective for tax year 2003
but can be used in 2002.
BEGINNING DATE REQUIREMENT
IRA owners must take at least a
minimum amount from their IRA each
year; starting with the year they
reach age 70½.
If a taxpayer fails to take a distribution
in the year they reach 70½, they
can avoid a penalty by taking that
distribution no later than April
1st of the following year. However,
that means the IRA must take two
distributions in the following year,
one for the year in which they reached
age 70½ and one for the current
year.
If an IRA owner dies after reaching
age 70½, but before April 1st of
the next year, no minimum distribution
is required because death occurred
before the required beginning date.
MULTIPLE IRA ACCOUNTS
For purposes of determining the
minimum distribution, all Traditional
IRA accounts owned by an individual
are treated as one and the minimum
distribution can be taken from any
combination of the accounts. If
the owner chooses not to take the
minimum distribution from each account,
it is not uncommon for IRA trustees
to require written certification
that the owner took the minimum
distribution from other accounts.
DETERMINING THE DISTRIBUTION
The minimum amount that must be
withdrawn in a particular year is
the total value of all IRA accounts
divided by the number of years the
IRA owner is expected to live.
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Determining Total Value:
The total value is based on
the sum of the value of all
the owner’s accounts at the
end of the business day on
December 31st of the prior
year. Generally, IRA account
trustees will provide this
information on the year-end
statements or on IRS Form
5498.
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Determining the Distribution
Period: The IRS provides two
tables for use in determining
the IRA owner’s life expectancy
(referred to as “distribution
period” by the IRS). Generally,
IRA owners will use the “Uniform
Lifetime Table” to determine
their “distribution period.”
If the IRA owner’s spouse
is the sole beneficiary (on
all the IRA accounts), the
Joint and Last Survivor Table
may be used. However, the
Uniform Lifetime Table will
always produce the smallest
minimum distribution, unless
the spouse is more than 10
years younger than the IRA
account owner. Example: The
IRA owner is 75 and from the
“Uniform Lifetime Table,”
the owner’s life expectancy
is 22.9 years.
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Determining Age: Use the
owner’s oldest attained age
for the year of the distribution.
Example: Suppose an IRA owner
takes a distribution in February,
when the owner’s age of 74,
but later in November, turns
75. For purposes of determining
the owner’s life expectancy,
the oldest attained age for
the year, 75 would be used
in computing the minimum distribution.
The same rule is used for
the spouse beneficiary, if
applicable.
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Example: The IRA account
owner is age 75 and the owner’s
spouse, who is the sole beneficiary
of the accounts, is age 72.
Since the spouse is less than
10 years younger the IRA account
owner, the Uniform Lifetime
Table will produce the smallest
required distribution. From
the table, we determine the
owner’s life expectancy to
be 22.9. The owner has three
IRA accounts with a combined
value of $87,000 at the end
of the prior year. The minimum
distribution is $3,537 ($87,000
/ 22.9).
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UNIFORM LIFETIME TABLE –
The following table is the one that
is generally used to determine the
Required Minimum Distribution from
Traditional IRA accounts. Not illustrated,
because of the size, are the Joint
and Survivor Life Table used to
determine RMDs when the sole beneficiary
spouse is more than 10 years younger
than the IRA owner and the Single
Life Table used for certain beneficiary
RMD determinations For table values
not illustrated, please call this
office.
TIMING OF THE DISTRIBUTION
The minimum distribution
computation determines the amount
that must be withdrawn during the
calendar year. The distributions
can be taken all at once, sporadically
or in a series of installments (monthly,
quarterly, etc.), as long as the
total distributions for the year
are at least the minimum required
amount.
Amounts that must be distributed
(required distributions) during
a particular year are not eligible
for rollover treatment.
MAXIMUM DISTRIBUTION
There is no maximum limit on distributions
from a Traditional IRA and as much
can be withdrawn as the owner wishes.
However, if more than the required
distribution is taken in a particular
year, the excess cannot be applied
toward the minimum required amounts
for future years.
UNDERDISTRIBUTION
PENALTY
Distributions that are less than
the required minimum distribution
for the year are subject to a 50%
excise tax (excess accumulation
penalty) for that year on the amount
not distributed as required.
Example: The owner’s required minimum
distribution for the calendar year
was $10,000, but the owner only
withdrew $4,000. The excess accumulation
penalty is $3,000, computed as follows:
50% of ($10,000 - $4,000).
If the failure to withdraw the minimum
amount or part of the minimum amount
was due to reasonable error, and
the owner has taken, or is taking,
steps to remedy the insufficient
distribution, the owner can request
that the penalty be excused. However,
the penalty must first be assessed
and then refunded by the IRS if
the request is approved.
NOT REQUIRED TO
FILE
Even though the IRA owner is not
required to file a tax return, they
are still subject to the minimum
required distribution rules and
could be liable for the under-distribution
penalty even if no income tax would
have been due on the under-distribution.
DEATH OF THE IRA
OWNER
If the IRA owner dies on or after
the required distribution beginning
date, a distribution must be made
in the year of death, as if the
IRA owner had lived the entire year.
If the distribution is after the
owner’s death, the minimum amount
must be distributed to a beneficiary.
BENEFICIARY DISTRIBUTIONS
When an IRA owner dies after beginning
the required distributions and the
beneficiary is an individual, the
beneficiary must begin taking distributions
the year after the IRA owner’s death
as follows:
Spouse as Sole Beneficiary: The
IRS permits a sole beneficiary spouse
far more options than it does other
beneficiates. When the spouse is
the sole beneficiary the spouse
has the following options:
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Convert the IRA to their
own account, thereby delaying
additional distributions until
they reach age 70 ½.
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Or, if already age 70 ½,
convert the IRA to their own
account and begin taking RMD
based on their attained age
using the Uniform Distribution
Table.
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Treat the IRA as if it were
their own, frequently referred
to as recharacterizing the
IRA to a “Beneficial IRA”
and naming new beneficiaries.
The spouse must begin taking
minimum distributions in the
year following the owner’s
death based on their life
expectancy using the Single
Life Table. Distributions
from Beneficial IRAs are not
subject to the premature distribution
penalties. Later, after they
are no longer subject to the
premature distribution penalty,
the IRA can be converted as
their own and they can choose
to stop taking distributions
until age 70 ½.
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The choice depends
on the surviving spouse’s financial
needs and goals and in most cases
requires careful planning.
Caution: The
sole beneficiary requirement is
not met if the beneficiary is a
trust, even if the spouse is the
sole beneficiary of the trust.
Other Individual
Beneficiaries: If the beneficiary
or beneficiaries include individuals
other than the spouse, then the
first required distribution is the
calendar year following the year
of the IRA owner’s death. Using
the Single Life Table, the post-death
distribution period used to determine
the RMD is the longest of:
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The remaining life expectancy
of the deceased IRA owner using
the deceased’s attained age
in the year of death and subtracting
one for each year subsequent
year after the date of death.
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The remaining life expectancy
of the IRA beneficiary using
the beneficiaries attained age
in the year of death and subtracting
one for each year subsequent
year after the date of death.
The beneficiaries’ remaining life
expectancy is determined using the
oldest beneficiary’s age as of their
birthday in the calendar year immediately
following the IRA owner’s death
or for those accounts that were
separated by the end of the year
after the year after death, the
age of each beneficiary. Where the
beneficiaries include the spouse,
account separation must be completed
by September 30th instead of year-end
to take advantage of the spouse
sole beneficiary provisions.
5-Year Option: A beneficiary,
who is an individual, may be able
to elect to take the entire account
by the end of the fifth year, following
the year of the owner’s death. If
this election is made, no distribution
is required for any year before
that fifth year.
The above rules apply only to distributions
where the beneficiaries are all
individuals and occur after the
IRA owner has begun or is required
to begin minimum IRA distributions.
For distribution options for non-individual
beneficiaries or for distribution
options where the IRA owner dies
prior to beginning the required
minimum distributions, please call
this office.
PLANNING CAN MINIMIZE THE TAX
Advance planning can, in many cases,
minimize or even avoid taxes on
Traditional IRA distributions. Often,
situations will arise where a taxpayer’s
income is abnormally low due to
losses, extraordinary deductions,
etc., where taking more than the
minimum in a year might be beneficial.
This is true even for those who
may not need to file a tax return
but can increase their distributions
and still avoid any tax. If you
need assistance with your planning
needs, please call this office for
assistance.
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Parents
Should Encourage Roth IRAs For Their Children
The long-term benefits of tax-free accumulation
provided by Roth IRAs are hard to ignore.
Parents can do their children a real service
by encouraging them to establish a Roth
IRA at the first opportunity. A Roth IRA,
left untouched until retirement, will
ensure that your child has a substantial
nest egg.
Take for example a youngster, age 17,
who contributes $2,000 to a Roth IRA and
allows that single deposit to accumulate
untouched until retirement at age 65.
At a conservative 8% annual growth, the
Roth IRA will have grown to $80,421.
Consider what the result would be if that
same young person continued to deposit
$2,000 a year to their Roth IRA. Assuming
an 8% annual growth, the Roth IRA will
grow to $980,264 by the time they reach
retirement age of 65.
But keep in mind that children, like adults,
must have "earned income" to establish
a Roth IRA. Generally, earned income is
income from working, not from investments.
Earned income can include income from
a part-time job, summer employment, baby-sitting,
yard work, etc. The amount that can be
contributed to either a Traditional or
a Roth IRA is limited to the lesser of
earned income or $2,000.
Your children may balk at having to give
up their earnings, especially since their
focus at their age will not be on retirement.
But this is not an obstacle if parents,
grandparents or others are willing to
fund all or part of the child’s Roth contribution.
If the parents or others contribute the
funds, they need to keep in mind that
once the funds are in the child’s IRA
account, the funds belong to the child.
The child will be free to withdraw part
or all of the funds at any time. If the
child withdraws funds from the Roth IRA,
the child will be liable for any early
withdrawal tax liability.
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Avoiding
Premature Traditional IRA Distribution
Penalties
You may encounter certain financial situations
making it necessary to withdraw funds
from your IRA account. Funds withdrawn
from a Traditional IRA are taxed at the
regular income tax rates AND are subject
to a 10% early withdrawal penalty if you
are under 59-1/2 years of age at the time
of the withdrawal. However, in addition
to death, there are exceptions to this
10% penalty when you meet certain conditions
or the funds withdrawn are used to pay
certain qualified expenses. But remember
even if you avoid the penalty with one
of the following exceptions, the withdrawal
is still taxable for regular tax purposes.
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Higher education expenses such
as tuition, fees, books, supplies,
and equipment required for the enrollment
or attendance of a qualified student
at an eligible educational institution.
In addition, if the individual is
at least a half-time student, room
and board is a qualified higher
education expense.
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First-time homebuyer acquisition
costs (within 120 days of the distribution)
for the main home of a first-time
homebuyer that is the taxpayer,
spouse, child, grandchild, parent
or other ancestor. The distribution
is limited to $10,000 and if both
husband and wife are first-time
homebuyers, they each can withdraw
up to $10,000 penalty-free.
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Unreimbursed medical expenses,
that are not more than: 1) The amount
you paid for unreimbursed medical
expenses during the year of the
withdrawal, minus 2) 7.5% of your
adjusted gross income for the year
of the withdrawal.
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Medical insurance premiums that
you made as a result of becoming
unemployed.
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Disability - you are considered
disabled if you cannot perform any
substantial gainful activity because
of your physical or mental condition.
A physician must determine that
your condition can be expected to
result in death or to last for a
continued and indefinite duration.
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Annuity distributions - if you
retire before reaching the age of
59-1/2, you can avoid the penalty
provided that the withdrawals are
part of a series of substantially
equal payments over your life (or
your life expectancy), or over the
lives (or joint life expectancies)
of you and your beneficiary. The
payments under this exception must
continue for at least 5 years, or
until you reach the age of 59-1/2,
whichever is the longer period.
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The
foregoing is a brief synopsis of
the exceptions to the early withdrawal
penalty. The rules pertaining to
these exceptions are extensive and
you are cautioned to consult with
this office prior to making any
withdrawals to insure you qualify
under the more detailed requirements.
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Self-Employed
Pension Plan Contribution Limits Increased
Tax laws provide for plans that allow
self-employed individuals to establish
retirement plans for themselves and
their employees, if they have any. Those
most frequently encountered are the
SEP (Simplified Employee Pension) and
Keogh Profit Sharing Plans. Even though
they are not IRAs, the SEP plans utilize
an IRA account as the depository for
the SEP plan contribution, thus minimizing
the administration requirements of the
employer but limited the contributions
prior to 2002 to 15% of earnings. The
Keogh plans, on the other hand, offer
both profit sharing and money purchase
plans. Prior to 2002, the profit sharing
plan contributions were limited to 15%,
but the money purchase plans or combination
of profit sharing and money purchase
plans allowed contributions of up to
25%.
The compensation limits for both of
these plans has been increased to 25%
of compensation for years beginning
in 2002. The following details the differences
between contributions for employees
and the amount allowed for the self-employed
individual.
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Employees: Contributions
on behalf of an employee are currently
limited to the lesser of $30,000
or 15% of the employee’s compensation
(up to the compensation limit).
Beginning in 2002, this has been
increased to $40,000 or 25% of
compensation up to the compensation
limit. The compensation limit
for 2001 is $170,000 and increases
to $200,000 (adjusted for inflation)
in 2002.
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Self-Employed Individual:
Under prior law, the contribution
to a SEP by an owner-employee
was limited to 15% of the net
profits for self-employment (13.0435%
of the net profits before deducting
the contribution itself). Beginning
in 2002, this contribution limit
has been increased to 25% of the
net profits from self-employment
(20% of the net profits before
deducting the contribution itself).
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Under current law, Keogh
Money Purchase Plans provide for contributions
of up to 25% of compensation. However,
the annual contribution to a Money Purchase
Plan is mandatory while the contribution
for a Profit Sharing Plan is discretionary.
This essentially eliminates the need
for Money Purchase Plans, since a Profit
Sharing Plan provides for the maximum
contribution while making the contribution
discretionary.
Based on the limits, some employers
and self-employed individuals may wish
to alter their retirement plans. Please
call this office for additional details.
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Pension
Start-Up Credit
New For 2002 ! This is a nonrefundable
income tax credit for 50% of the administrative
and retirement-education expenses for
any small business (less than 100 employees)
that adopts a new qualified defined benefit
or defined contribution plan (including
a Code Sec. 401(k) plan), SIMPLE plan,
or simplified employee pension ("SEP").
The credit is limited to 50% of the first
$1,000 of administrative and employee
retirement-education expenses in each
of the first three years of the plan.
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Planning
Your Taxable IRA Withdrawals
Your age at the time you make a taxable
withdrawal from your Traditional IRA account
can make a big difference in the amount
of tax you will pay. Generally, there
are three periods within your lifetime
where different tax rules apply:
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Under Age 59½ - If you withdraw
the IRA funds before you reach age
59 ½, you will pay tax and a 10%
early withdrawal penalty unless
you can avoid the penalty through
one of the several exceptions provided
in the tax law. Note: Some states
also have small early withdrawal
penalties.
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Age 59½ to Age 70½ - During
this period you can make withdrawals
of any amount without penalty. You
are only subject to the income tax.
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Above Age 70½ - After reaching
age 70 ½, you must begin taking
at least the required minimum distributions
or face the 50% excess accumulation
penalty.
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The number one key to minimizing taxes
on IRA distributions is to match withdrawals
to tax years in which you are in a low
tax bracket or even have a negative taxable
income. Take for example a year when because
of illness, disability, unemployment,
large business losses etc. that your income,
less your deductions and personal exemptions,
leaves you with a negative taxable income
for the year. To the extent your taxable
income is negative, you could make a taxable
IRA withdrawal and avoid any tax on the
amount withdrawn, and even if you are
under 59 ½, you would only pay the small
early withdrawal penalty.
Generally, except as mentioned above,
if you are under 59½, your IRA funds are
not a good source of cash except in cases
of extreme need simply because of the
tax liability and penalties. But if there
are no alternatives, it may be possible
to avoid part or all of the penalties
by carefully planning the withdrawals
so that they qualify for one or more of
the early withdrawal penalty exceptions;
(1) amounts withdrawn to pay un-reimbursed
medical expenses, (2) amounts withdrawn
while qualifying as disabled, (3) amounts
withdrawn and used to pay for medical
insurance while unemployed, (4) amounts
used to pay higher education expenses,
(5) amounts up to $10,000 for the purchase
a first home, and (6) early retirement
amount withdrawn as an retirement annuity.
Taxpayers must meet certain criteria to
qualify for these exceptions, so be sure
to contact this office to make sure you
meet those qualifications before proceeding.
For retired individuals, receiving Social
Security benefits, planning IRA distributions
can also be beneficial. Social Security
itself is only taxable when ½ of the taxpayer’s
Social Security benefits added to the
taxpayer’s other income exceeds $25,000
($32,000 for a married couple filing jointly).
Once this threshold is reached, every
additional dollar of other income will
cause 50 to 85 cents of the Social Security
benefits to also become taxable. Therefore,
if a taxpayer’s other income is under
the threshold, it is generally good practice
to withdraw just enough taxable IRA funds
to bring the income up to the threshold
amount even if the funds are not needed
in that year. They can be set-aside for
a future year when they might be used
for some unplanned need or large purchase.
Retirees, with income that already puts
them over the Social Security taxable
threshold, should avoid large uneven withdrawals
that might push them into a larger tax
bracket one year and way below that tax
bracket change in other years.
Remember, once a taxpayer reaches 70½,
they must begin taking distributions equal
to or greater than the Required Minimum
Distribution, somewhat limiting planning
options. If you wish to explore any of
these or other tax saving techniques,
please contact this office.
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Don't
Mix Required Minimum Distributions!
Taxpayers who have reached the age of
70½ and have qualified retirement plans
are generally required to take minimum
distributions from those plans annually.
Quite frequently, taxpayers have multiple
IRA accounts in addition to one or more
types of qualified plans.This gives rise
to a commonly asked question, "Must I
take a distribution from each individual
account?" For purposes of the annual required
minimum distribution, a separate distribution
must be taken from each type of plan.
However, a taxpayer may have multiple
accounts for each type of plan, which
for tax purposes are treated as one plan.
For example, you have three IRA accounts.
The three separate accounts are treated
as one for tax purposes, and the distribution
can be taken from any combination of the
accounts.
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How
Taxable Distributions from a Roth IRA
are Determined
Withdrawals from a Roth IRA are tax-free
if the funds have been in the Roth IRA
for at least five years, and
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The account owner is at least 59-1/2,
or
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The funds are used for a qualified
first-time home purchase (up to
$10,000), or
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The accountholder becomes disabled
or dies.
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Suppose a taxpayer does not meet the
requirements for a tax-free withdrawal.
The funds contributed to the IRA are always
tax-free, because taxes were paid on those
funds before they were deposited. Only
the earnings would be taxable. Then the
question becomes which funds are withdrawn
first? Anticipating this question, the
IRS has established a set of “Ordering
Rules” which specify the sequence in which
funds are withdrawn. All Roth IRAs, regardless
of where they are deposited, are treated
as one for purposes of the “Ordering Rules.”
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First from contributions until
all contributions have been withdrawn
(these funds would be withdrawn
tax and penalty-free);
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Next from all converted (rollover
amounts) until all have been withdrawn
(these funds would be withdrawn
tax-free, but see acceleration clause
below);
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Finally, from earnings (these funds
would be taxable, and subject to
the early withdrawal penalty when
the taxpayer is under 59-1/2 years
of age.)
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Acceleration Clause: If the taxpayer
converted funds from a Traditional IRA
in 1998 and elected to spread the tax
over four years and withdraws any of the
taxable portion of the converted funds,
then the taxability of the converted funds
is accelerated. This is best described
by example. Suppose a taxpayer converted
$20,000 from a Traditional IRA to a Roth
IRA and elected the special 4-year taxation.
$5,000 would be taxable each of the four
years. However, if the taxpayer withdrew
$7,000 of the $20,000 in 1999, the taxable
portion for 1999 would be $12,000 ($5,000
plus the $7,000 withdrawal.) In the year
2000, only $3,000 would be taxable (the
remainder of the $20,000) and nothing
would be taxable in 2001, the final year
of the 4 years.
Taxable IRA Income – Acceleration
Example:
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Deemed
IRAs Can Lead To Tax Problems
The 2001 Tax Act created a way for taxpayers
to make both Traditional and Roth IRA
contributions through their employer’s
qualified plans. Under this program, employees
can make “volunteer employee contributions”
which can be designated as either Roth
or Traditional IRA contributions. However,
even though these IRA contributions are
being made through the employer’s “Deemed
IRA” program, you still must meet all
of the normal income qualifications and
contribution limits for either the Roth
or Traditional IRAs. If you do not qualify,
then the “Deemed contributions” would
be considered over-contributions that
would have to be corrected and could incur
some tax penalties. Therefore, before
becoming involved with a Deemed IRA program,
we strongly suggest you contact this office.
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401(k) Contribution
Limits Increased
Many employers offer what are commonly
referred to as 401(k) plans named after
the tax code section that created the
plans. These plans allow employees to
defer part of their earnings for retirement.
Some employers offer matching contributions
that increase the attractiveness of
the programs.
Beginning in 2001, the value of 401(k)
plans is enhanced even further by increasing
the general contribution limit and allowing
individuals over age 50 to make additional
contributions. The Act also allows individuals
to contribute amounts that are not excluded
from income to a 401(k) plan in a manner
similar to Roth IRA contributions.
The so-called “catch up contributions”
allow individuals age 50 and over to
make additional annual contributions
to 401(k) plans. These “catch-up” contributions
are $1,000 in 2002; $2,000 in 2003;
$3,000 in 2004; $4,000 in 2005 and $5,000
in 2006 and thereafter. Catch-up contributions
are exempt from the regular dollar limits
on deferrals provided that all 401(k)
plan participants are permitted to make
catch-up contributions.
The table below summarizes the limits
for 401(k) plans through 2006. If you
have additional questions about participating
in your employer’s 401(k) plan, please
call this office
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Substantially
Equal Payment Exception
The decline in the stock market has adversely
affected the value of taxpayer’s retirement
investments. This decline in value of
retirement accounts has uniquely affected
taxpayers who have taken early retirement.
Generally, taxpayers who withdraw from
their pension plans including IRAs before
reaching age 59 ½ are subject to the 10%
early withdrawal penalty. However, taxpayers
who retire can avoid that penalty by using
a special exception that requires that
they take substantially equal payments
from their pension plan for a period of
time that is the longer of five years
or the until they reach 59 ½.
The substantially equal payments are computed
based on the value of the retirement account.
Those retirees who retired before the
decline in the market may have substantially
equal payments that are excessive for
account that have substanilly declined
in value and are depleting the plan to
a point that future recovery is threatened.
Because of this, the IRS has announced
that it will allow taxpayers to make a
one-time change to the Minimum Required
Distribution method, which is the same
method used by individuals who have reached
the age of 70 ½.
This one-time change will only allow a
taxpayer to switch to the Required Minimum
Distribution (RMD) method. Caution: switching
to the RMD may substantially reduce the
annual distribution and may not allow
an affected taxpayer to withdraw enough
to meet their current financial obligations
while they wait to meet the 5-year or
age 59 ½ rule. Many of them are counting
on the early pension withdrawals until
they start receiving their Social Security
or employer retirement. Once they switch,
they cannot increase or decrease their
withdrawal without violating the exception.
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