Roth IRA’s (Individual Retirement Account) were introduced in 1997 by Senator William Roth. 15 years later, there is still a lot of confusion about what they actually are, and who should use them. Prior to 1997, there were only IRA’s (now called Traditional IRA’s to differentiate them from Roth IRA’s). You could put money into a Traditional IRA each year, and deduct your contribution on your tax return. This meant you didn’t have to pay income taxes on your Traditional IRA contribution. The money would then grow tax deferred, so you didn’t pay taxes on the growth every …Read More
Often there is confusion about what constitutes a “contribution” and a “rollover” into an IRA. This post is intended to clear up the difference.
While both activities are technically contributions, there’s a major difference between the two. The most significant of the differences is that with a regular annual contribution there are several limits imposed that can be quite restrictive.
Annual Contribution Limits
For an annual contribution to a traditional IRA or a Roth IRA, you are limited to the lesser of $5,000 or your actual earned income for the year. If you have no earned income, you’re not allowed …Read More
IRAs (Individual Retirement Account) are great investment vehicles for tax deferred growth and estate planning. An IRA has a designated beneficiary when the account is set up that makes it easy to determine who should inherit the money. Usually the beneficiary is a spouse but sometimes it is a minor or a non-spouse. It gets tricky when the beneficiary is a non-spouse. Let’s look at your options if you are a non-spouse beneficiary of an IRA.
Your first option and my personal favorite is called the Stretch IRA which means you start taking the required distributions which are …Read More
In past tax years (through the end of 2011) there was a provision available that allowed taxpayers who were at least age 70½ years of age to make distributions from their IRAs directly to a qualified charity, bypassing the need to include the distribution as income. The law allowed the taxpayer to use a distribution of this nature to satisfy Required Minimum Distributions (RMDs) where applicable.
This law expired at the end of 2011, but in years past Congress has acted very late in the year and retroactively reinstated this provision. For more detail on how this provision (if not …Read More
All individuals have the opportunity to give gifts annually to any person without having to file a gift tax return. For 2012, the amount of the annual exclusion is $13,000.
This means that anyone can give a gift of up to $13,000 to any person for any reason without worrying about possible gift tax implications. A married couple can double this amount to $26,000.
In 2013, this annual exclusion amount will increase to $14,000 ($28,000 for couples).
For amounts given in excess of the annual exclusion amount, every individual has a lifetime exclusion amount, against which the excess gifts are …Read More