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1
House and Senate Pass Legislation Waiving 2009 RMDs
2
Uniform Transfer to Minors Act (UTMA)
3
Will 401(k) Accounts Be Eliminated?
4
Dealing With Losses in 529 Education Savings Accounts
5
Coverdell Savings Accounts

House and Senate Pass Legislation Waiving 2009 RMDs

Both the U.S. House of Representatives and the U.S. Senate passed a bill that would waive required minimum distributions (RMD) in 2009. Normally, individuals over the age of 70.5 are required to withdraw an amount calculated by dividing the prior December 31st balance of the retirement account by the individual’s life expectancy as determined by the Internal Revenue Service. The government requires these distributions to ensure that money in retirement accounts is ultimately taxed. Failure to withdraw the required amount subjects the individual to a 50% penalty on the amount that should have been withdrawn in addition to income taxes …

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Uniform Transfer to Minors Act (UTMA)

Uniform transfers to minors accounts allows someone to make a gift or a transfer of property to a minor without setting up a trust. All transfers to UTMA accounts are considered irrevocable and the donor cannot reclaim the gift or change the beneficiary of the account.

An adult is designated as the custodian to manage the account for the benefit of the minor until the child reaches the age specified in the statute. Custodians have certain powers and responsibilities under these laws and they should consult with legal counsel to understand their obligations with respect to the account. Once the …

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Will 401(k) Accounts Be Eliminated?

Back in October, some influential members of the House of Representatives held hearings to discuss overhauling the 401(k) retirement plan system. Soon thereafter, talk radio, the blogosphere, and even the generally-sober Wall Street Journal erupted with dark warnings of a plot afoot to “nationalize” or “confiscate” everyone’s 401(k) plans and convert them to accounts managed by the Social Security Administration.

The House Education and Labor Committee interviewed a number of retirees, activists, and others to open discussion on the possibility of altering the nature of 401(k) accounts.  The discussions were partly a response to the realization that 401(k) holders had …

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Dealing With Losses in 529 Education Savings Accounts

With stock markets down precipitously and few asset classes that haven’t declined significantly this year, many investors in 529 college savings plans are wondering what to do. In some situations, it may make sense to make a change in your child’s 529 plan.

529s are tax-advantaged savings plans that can be used to pay for college and graduate education expenses.  Investment allocations for these plans are typically set up like target-date funds: the proportion of stock holdings declines as the beneficiary approaches college age.  Unfortunately, with most asset classes taking big dives in price this year, even accounts with …

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Coverdell Savings Accounts

Unlike 529 plans, the rules governing Coverdell Savings Accounts are dictated by the IRS. Thus, there is no variation in these plans from state to state.

Contributions to Coverdell accounts are not deductible on either a federal or state income tax return. However, similar to 529 plans, earnings withdrawn from these accounts are tax-free if used to cover qualified education expenses. Also similar to 529 plans, funds withdrawn that are not utilized for education expenses are taxed as ordinary income and subject to a 10 percent penalty.

Coverdell accounts offer several advantages over 529 plans. First, the definition of qualified …

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