The main perk of retirement is freedom. The freedom to sleep in late. The freedom to play golf five days a week. The freedom to talk about the laughs and tears of the last 30 years. This comic illustrates one of the great benefits of retirement...well, along with a safe and secure stack of money to afford you a comfortable, enjoyable trip through your golden years.
A provision in the tax code allows use of a special formula called “ten year income averaging” by qualifying individuals or their beneficiaries to determine the tax liability with respect to a lump sum distribution they may receive from an employer-sponsored qualified plan or annuity. To qualify for 10 year income averaging, the following six tests must be met.
In a recent case, the US District Court for the Middle District of Louisiana ruled that despite having previously named his three children as beneficiaries of his 401(k) plan, Leonard Kidder's 401(k) balance would pass to his new wife. The Court's ruling illustrates just how difficult it can be to remove a spouse as the beneficiary of an ERISA governed plan, such as a 401(k).
Do you have a Required Minimum Distribution in 2011? These questions come up at the beginning of each year. When do I have to take my first distribution? What age do I use? Do I have to wait until I actually turn 70 ½? Click to read the answers to these questions.
Here is Ed Slott's interview with Tracey Byrnes on the Willis Report, talking about Roth Conversion Planning. The interview is from late December, but still applies if you decided to do a 2010 Roth Conversion. Click to watch the video.
We have begun to receive the official numbers behind the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 President Obama will sign into law likely later today. Click to read the IRS Notice.
This week the Ed Slott IRA Discussion Forum featured a question on the recent Health Care Legislation. The new laws will impact IRAs in a number of ways, including a new 3.8% surtax. Curious as to how this new surtax could impact your IRA planning?
So you did your recharacterization from the Roth IRA back to the traditional IRA and now you are wondering how you put this on your tax return so you don’t have to pay tax on the conversion.You can find some guidance from IRS on the instructions for Form 8606 - which in most cases you don’t have to file when you do a recharacterization. You can find these instructions at www.irs.gov.
By a vote of 62-36, the Senate on March 10, 2010 passed the American Workers, State & Business Relief Act of 2010. The bill includes a combination of tax-extenders (items that expired in a previous year but are up for renewal in 2010), energy provisions and incentives for businesses.
Life insurance is not only be the single biggest benefit in the tax code, but it is also the most cost-effective way to protect a large IRA. If set up correctly, life insurance proceeds (death benefits) could come into the estate sans estate and income tax.Life insurance premiums should be paid by the beneficiaries or by the trustee of an irrevocable life insurance trust so that life insurance proceeds will be estate and income tax free.
