An employer retirement plan, such as 401(k) plan may provide for hardship distributions. A hardship distribution must be for an immediate and heavy financial need of the employee, his spouse, or dependent. Hardship distributions are generally taxable and cannot be rolled over to an IRA or other retirement plan. They are also subject to the 10% early distribution penalty (unless an exception applies).
Wait a minute? Isn’t the deadline for making an IRA or Roth IRA contribution the tax filing deadline, not including extensions? You bet your bottom dollar it is! Then how, you might ask, can you possibly make a 2011 IRA contribution on May 9, 2012 – well after the general filing deadline of April 17, 2012? We'll tell you!
Many IRA owners do not realize that they can only do one IRA-to-IRA or Roth-to-Roth rollover, per IRA or Roth IRA account, per year. If you have more than one IRA or Roth account, you can do one rollover from each account. So you could do five rollovers when you have five IRAs. If you do a rollover on April 20th, you cannot do another rollover from that account until the next April 20th.
An IRA rollover is when you take money out of your IRA or Roth IRA and the distribution is payable to you. You can put the funds in your bank account, spend them, invest them, do anything you want with them. Then, within 60 days, you can put all or part of the amount distributed back into your IRA or Roth IRA. There will be no tax or penalty on this transaction.But how do you know when the 60 days are up? You do NOT start counting from the date you request the distribution, the date on the check, or the date the funds left the IRA account. You start counting on the date you receive the funds if they are mailed,
The IRS has released the winter 2012 issue of the Statistics of Income (SOI) Bulletin. The SOI Bulletin is produced on a quarterly basis and provides the most recent data available from various returns filed by U. S. taxpayers. This latest SOI Bulletin includes data on personal wealth in the U. S. for 2007 and information from individual income tax returns filed for 2009. Information related to several other categories is also provided.
Individuals who did Roth conversions in 2010 and took advantage of the opportunity to spread the income over 2011 and 2012 are now faced with the tax bill for income that must be included on their 2011 tax returns. Many are now having second thoughts or are having difficulty coming up with the funds to pay the tax.
One of the most common questions asked during tax season is, "Do I have to file a tax return?" The answer, of course, is a bit complicated, but in general, if your income is equal to or greater than the sum of the standard deduction plus your personal exemption, you must file a return. The standard deduction is higher for those 65 or older, so age makes a difference in some cases.
IRS released its "Dirty Dozen Tax Scams for 2012" on February 16, 2012. Number one on the list this year - Identity Theft. We detail this problem and how you can protect yourself below.
IRS released proposed regulations regarding the establishment of "qualified longevity annuity contracts" (QLACs) on Friday February 3, 2012. The new QLAC rules will allow you to purchase certain annuity contracts with a portion of your retirement assets that you will be able to exclude from your required minimum distribution (RMD) calculations.
Let's assume you did the unforgiveable and took a distribution from your IRA (or other retirement plan) that was payable to you, other than a required distribution. Within 60 days you presented the funds to an IRA (or Roth IRA) custodian for redeposit. Then something happened and the funds do not end up in an IRA (or Roth IRA) account. You do not discover the error immediately. Typically it is discovered at tax time. What are your options?
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