On Friday, December 18, 2015 President Obama signed the 2016 Consolidated Appropriations Act into law. Among its many provisions it is the permanent extension of the ability for a taxpayer to make qualified charitable distributions (QCDs) from individual retirement accounts (IRAs).
403 (b) plans are the retirement savings plans for educators and employees of tax-exempt organizations. They are also known as tax sheltered annuity plans (TSAs). Participants include teachers, school administrators and other personnel, nurses, doctors, professors, librarians, and ministers. Many of these folks also receive a pension, but often the pension is not enough to give them a secure retirement so they add to their retirement savings by reducing their salary and having that amount contributed to a 403 (b) plan.
If you did a Roth IRA conversion in 2010, congratulations. The next smart thing to do is to review that decision and see if it still makes sense for your situation.
With the passage of the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 (2010 Tax Act), Congress retroactively reinstated the ability of taxpayers to make direct qualified charitable distributions (QCDs) from an IRA, in amounts up to $100,000, by IRA owners who are at least age 70½ years of age. You have until January 31, 2011 to make a QCD for 2010.
2011 is the first year that taxpayers with more than $100,000 of income can convert to a Roth IRA. 2011 may also be the best year for taxpayers to do a Roth IRA conversion because of the scheduled tax increases in future years. In addition, after 2010, increasing income could cause a person's investment income and wages to be subject to the new health care taxes.
An inherited Roth IRA is truly a "gift that keeps on giving." It is an exceptional estate planning tool. When deciding whether or not to convert your traditional IRA to a Roth IRA, most people (or their advisors) "run the numbers." The cost and benefits of a Roth conversion is compared to the status quo - maintaining the traditional IRA. Assumptions are made about investment returns, future income tax rates, life expectancy, etc.
When the Roth IRA conversion law was enacted in 1997, taxpayers with adjusted gross incomes over $100,000 could not convert. No more. On January 1, 2010, every IRA owner will qualify for a Roth IRA conversion - there will be no income limitation.
Entrust Group launched a new service for IRA owners. Now you can access your IRA with the swipe of a debit card. Want that new pair of shoes - go ahead - use your IRA money. Want to go on vacation - use your IRA.
You don't have to take a required minimum distribution (RMD) from your IRA in 2009.
In view of the precipitous decline in the stock market, there are some tax strategies for owners of traditional or Roth IRAs to consider.