As if Tax Rules Weren't Complicated Enough...

by Marylove Moy 17. February 2015

Individual Retirement Accounts

The U.S. Tax Court in 2014 re-wrote the rules on rollovers between Individual Retirement Accounts (IRAs).

Up until until January 1, 2015, an IRA account holder could withdraw IRA money from either a traditional or Roth IRA and have 60 days to redeposit the funds back into the same type of retirement account. No penalties or taxes were imposed in this "rollover" as long as the funds met the 60-day rule. The IRA investor could use this "60-day" rollover every 12 months on each IRA owned. This type of rollover is considered "indirect."

According to the new IRS rulings, in 2015 a taxpayer can only do ONE indirect rollover no matter how many IRAs he or she owns be they traditional and/or Roth. The IRS lumps the traditional and Roth IRAS together for this rule.

Investors are given a fresh start for tax year 2015. Indirect rollovers completed during 2014 will be disregarded for the purposes of determining whether a 2015 distribution is eligible for rollover "provided the 2015 distribution is from a different IRA that neither made nor received a 2014 distribution."

The once per year limitation does not apply in the following circumstances:

  • Indirect rollover from a qualified plan, e.g. 401(k), 403(b) etc.
  • Traditional to Roth conversions.
  • Trustee-to-trustee transfers.

The safest way for a client to move funds between IRAs is to use the "trustee-to-trustee" transfers such as a bank moving funds to another bank, investment firm or credit union. It should be noted that a check from one IRA custodian made payable to another IRA custodian will qualify as a trustee-to-trustee transfer even if the first custodian gives the check to the IRA owner.

Specialized tax advice not provided: please consult your professional tax advisor.

Securities offered through LPL Financial, member FINRA/SIPC. Insurance products offered through LPL Financial or its licensed affiliates. 1st Mariner Bank and 1st Mariner Financial Services are not registered broker/dealers and are not affiliated with LPL Financial.

www.finra.org / www.sipc.org

 

Not FDIC Insured Not Bank Guaranteed May Lose Value
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If you found this article useful, be sure to check out these related articles:

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The Importance of Reviewing Your Beneficiaries

by Marylove Moy 19. November 2014

Beneficiaries

September was Life Insurance Awareness Month but in my mind every month is an awareness month! My time spent in the Financial Services world has taught me many things; one lesson that I learned from clients is the importance of reviewing one’s beneficiary designations on personal documents, investments, retirement plans and insurance.

I know of one individual who was married and divorced at a young age. She was a teacher in a local high school who remarried in her early thirties. Fast forward 30 years when she tragically passed away in an automobile accident. It was determined that her ex-husband of her brief early marriage was the recipient of her retirement plan (over $1,000,000) because she never updated her beneficiary forms!

I encourage everyone to commit to review their designations. These decisions can be complicated because of many factors such as estate tax laws, Social Security and Medicaid eligibility to name a few. It is always wise in an important financial decision to consult with a trusted attorney, accountant, knowledgeable family member or friend or a financial advisor.

The LPL Financial Advisors at 1st Mariner Financial Services would be happy to review your beneficiary papers with you. We work very closely with knowledgeable outside estate attorneys to help you access the advice you need. Please take the time to go over your designations; your loved ones are too important to leave their future to chance.

Securities offered through LPL Financial, member FINRA/SIPC. Insurance products offered through LPL Financial or its licensed affiliates.

www.finra.org / www.sipc.org

 

NOT FDIC Insured Not Bank Guaranteed May Lose Value
NOT a Bank Deposit    Not Insured by Any Federal Government Agenc

 

If you found this article useful, be sure to check out these related articles:

Individual Retirement Accounts: An Introduction

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Individual Retirement Accounts: An Introduction

by Marylove Moy 2. June 2014

Individual Retirement Accounts

Do your eyes glaze over when you see the term IRA? Are you sick and tired of all those ads on tv talking about retirement? I hear ya! These days, retirement – and retirement planning – is the 800 pound gorilla in most people’s homes.

Well, have no fear...let’s take a look at what an IRA is and how they have evolved over time. Once we understand the history, we can move on to other related topics: investing, planning and other retirement ideas.

Basically, an IRA is an “individual retirement plan” provided by many banks and financial institutions that provides tax advantages for retirement savings. In essence, interest and/or earnings grow tax-deferred until the owner withdraws the funds.

The IRA account was introduced in 1974 in the Employee Retirement Income Security Act (ERISA). Taxpayers could contribute up to $1,500 AND deduct the contribution from taxes. If you fast forward to tax year 2013, the annual dollar amount has increased dramatically to $5,500 for those under age 50, and $6,500 for those over 50. Congress is increasingly worried that individuals will not have enough money to live on when they retire, hence the increases in allowable contributions.

I can feel your eyes drooping reading this article… Enough for today! We can move on to the importance of opening an IRA, types of IRAs and investment ideas another day!

Securities offered through LPL Financial, member FINRA/SIPC: www.finra.org; www.sipc.org. Insurance products offered through LPL Financial or its licensed affiliates. 1st Mariner bank is not a registered broker/dealer and is not affiliated with LPL Financial.

The LPL Financial Registered Representatives associated with this site may only discuss and/or transact securities business with residents of the following state: (MD)

NOT FDIC Insured Not Bank Guaranteed May Lose Value
NOT a Bank Deposit    Not Insured by Any Federal Government Agenc
If you found this article useful, be sure to check out these related articles:

Traditional vs Roth IRAs: How to Choose

Money in Your 30s: Manage It, Don't Be Managed by It

Managing Your Money in Retirement



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