Articles Tagged with IRA

IRS deadlinesDad missed the 60-day IRA rollover period and is now being taxed on 100 percent of his life’s savings. Can anything be done?

Applicable IRS rules and regulations provide that if someone receives a distribution from an IRA, the distribution is then taxed at an individual’s ordinary income rate. A distribution can occur inadvertently in cases where a person wishes to rollover the IRA funds from one investment account into another and the rollover is done incorrectly. This can have disastrous tax results.  Again IRS rules and regulations do provide that if there is “reasonable cause,” e.g. mistakes or incorrect actions, missed deadlines can be undone. There are strict timelines again for these procedures, and if all other timelines have passed, the taxpayer can seek relief by means of an IRS Private Letter Ruling (“PLR”).  These PLRs are technical and complex to obtain and have significant filing fees and transaction costs but, if someone’s life savings are at issue, it can be worthwhile. 

In a recent IRS Private Letter Ruling (PLR)(1), attorney-CPA Tom McCulloch and attorney-CPA Chris Kolenda successfully assisted a taxpayer who had missed a rollover deadline because the institution receiving the funds from the old IRA completed the paperwork incorrectly.  Also, that the taxpayer suffered dementia from Alzheimer’s Disease.  The process included obtaining sufficient medical evidence about the taxpayers’ medical/cognitive condition from several years past and presenting it cogently to the IRS along with substantiation of the institution’s mistakes.  The IRS Private Letter Ruling allowed the taxpayer to successfully roll over the IRA funds from the old account into a new IRA account and avoid being taxed on a significant part of his/her life’s savings.

MP900407458Whichever way you pass on your retirement account assets, leaving an IRA can provide a grandchild with a significant financial foundation.

Think of an IRA as a potentially powerful estate planning tool. Properly structured, an IRA may transfer wealth to younger generations. In fact, the younger, the better.

Kiplinger raised this point in its January edition with an article titled “Pass an IRA to Young Grandkids With Care. 

TaxesYou were so helpful to me in September, clarifying the IRA charitable contribution. Do you know if the government is instituting that same contribution this year?

We are well into tax season and planning for the upcoming year. Are you keeping up with the tax laws? As many retirees and their advisors review changes in the tax laws and begin their planning, they have one important question in common: “Will Congress revive the IRA charity rollover?”

Coincidentally, these taxpayers and advisors will be interested in a recent article in The Wall Street Journal titled “Will Congress Revive the IRA Charity Rollover?

Wills-trust-estates-bank-beneficiary-trust-trusteesWe say it over and over again. Check your beneficiary forms! Don't let your retirement funds go down the drain.

Anything involving the court system is rarely quick and painless (probate anyone?). Fortunately, IRAs can easily be transferred to your loved ones outside of probate simply by completing a beneficiary designation form. But what if there was no beneficiary designation form completed? Uh-oh, what now?

The slightly messy situation of an IRA left without a beneficiary was tackled recently by Ed Slott’s blog, The Slott Report. The article, titled “There is No Beneficiary on the Retirement Account: Now What?,” is the perfect encouragement to ensure that every beneficiary form is filled out and up to date.

MP900289434If your beneficiaries are out-of-date, when you die, your assets could go [to] the wrong people – a former spouse, for example – no matter what your will says.

Often, the biggest mistakes we can make when it comes to our estate planning are also some of the easiest to prevent. For example, the consequences of failing to update your beneficiary designations can be catastrophic, while the “fix” is as easy as a phone call or completing a paper (or online) form.

A recent Forbes article titled “The Big Estate-Planning Goof You May Be Making” puts the importance of proper beneficiary designations in perspective.

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