Don’t Forget to Contribute to Your IRA

If you planned to make a contribution to your IRA in 2015 but didn’t have time, weren’t sure if you wanted to or just simply forgot about it, you still have some time. You have until your tax filing deadline to do it, so most taxpayers have until April 18, 2016 to make an IRA contribution for 2015.

Contributions can be made to your traditional IRA for a year at any time during that year or by the due date for filing your return for that year, not including extensions. The limit is $5,500 (or $6,500 if you are age 50 or older).

Be aware of the 70½ rule though… traditional IRA contributions cannot be made for the year in which you reach age 70½ or for any later year. Contributions can only be made to your traditional IRA for each year that you receive compensation and have not reached age 70½.

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Most Americans face the real possibility of out-living their money. Even dutiful savers cannot presume that their nest egg will support their lifestyle throughout a long and active retirement. Are you one of those Americans? Unless you have a comprehensive distribution plan in place, you probably are!

Tax season is near and many people don’t realize that they must take steps to “disinherit” Uncle Sam. What’s the point of working your whole life, reaping high rates of return (hopefully) and accumulating a sizeable balance if you’re just going to hand it over to the IRS?

How did we get into this mess? When you think about it, it’s very easy to out-live your money by something as simple as spending too freely, especially early in retirement. Excessive withdrawals tend to happen partly due to the fact that we didn’t expect to live as long as we do!

Finally, a great danger to a retirement plan is the unforeseen, economic and political elements that can sabotage even the best-laid plans. The unforeseen can also include what are termed Black Swan event trends that are impossible to predict yet have profound and lasting effects on world economies.

The statistics can be grim but if you are reading this, the good news is there is still time to preserve, protect and defend yourself against market downfalls and other negative elements. Your retirement distribution specialist at America’s Tax Solutions™ can help you protect your nest egg and discuss strategies that can help you create a stream of income that you cannot outlive.

Retirement Plans for All?

The White House recently released a Fact Sheet about proposals that will be included in the 2017 budget. One of those has to do with employers offering their employees retirement plans. According to this release, less than 10% of American workers contribute to some sort of retirement plan on their own if their employer does not sponsor one.

One of the President’s proposals would require employers with more than ten employees to automatically enroll each employee in an IRA if that employer does not offer its employees a retirement plan. A tax credit of up to $3,000 would be offered to employers with less than one hundred employees for this “auto-IRA” requirement.

What a Will, Will and Will Not Do

Sound confusing? Many Americans are confused when it comes to understanding what can and what cannot pass by their will and they assume that a will takes care of everything.

There are several situations in which a will does not control the transfer of an asset. Disposition of a decedent’s property is determined by the form of ownership of a particular asset or by a beneficiary designation form, which overrides the provisions of a will. For example, regardless of how perfect and well drafted a last will and testament may be, its terms cannot and do not override the terms of an IRA or 401(k) custodial agreement, a private and binding contract.

Here are just a few common assets that do not pass through a will: IRA, 401(k), Pension Plan, Annuity, Life Insurance Policy, Joint Tenancy Property, Community Property with Right of Survivorship, POD Accounts and Totten Trusts.

Special Announcement

Denise Garrison Named Director of CPA Relations for America’s Tax Solutions

America’s Tax Solutions™ announced that Denise Garrison has rejoined the firm as Director of CPA Relations and will head the company’s relationships with its accounting partners across the country.

Ms. Garrison previously served as Special Assistant to the President of Table Bay Financial, America’s Tax Solutions parent company. In that role she worked extensively with the ATS System and accountants and Wealth preservation Specialist around the country. Her institutional knowledge of the entire enterprise and all of the various support systems will be invaluable to the accounting firms in the program.

Prior to joining Table Bay in 2015 Denise was with Edward Jones for six years. She will have responsibility for all aspects of the America’s Tax Solutions Program™ including Relationship Management, Firm Induction, Member Support Services, Training, and Education.

Denise will be in touch with all member firms in the coming days to introduce herself and asses how we can best help and support you during tax season.

She can be reached at: 1-866-225-1786 Ext. 307 or Email: Dgarrison@tablebayfinancial.com.

Tax Season Q&A

Tax Season Q&A

Q: I requested my 2015 RMD on December 31st but my IRA custodian told me I will get a 1099-R for 2016, not 2015…why?

A: The distribution year is determined by the processing date, not the request date. Make sure you know your IRA custodian’s deadline for processing RMD requests. Some custodians require them to be submitted by early December to ensure processing is complete by the deadline. There is a 50% IRS penalty for failing to take an RMD by December 31st.

Q: I inherited an IRA from my brother. He passed away in July 2015 at age 76 and he hadn’t taken his 2015 RMD yet, so I took it in October. Is this RMD reported on his estate tax return or my 2015 tax return?

A: Your tax return. Year of death RMDs are reported on the recipient’s tax return.

Q: If I have a Roth IRA, aren’t all of my distributions automatically tax free and penalty free?

A: No, only qualified Roth distributions are tax and penalty free. There are circumstances where there may be income tax due or an early distribution penalty.

Q: May I deduct losses in my IRA on my 2015 tax return?

A: Not unless you withdraw the entire balance from all of your IRAs of the same type. Losses and gains are not taken into account on your tax return while your IRA is still open.

Q: I retired and directly rolled over my entire 401(k), including my highly appreciated employer stock, to an IRA last year. I recently discovered that a Net Unrealized Appreciation (NUA) strategy could give me a huge tax advantage. Since I haven’t filed my tax return yet, may I still elect to use an NUA strategy?

A: No. Unfortunately, once you rolled over your highly appreciated employer stock to an IRA, the opportunity to use an NUA strategy was permanently eliminated. To preserve an NUA strategy opportunity, among other requirements, the shares must have been transferred in-kind to a taxable account.

Spousal IRA Contributions: Key Points

• A spousal IRA contribution is made when one spouse has little or no compensation.

• The spouse with little or no compensation for whom the contribution is made must satisfy all other regular contribution requirements.

• If neither spouse participated in a retirement plan at work, all of your contributions will be deductible.

• Married couples who file separately are not permitted to make spousal IRA contributions.

• The amount of your combined contributions can’t be more than the taxable compensation reported on your joint return.

• If you are legally divorced by the end of your tax year, you cannot deduct contributions you make to your former spouse's traditional IRA. You can deduct only contributions to your own traditional IRA.

• Same-sex couples who are legally married are permitted to make spousal IRA contributions.