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| Coralee - Your Virtual Host
In pursue of better health and less pain, Coralee started collecting articles and information on how to have a quality life with better health. Carl, her husband and web designer, turned her finding into the web pages you are viewing.
In their “spare time” they are professional tax preparers. Coralee and her husband, Carl, are founders of the CPA Moms. |
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Roth IRA * IRA Changes For 2006
Important IRA Changes for 2006
Matthew Tuttle
2006 is a little more than half way over but we have already seen some major changes in the IRA rules. This article will summarize two of these changes and what they mean to you.
Income Limit for Roth IRA Conversion Repealed
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8 Roth IRA Conversion Traps To Avoid (Bankrate.com Via Yahoo! Finance)
Converting a traditional IRA to a Roth IRA can be a smart move; just be mindful of these traps.
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Clients often ask me whether they should do a traditional IRA or a Roth IRA. Contributions to a traditional IRA are tax deductible while contributions to a Roth IRA are not. Traditional IRAs grow tax deferred (any money you take out is taxed as income) and you must start withdrawing money by April 1 of the year after the year you turn 70 ˝. Roth IRAs grow tax free and money doesn't have to be taken out during your lifetime. You are allowed to convert a traditional IRA to a Roth IRA (and pay taxes today on the amount you convert), and for many people this makes a lot of financial sense. However, under current laws, if you make over $100,000/year you cannot do a Roth conversion.
Effective in 2010, all taxpayers regardless of income will be able to convert to a Roth IRA. Furthermore, the tax due on conversions done in 2010 can be spread out over two years and paid out in 2011 and 2012.
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Roth IRA, 401(k): What's The Difference? (Fox News)
The 401(k) version of the Roth has a couple of key differences from its IRA cousin.
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Obviously, Congress realizes that Roth IRAs are a good thing and they want to make it as enticing as they can for you to do a conversion. Since this rule opens up the possibility of a Roth conversion to everyone, you should put a note on your calendar to have a discussion with your advisors on January 1, 2010 about whether a Roth conversion makes sense for you.
Company Sponsored Retirement Plans Can Now Be Rolled Into Inherited IRAs by Non-Spouse Beneficiaries
The Stretch IRA is a very powerful concept. Properly structured, your non-spouse beneficiary (your spouse can always just rollover your IRA into their own and treat it as theirs) can take small distributions each year, and pay taxes on them, and leave the balance or your IRA growing tax deferred for their lifetime. However, in the case of a non-spouse inheriting a company sponsored retirement plan (401k, 403b, TSA, etc) they usually have to take the money out over a short period of time and pay taxes on it, forfeiting a lifetime of tax deferred growth.
Effective in 2007, a non-spouse beneficiary (your kids, grandkids, cousins, etc) can roll over a company sponsored retirement plan into a properly titled inherited IRA. The new rules will now allow non-spouse beneficiaries the ability to stretch distributions, and taxes, out over their lifetime.
The new rules also allow company sponsored plans to be transferred into trusts that can stretch out distributions. In the case where you do not trust your beneficiaries to make smart choices with the money, a trust can be used.
There are a couple of key details with the new rules; The company has to allow the transfer, which it may not, and it must be a direct transfer to the inherited IRA.
This new rule means that if you want to leave money in a company sponsored plan after you retire it will not take any tax advantages away from your beneficiaries. Of course, there are still a number of other issues that might argue for rolling the company sponsored plan into an IRA----required minimum distribution simplicity, more investment options, less paperwork, etc.
Congress seems to understand the important roll IRAs play in retirement savings, and so far this year they have been very accommodating on making the rules easier and more attractive. This area of the law is constantly changing so stay tuned.
Matthew Tuttle is the author of "Financial Secrets of my Wealthy Grandparents". For more information or to subscribe to his free newsletter, please visit his website at www.Matthewtuttle.com.
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Index of Articles about Roth IRA
What Other Authors say about Roth IRA
SUPER-CHARGE YOUR DREAM OF RETIRING RICH WITH THE ROTH 401(K)!
by Dr. Scott Brown, Ph.D.
This retirement account is so new and unique that you may not have heard of it. For additional reasons, I describe in my home study course, corporate insiders may not want to offer it to corporate employees....
Roth IRA or 401K - Which is Better?
by Kristine A McKinley
Q: I am trying to decide if opening and contributing to a Roth IRA would be a better option than contributing over and above what my company matches in my 401K.A: Ideally, it's best to max out both your...
Roth 401k Only Available to a Few
by D Lamaute
Only about one in three employers are expected to start Roth 401(k) plans in 2006. But, those who are self-employed, independent contractors, or business owners with no employees, don’t have to wait....
What Roth Hath, Traditional Hath Not
by Ken Morris
What Roth Hath, Traditional Hath Not The Taxpayer Relief Act of 1997 introduced a new Individual Retirement Account (IRA) called the Roth IRA. The primary inducement to make contributions to the new Roth...
Plan For Retirement With A Roth IRA
by Frank Vanderlugt
Great retirement benefits and bonuses used to come standard with just about any job, but these days even the most loyal of workers are seeing their retirement packages pulled out from under them. At least...
DISCOVER THE RETIREMENT BREAKTHROUGH ...THE ROTH IRA!
by Dr. Scott Brown, Ph.D.
If you don't know what a Roth IRA is then stop everything, print this article and read it carefully as this will certainly be the most valuable information you read this year. This next retirement account...
Investing Your Money: Information about Roth IRA
by Frank Vanderlugt
Information about Roth IRA is important if you have one of these accounts and need to know how it operates. A Roth IRA in an individual retirement account or arrangement that is similar to a traditional...
Understanding The Roth Ira
by John Kaighn
The ROTH IRA is a retirement product which allows the withdrawal of tax free income from a tax deferred account, and it is a fantastic savings vehicle for people of any age, but particularly for younger...
You're Roth IRA Withdrawal
by LeeAnna
The Roth IRA was born on January 1, 1998 as a result of the Taxpayer Relief Act of 1997. It's named after former Senator William V. Roth, Jr. The Roth IRA provides no deduction for contributions, but instead...
A Closer Look At The Roth 401k
by Joseph Kenny
Roth 401k is a good retirement savings option. Although it does not provide an up-front tax-deduction, the account eventually becomes tax-free, because the withdrawals taken at retirement are not subject...
Roth 401k- a Parlay for the Privileged
by Lawrence Groves
January 1, 2006, a new opportunity for savings came to town. Known as the post tax ROTH 401k - this is the classier sister to the traditional 401k plan. On one side is the post tax Roth 401k, with a fuller...
A SECRET WAY A NEWBORN BABY CAN OPEN A ROTH IRA!
by Dr. Scott Brown, Ph.D.
The Roth is kind of weird until you get used to it in terms of how much you can put in (contribute) each year depending on how much you earn (compensation). Because of this you really have two limits,...
Should I Convert to a Roth IRA?
by Ken Morris
Should I Convert to a Roth IRA? This is a perplexing question many investors are asking themselves in the wake of all the new tax laws. If the opportunity is available, should an individual take a distribution...
Which Of These Costly Roth IRA Contribution Mistakes Will You Make?
by John Angel
The Roth IRA is a smart investment choice for retirement.Why? Because not only does your money grow tax free while you're investing in one of these accounts... but... the flexibility of the Roth IRA allows...
Tax Help: Use Roth IRA in Estate Planning
by Andy Andersohn
Tax Tip: Using the Roth IRA for Creative Estate Tax PlanningParents must give serious consideration to protecting their family through creative estate tax planning. While life insurance and trusts should...
In the articles shown above on this web site you will find information that has been collected from many independent sources. Each article or item may offers a different point of view, but not necessary that of the CPA Mom's. This information is for general information only.
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