Headlines about "IRAs"
Gathered from the web by the editors at BenefitsLink.com.
Is Giving IRA Assets to Charity Still OK?
Excerpt: "if the handful of retirement-savings provisions still on the table make it into law later this year, consumers could still make those tax-free donations -- as well as leave assets in their 401(k)s while converting them to tax-free Roth status, among other changes." (The Wall Street Journal)
The IRA Investor Profile Series
Excerpt: "The series draws from information collected in The IRA Investor Database? -- a joint project by the Investment Company Institute [and the Securities Industry and Financial Markets Association]. The new database is designed to shed light on key determinants of IRA contributions, rollover and withdrawal activity, and the types of assets that investors hold in these accounts." (Investment Company Institute)
[Opinion] The Roth Plan is Wrong for Some People
Excerpt: "The proper way to evaluate Roth versus regular deferrals is to estimate the point at which the marginal tax rate at the time of the deferral is the same as the marginal rate on the distributions. In other words, you want to pay taxes at the lowest rate, comparing actual taxes at the time of deferral to estimated taxes at the time of distribution." (PLANSPONSOR.com via Reish & Reicher)
Upper-Income Taxpayers Plan for Tax Hike
Excerpt: "It is hard to determine how many people are converting to Roth IRAs for this reason, however. While conversions are up this year, this was also the first year in which taxpayers earning more than $100,000 annually could take advantage of the Roth, so some people might have converted even without the threat of tax increases next year." (The Wall Street Journal)
Bills to Require Automatic Employer-Provided IRAs Proposed in House and Senate
Excerpt: "Both bills would provide incentives for the establishment of qualified retirement plans. These would include increasing the maximum start up credit for qualified plans from $500 to $1,000 (which would be available for the first three years, instead of only the $250 credit available for first two years for providing the Automatic IRAs)." (Deloitte via BenefitsLink.com)
Auto-IRA Legislation Introduced in Both Houses of Congress
Excerpt: "The bills set the stage for serious work on the proposals in the next Congress. Auto-IRAs are a key plank in the Obama administration's retirement policy agenda, and the bills may draw support from Republicans who have backed prior auto-IRA bills." (Mercer)
What the Experts Are Doing With Their Own Roth IRAs
Excerpt: "Three [experts] say they have either made Roth conversions or plan to do so soon, and the fourth says he will do so if the market tanks. Thus, all believe their own tax rates will be the same or higher in the future, and they aren't worried that Congress will curtail Roth benefits enough to make them rue the move. In addition, all say they will use non-IRA funds to pay any conversion taxes." (The Wall Street Journal)
Appendix: Traditional IRA Investors' Contribution Activity, 2007 and 2008 (PDF)
58 pages. (Investment Company Institute)
'Automatic' IRAs to Fill Retirement Plan Coverage Gap
Excerpt: "Half of American workers have no work-based retirement plan, and as many as 42 million Americans would benefit from the bill . . . ." (TheStreet.com, Inc.)
Seven Ways the Automatic IRA Would Impact Retirement Savers
Excerpt: "The default retirement account would be a Roth IRA, but employees would be given the option to contribute to a traditional IRA." (U.S. News & World Report)
Six Reasons Not to Roll Over Your 401(k)
Excerpt: "Just as group medical insurance is generally a better bargain than individual coverage, a group retirement plan can offer advantages investors can't get if they roll the money into an IRA . . . ." (Bankrate.com)
[Official Guidance] Text of Official Summary of the Automatic IRA Act, H.R. 3760 (PDF)
6 pages. (American Benefits Council)
Auto-IRA Bill Introduced With Employer Mandates
Excerpt: "[The] Automatic IRA Act of 2010 (S. 3760) enables nearly all employees who work for a private business with more than 10 workers and whose employer does not already offer a retirement plan to contribute to retirement savings through payroll deductions." (PLANSPONSOR.com)
Pension Participation and Uncovered Workers
This issue brief explores the participation issue. (Center for Retirement Research at Boston College)
Traditional IRA Investors' Contribution Activity, 2007 and 2008 (PDF)
70 pages. Excerpt: "The IRA Investor Database contains account-level information from a wide range of mutual fund and insurance companies, which provided data for more than 10 million IRA investors in 2007 and 2008." (Investment Company Institute)
Turn Lemons Into Roth Conversion Cash
Excerpt: "If your client wants to convert his or her individual retirement account to a Roth IRA this year but doesn't have cash from non-IRA sources to pay the tax on the conversion, consider looking at his or her capital assets." (Investment News; free registration required)
In-Plan Roth Conversions, Roth 457 Accounts Expected to Gain Senate Approval
Excerpt: "The Senate may vote this month to let 401(k) and 403(b) plan participants transfer non-Roth amounts to a Roth account in the same plan. However, these in-plan conversions would be allowed only for participants otherwise eligible for a plan distribution." (Mercer)
[Official Guidance] Text of IRS Final Regs on Excise Taxes on Prohibited Tax Shelter Transactions and Related Disclosure Requirements; Disclosure Requirements With Respect to Prohibited Tax Shelter Transactions; Requirement of Return and Time for Filing (PDF)
11 pages. Excerpt: "This document contains final regulations that provide guidance under section 4965 of the Internal Revenue Code (Code), relating to entity-level and manager-level excise taxes with respect to prohibited tax shelter transactions to which tax-exempt entities are parties . . . . " (Internal Revenue Service)
Roth Conversions and Estate Planning
Excerpt: "A traditional IRA generally consists of pre-tax contributions and tax-deferred earnings that are taxed as ordinary income when the owner takes distributions. Leaving this account to your heirs means they might pay federal taxes twice??'once on the estate (if it's large enough to incur estate taxes) and again when taking distributions." (The Vanguard Group, Inc.)
Legislation Pending to Permit 401(k) Rollovers to Roths for Employees Who Are 59 1/2 Years Old or Older
Excerpt: "According to a draft copy of the bill . . ., it would allow the rollover of amounts in a 401(k) retirement plan of otherwise permissible distributions to a Roth-type account in the same plan." (PLANSPONSOR.com)
Roth 457 Provision Excluded from Latest Version of Tax Extenders Legislation
Excerpt: "The Roth provision would have leveled the playing field for state and local government workers by permitting 457(b) plans to offer the designated Roth accounts already permitted in 401(k) and 403(b) plans." (ICMA-RC)
Should You Convert to a Roth IRA?
Excerpt: "[O]bservers expect growing government debt will cause taxes to increase significantly for future retirees. For households who are still years away from retirement, Roth conversions protect a portion of retirement income against future tax increases." (National Center for Policy Analysis)
J. Mark Iwry at Treasury Dept. Is Planning Your Retirement
Excerpt: "Mr. Iwry's job, as the Treasury Department's senior benefits official, is to figure out what the government can and can't do to boost retirement savings. He is currently promoting 'auto-IRAs,' the top retirement item in the Obama administration's budget, which will be introduced to Congress within a few weeks." (The Wall Street Journal)
Is a Roth IRA Safe from Taxes?
Excerpt: "Without a crystal ball, it is impossible to answer the question definitively. But the short answer appears to be: 'No, Congress won't tax Roth conversions, at least not soon.' And the prospect of longer-term changes isn't deterring experts who are converting their own accounts." (The Wall Street Journal)
[Opinion] ASPPA Comments on Notice 2009-68 ? Safe Harbor Explanation ? Eligible Rollover Distributions
Excerpt: "ASPPA recommends that the guidance and model notices be revised to: Clarify that a single notice may be used for plans that offer both Roth and non-Roth accounts. Clarify that pre-tax amounts in a partial or split rollover can be rolled first to a traditional IRA or qualified plan in accordance with Internal Revenue Code (the 'Code') Section 402(c)(2) . . . ." (American Society of Pension Professionals & Actuaries)
Summary of H.R. 4213, The American Jobs and Closing Tax Loopholes Act of 2010 (PDF)
28 pages. A description of pension provisions begins at page 8, including 'Temporary single employer plan funding relief.' See also page 19, 'Extension of tax-free distributions from individual retirement plans for charitable purposes." (Committee on Ways and Means, U.S. House of Representatives)
Waiver Sought for IRA Funds Used for Small Business
Excerpt: "A bill introduced last month would waive the 10% penalty on early distributions from retirement plans if the funds were used for small-business investments. Called the Small Business Investment Penalty Relief Act of 2010 . . . ." (Investment News; free registration required)
[Opinion] American Benefits Council's Follow Up Letter Regarding Interpretive Issue Under Notice 2009-68 Partial Rollovers (PDF)
7 pages. Excerpt: "Thank you for taking the time to meet with the American Benefits Council (Council) and other interested stakeholders to discuss the tax treatment of a partial rollover to an IRA from a plan that includes amounts attributable to aftertax employee contributions." (American Benefits Council)
Obama Administration Proposing That Employees Without Access to 401(k)s Be Automatically Enrolled in an IRA
Excerpt: "Two bills on this issue are expected to be reintroduced in Congress that would require businesses that are at least two years old and have 10 or more workers to automatically enroll employees in an IRA. Employees would have a chance to opt out." (Treasury & Risk)
Cheap Source of Startup Capital? Your 401(k)
Excerpt: "An investor sets up a corporation, establishes a new 401(k) plan there, rolls over his or her existing 401(k) or Individual Retirement Account, and then uses part or all of the plan's assets to buy shares of the new company. This funds the new business, while keeping the tax advantages of the retirement plan." (Investment News)
[Guidance Overview] Roth 401(k)s, Roth IRAs and 2010 Roth Conversions (PDF)
5 pages. Excerpt: "The year 2010 is important for Roth conversions[:] the elimination of income limits on conversions and the anticipated 'sunset' of Bush administration tax cuts. In this article, we review key factors underlying participant decisions about Roth conversions. We begin with background on the economics of Roth 401(k)s and the Roth/non-Roth decision generally. We then discuss the 2010 changes. We close by discussing possible additional Roth conversion legislation that may affect employer plans." (Aon Consulting)
[Official Guidance] What Should Be On 2010-11 Guidance Priority List? IRS Wants to Know (PDF)
4 pages. Excerpt: "[T]he Guidance Priority List [is used] each year to identify and prioritize the tax issues that should be addressed through regulations, revenue rulings, revenue procedures, notices, and other published administrative guidance." (Internal Revenue Service)
Webcast: Roth 401(k) Contributions, Safe Harbor 401(k) Plans, and Automatic Enrollment (PDF)
81 pages. (Morgan, Lewis & Bockius LLP)
How to Tap Retirement Savings Early Without Penalty
Excerpt: "The law dictating when you can use your retirement money is straightforward: Funds withdrawn from an individual retirement account before age 59-1/2 are subject to a 10% hit. But the Internal Revenue Service permits a loophole, part of Section 72(t) of the federal tax code, where the penalty does not apply if the money is paid out in set amounts over time." (MarketWatch)
[Opinion] Comments on Proposed Amendment to Bank Secrecy Act Regulations -? Foreign Account Reporting ('FBAR') (PDF)
April 27, 2010; 12 pages. Excerpt: "[T]he policy goals of the foreign account provisions of the Bank Secrecy Act -- to detect and prevent taxpayers from hiding assets offshore to avoid income taxes or launder money -- are not advanced by requiring U.S persons to file FBAR with respect to 'foreign financial accounts' held by or for the benefit of employee benefit pension plans, voluntary employee beneficiary associations ('VEBAs'), and individual retirement accounts . . . ." (Groom Law Group)
Many IRA Account Holders Not Convinced by Roth's Tax Savings, Poll Shows
Excerpt: "More than half of U.S. savers with taxable IRA accounts won't convert to a tax-free Roth type because they aren't convinced about the tax savings, a Putnam Investments survey shows." (Boston Globe via AARP)
Americans Shift Expectations About Retirement Funding
Excerpt: "401(k)/IRA accounts down but still top list; Social Security moves up." (Gallup)
Roth 401(k) Conversions Likely to Be Approved
Excerpt: "Legislation allowing defined-contribution-plan participants to convert plan assets to an in-plan Roth account may be passed into law as soon as the end of next month. Approved by the Senate last month, the American Workers, State and Business Relief Act of 2010 would allow rollover contributions to a designated Roth account inside a 401(k) or 403(b) plan. The bill's counterpart in the House, which was passed in December, doesn't include a Roth conversion provision." (Investment News; free registration required)
[Guidance Overview] Chart on Exceptions to 10% Early Distribution Penalty
The chart presents a comparison of qualified plan and traditional IRA exceptions to the 10% penalty on distributions prior to age 59?. (McKay Hochman Co., Inc.)
[Guidance Overview] Inherited IRA Not Exempt from Debtors' Bankruptcy Estate, According to Court
Excerpt: "Debtors could not claim an exemption for an inherited IRA from their bankruptcy estate because inherited IRAs do not contain retirement funds as required under Bankruptcy Code Sec. 522(d)(12), a U. S. Bankruptcy Court for the Eastern District of Texas has ruled in In re Chilton." (Wolters Kluwer)
[Guidance Overview] Court Finds Principal not a Fiduciary in Case Involving Rollover of 401(k) Accounts
Excerpt: "A federal district court recently denied class certification in a lawsuit relating to the rollover of funds from 401(k) plans nationwide for which Principal Life Insurance Company provided retirement services. . . . The court rejected plaintiff's argument that Principal could be a fiduciary because it exercised 'control' over the disposition of plan assets by inducing the participants to rollover their plan account balances, saying that for Principal to qualify as a fiduciary, the plaintiff would need to establish that Principal, not the participant, controlled the decision to rollover the funds." (PLANSPONSOR.com)
Avoid These Roth IRA Conversion Mistakes
Excerpt: "While most of the some four in 10 U.S. households who own an IRA don't plan to convert those accounts to Roth IRAs this year, tens of thousands, perhaps even hundreds of thousands, are deciding to take the conversion step -- and many are making some astonishing mistakes that experts say could be avoided easily. What are those mistakes and what can you do to avoid them?" (MarketWatch, Inc.)
[Guidance Overview] What Can't Be Converted to a Roth: 72(t) Payments, Hardship Distributions Among Items Ineligible for Conversion
Excerpt: "The tax code allows only eligible rollover distributions to be converted to Roth individual retirement accounts. That means that besides required minimum distributions, there are a number of other items that can't be converted. These include 72(t) payments, hardship distributions, corrective distributions of excess deferrals, deemed distributions (i.e., defaulted plan loans, though plan loan offsets are eligible for rollover) and dividends from employer securities. In addition, funds in an inherited IRA are not eligible to be converted to a Roth IRA." (Investment News; free registration required)
[Guidance Overview] Elimination of Income Ceiling for Roth IRA Conversions
Excerpt: "Discussed . . . is an overview of Roth IRAs and the factors to consider for converting a traditional IRA or qualified plan account to a Roth IRA." (Tax Management Estates, Gifts and Trusts Journal via Buchanan Ingersoll & Rooney PC)
Retirement Investing: The End Game
Excerpt: "Unfortunately for skittish investors -- especially those within hailing distance of retirement age -- there is no obvious path to perfect safety." (Business Week)
[Official Guidance] Text of IRS 'Employee Plans News' -- Spring 2010 Edition (PDF)
14 pages. Articles include 'DOs and DON'Ts for Form 5307 Applications', 'What Can and Can't Be Rolled Over to a Roth IRA', 'The Taxable Portion of Your Rollover to a Roth IRA', 'Distribute Excess Deferrals', 'Fix-It Guides -- Common Problems, Real Solutions!', Future Requirements for Tax Return Preparers', 'Multiemployer Funding Issues' and 'Calendar of EP Benefits Conferences." (Internal Revenue Service)
Internal Revenue Service Includes 'Abusive Retirement Plans' in Its 2010 'Dirty Dozen' List of Tax Scams
Excerpt: "The IRS says it is looking for transactions that taxpayers use to avoid the limits on contributions to IRAs, as well as transactions that are not properly reported as early distributions." (PLANSPONSOR.com)
Senate Passes Bill to Expand Roth Access to 401(k) Plan Distributions
Excerpt: "Last week the U.S. Senate approved a bill that would permit 401(k) plan participants to convert pre-tax contributions to a Roth account within their 401(k) plan . . . . However, the language in the bill limits such conversions to 'distributable events' ? that is, only applicable to monies that would be eligible for a distribution. Moreover, the bill would seem to suggest that the participant must first request a distribution, receive it, and then redeposit it to the 401(k) in Roth status." (PLANSPONSOR.com)
Should You Convert a Traditional IRA Into a Roth IRA?
Excerpt: "This brief considers the merits of making such a conversion. People are likely to benefit if they expect their income tax rates to rise after they retire. People who expect their tax rates to fall also may benefit if they want to defer withdrawing money from their IRAs longer than the rules for traditional IRAs permit. In addition, a conversion can appeal to savers who wish to boost their total IRA balances more than the restrictions on their annual contributions will allow." (Center for Retirement Research at Boston College)
In-Plan Roth Conversions Under Tax Extenders Legislation
Excerpt: "An amendment to a pending Senate bill to extend expiring tax cuts (H.R. 4213) would allow Roth conversions in ?401(k), ?403(b) and eligible governmental ?457 deferred compensation plans that have Roth accounts. (Another amendment to the extenders bill would allow Roth accounts within ?457 plans, which are not provided for under existing law.)" (Tax Management Inc.)
Senate Bill Would Permit Roth Conversion Within 401(k)s
Excerpt: "According to a statement from Brian Graff, Executive Director/CEO of The American Society of Pension Professionals & Actuaries (ASPPA), an amendment to H.R. 4123 was adopted by unanimous consent that would allow distributable 401(k) account balances to be converted to Roth accounts within the 401(k) plan." (PLANSPONSOR.com)
Senate Bill Would Permit Roth Conversion Within 401(k)s
Excerpt: "According to a statement from Brian Graff, Executive Director/CEO of The American Society of Pension Professionals & Actuaries (ASPPA), an amendment to H.R. 4123 was adopted by unanimous consent that would allow distributable 401(k) account balances to be converted to Roth accounts within the 401(k) plan." (PLANSPONSOR)
[Guidance Overview] Roth Conversions -- Some Simple Advice Despite the Complexity
Excerpt: "This Client Alert will attempt to provide some basic advice regarding whether or not to convert, while briefly mentioning some of the many caveats for those who wish to have a more complete understanding of the rules." (Miller Johnson)
[Guidance Overview] Weighing the Merits of Converting to a Roth IRA
Excerpt: "Financial advisers say you need to consider several factors before converting to a Roth, including: * What will your tax bracket be when you retire? * How will you pay the conversion tax? * Do you plan to leave money for your heirs? . . . . [Here are] some 'myths' surrounding Roth conversions . . . ." (Dallas Morning News)
[Guidance Overview] Certain Rules for Roth IRA Rollovers
Excerpt: "This is the fifth in a series of Technical Updates, covering Roth IRA issues, including 2010 law changes, plan to Roth IRA rollovers, Roth IRA conversions, recharacterizations and reconversions, and taxation issues associated with Roth IRA transactions. This Part 5 discusses questions relating to rolling over Roth plan and IRA account balances." (SunGard Relius)
Bad Investment Advice Can Turn a Free Meal Costly
Excerpt: "'Financial fraud is the No. 1 consumer protection issue for AARP,' said Andres Castillo, who heads an AARP program that monitors free lunch seminars and similar presentations. In an AARP survey last year of people 55 and older, 9 percent said they had attended a free financial seminar within the last three years." (New York Times; free registration required)
[Guidance Overview] IRS Pension Distribution Reporting Changes For 2010
Excerpt: "The IRS recently released the instructions for the 2010 Form 1099-R. The instructions clarify a number of important areas, including the new truncating social security number option and how to report 2010 Roth conversions that taxpayers may defer taxes on for 2010. Plan sponsors and administrators should review these changes and update distribution forms and procedures accordingly." (Groom Law Group)
[Guidance Overview] For Shift to Roth I.R.A., Know the Pitfalls to Avoid
Excerpt: "Financial institutions are required to withhold at least 10 percent for federal income taxes unless you ask them not to. On their Roth conversion forms, you indicate your preference by checking (or, in some cases, not checking) a box. Read the instructions carefully and specify that you do not want taxes withheld . . . ." (New York Times; free registration required)
Real Savings Plus: An Automatic Investment Option for the Automatic IRA
Excerpt: "In this paper, the Initiative on Financial Security at the Aspen Institute proposes an investment option for the Automatic IRA: Real Savings ('RS+'). RS+ combines two widely traded and highly liquid assets -- Treasury Inflation Protected Securities (TIPS) and a broad-based equity market index -- to provide savers with a personalized, automatic target date investment option." (Initiative on Financial Security at the Aspen Institute)
Tax Traps in Roth IRA Conversions
Excerpt: "The Roth IRA conversion floodgates are open. But while the attraction of 'tax-free forever' can be powerful, Roth conversions can trigger unintended tax traps and financial problems that are often not addressed until it's too late. Here are five of the most common traps:" (Ed Slott in Financial Planning)
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