Headlines about "IRAs"

Gathered from the web by the editors at BenefitsLink.com.
Roth IRA Conversion Mania: My IRA for a Calculator That Works
Excerpt: "No matter who converts, what is certain now is that financial-services firms are rolling out -- at a breakneck pace -- new tools and resources designed to help IRA owners figure out whether a conversion makes sense or not." (MarketWatch)

[Opinion] The 401(k): Don't Believe the Hype
Excerpt: "If someone made me America's personal-finance dictator, I'd scrap the 401(k). These workplace retirement plans are inequitable, as some companies offer good ones, some bad ones and others none at all. Fees are often too high. And even the better plans often don't provide enough investment options. Instead, I'd like to see the Roth IRA opened up to allow 401(k)-sized contributions - $16,500 a year instead of $5,000. (Or $22,000 and $6,000 for people 50 and over.) And I'd like to see the Roth's income limits lifted, so anyone could have one. . . . But since I'm not running things, the best I can do is suggest ways to make the traditional 401(k) work best." (Community Television Foundation of South Florida Inc.)

[Opinion] American Benefits Council Letter to IRS Regarding Partial Rollovers under Notice 2009-68 (PDF)
4 pages. Excerpt: "The Council is writing to urge the Internal Revenue Service to clarify the treatment of a partial rollover to an IRA of a distribution from a tax-preferred employer plan that includes after-tax contributions. Notice 2009-68, which was published on September 4,2009, updates the safe harbor '402(f) notice,' which describes the tax rules applicable to eligible rollover distributions from employer plans. The updated 402(f) notice includes a description of the tax rules applicable to plan distributions that include after-tax contributions. The description suggests for the first time a distinction in the tax treatment of partial rollovers that turns on whether the rollover is accomplished as a 60-day rollover or a direct rollover. The Council believes that there is no such distinction and urges the Service to clarify the matter." (American Benefits Council)

New Roth Conversion Opportunities: Is Converting a Traditional IRA, 403(b) or 401(k) a Smart Move, Unwise or Much Ado About Nothing?
Excerpt: "While the decision to convert to a Roth account can provide tax savings for some, it is not a wise move for all. Typically the most important consideration is a comparison between the marginal income tax rate in the conversion year and the marginal income tax rate in the withdrawal year if not converted, where this latter tax rate is usually a tax rate from a retirement year. If the future income tax rate is anticipated to be higher, converting to a Roth may be appealing, but if the future income tax rate is expected to be lower, converting may be unwise. When the anticipated tax rates are similar, other factors should be considered, such as required minimum distributions, tax diversification, beneficiary taxation, taxation of Social Security benefits, Medicare Part B premium amounts, and itemized deductions." (TIAA-CREF Institute)

Advisers Find Roth IRA Conversion Opportunity a Tough Sell
Excerpt: "[M]any advisers are having a hard time persuading clients to make the conversion and pay taxes now instead of later, given that most of them have taken such a huge hit from the market downturn, advisers said. Starting Jan. 1, people making more than $100,000 annually will be eligible to convert their traditional individual retirement accounts or 401(k) plans with previous employers into Roth IRAs. Currently, only those who make less than that amount a year are eligible to convert. Logically, it would make sense for many of these clients to convert next year, since their portfolios and their taxable income are probably smaller now than they will be years from now . . . ." (Investment News; free registration required)

[Guidance Overview] New Roth IRA Conversion Rules for 2010
Excerpt: "Starting in 2010, all taxpayers will be eligible to convert a regular IRA to a Roth IRA, regardless of their level of adjusted gross income ('AGI'). The option opens new opportunities, but also may require important tax planning. This article will discuss the new rules for conversion of a traditional IRA to a Roth IRA and the issues a taxpayer should consider before converting." (Warner Norcross & Judd LLP)

[Opinion] The Roth IRA: A Savings Vehicle in Which All Earnings, Appreciation, and Interest Can Be Free of Income Tax Forever
Excerpt: "If the rules are met, there's no RMD to be taken, no income tax due on withdrawals, and, while the account assets are included in your estate, withdrawals by your beneficiaries can also be tax-free. It hasn't been available to everyone because of income limits, but it soon will be. I'm speaking about the Roth IRA, of course. Until now, higher-income taxpayers ($100,000 modified adjusted gross income or higher) couldn't convert their savings from a traditional IRA to a Roth. But that's about to change." (The Vanguard Group, Inc.)

[Guidance Overview] Penalty for Failure to Disclose Listed Transaction Involving Roth IRA Applies Only to Participating Spouse
Excerpt: "The IRS Chief Counsel has advised in IRS Letter Ruling 200938022 (Chief Counsel Advice) that the penalty for the failure to disclose a listed transaction involving the avoidance of contribution limits for Roth IRAs as required by IRS Notice 2004-8 should not be treated as a joint and several liability of a husband and wife who file joint tax returns where only one of the spouses engaged in the transaction." (Wolters Kluwer)

The Question of Moving 401(k) After-Tax Contributions to a Roth
Excerpt: "A financial newsletter has reported that the IRS has issued a private ruling that after-tax contributions to a 401(k) plan can be pulled out in a lump sum and rolled over to a Roth IRA without triggering income tax. I can find no confirmation of this on the IRS Web site or in any other venue. Can you confirm this? . . . The Internal Revenue Service issued what is known as a private-letter ruling late last year on this subject -- but its scope could be more limited than what the reader describes above, according to Robert S. Keebler, a certified public accountant in Green Bay, Wis." (The Wall Street Journal)

[Official Guidance] Chart of IRS Retirement Plan Limits 2003 - 2010
Excerpt: "We have also produced a white paper that discusses the methodology that the Service uses to determine the limitations. This white paper includes the unrounded limitations." (Internal Revenue Service)

Deciding Whether a Roth Conversion Is Right
Excerpt: "Especially if you want to leave retirement assets to family or friends, a Roth conversion is one of the simplest, best planning tools available. You avoid the requirement to take yearly minimum distributions starting at age 70-1/2, and that can leave more for beneficiaries if you don't use the money yourself. And subject to certain restrictions, no tax is assessed when the money is withdrawn, so income can compound tax-free. But this technique has a hefty price tag." (New York Times; free registration required)

[Guidance Overview] Chart of 415, Etc., Limits Updated for News Release IR-2009-94
The chart of maximum limits subject to inflation indexing at Carol V. Calhoun's employee benefits site has now been amended to include the newly announced 2010 limits. Among other things, the chart shows limits under sections 415, 403(b), 401(k), and 457, as well as the Social Security wage base and Social Security and Medicare tax rates, for 1996-2010. (Calhoun Law Group, P.C.)

[Official Guidance] IRS Announces Pension Plan Limitations for 2010; Almost All Remain Unchanged
Excerpt: "Effective January 1, 2010, the limitation on the annual benefit under a defined benefit plan under Section 415(b)(1)(A) remains unchanged at $195,000. . . . The limitation for defined contribution plans under Section 415(c)(1)(A) remains unchanged for 2010 at $49,000. . . . The limitation under Section 402(g)(1) on the exclusion for elective deferrals described in Section 402(g)(3) remains unchanged at $16,500. The annual compensation limit under Sections 401(a)(17), 404(l), 408(k)(3)(C), and 408(k)(6)(D)(ii) remains unchanged at $245,000." (Internal Revenue Service)

Roth IRA Conversion Confusion Creates Opportunity for Investment Advisors, Study Finds
Excerpt: "The pending rule changes around Roth IRA conversions present a huge business opportunity for financial advisors to have deeper conversations with clients, according to a new survey by Charles Schwab & Co. Inc. Starting January 1, people making more than $100,000 annually will be eligible to convert their traditional individual retirement accounts or 401(k) plans with previous employers into Roth individual retirement accounts. Currently, only those who make less than that amount a year are eligible to convert. However, 61 percent of Americans surveyed by Schwab who made more than $100,000 annually were unaware of the Roth conversion rule changes, while only 14 percent of these 400 individuals said they could explain the rule changes." (Workforce Management; free registration required)

[Official Guidance] IRS 'Employee Plans News' - October 2009 Special Edition (PDF)
2 pages; contains hypertext links to the new final funding regulations, and a notice of an upcoming October 28 webcast about the required minimum distribution rules and the new 402(f) notice. (Internal Revenue Service)

[Guidance Overview] IRS's Guidance on Tax Treatment of Rollovers from Employer Plans to Roth IRAs
Excerpt: "The IRS Issued Notice 2009-75, in which they provide guidance on the federal income consequences of rollovers from employer plans[1] to Roth IRAs, primarily net unrealized appreciation (NUA) of employer stocks and income-averaging eligible amounts[i]." (RetirementDictionary!)

[Official Guidance] DOL Advisory Opinion 2009-02A on Estate Planning and IRAs
Excerpt: "[The DOL was asked w]hether an estate plan would give rise to a prohibited transaction under Code section 4975 if it is designed to use permissible minimum distributions from an IRA to fund a Trust, which is not a plan subject to fiduciary obligations under Title I of ERISA or the Code but is a disqualified person with respect to the IRA under Code section 4975, and where the beneficiary of the Trust is the IRA owner's grandson and Trustee of the Trust is the IRA owner's son who is entitled under applicable state law to receive statutory trustee commissions from the Trust." (U.S. Employee Benefits Security Administration)

Medicare Bite Tied to Roth Would Be Temporary
Excerpt: "Yes, converting to a Roth could result in paying higher Medicare premiums, but the increase will likely be temporary. The key: If you are a Medicare beneficiary, or about to become one, it is smart to calculate whether the additional income created by a conversion could increase your Part B premiums, as well as your tax bill. Then, with that information in hand, you can make an informed decision about whether a Roth conversion makes sense for you." (The Wall Street Journal)

Roth IRAs And 2010 Conversion Leave Some in The Dark
Excerpt: "[A]ccording to a Fidelity Investments study, many Americans are scratching their heads over a Roth IRA. While 56% of the study's participants report that they understood the benefits of a Roth IRA (an individual retirement account), the study proves otherwise." (Employee Benefit News; free registration required)

Few Savers Plan to Switch to Roth IRA,Survey Says
Excerpt: "Just 7% of survey respondents said they're planning now to convert to a Roth, according to a Fidelity Investments survey in August of 800 people with retirement accounts and household income of $100,000 or higher." (The Wall Street Journal)

[Guidance Overview] IRS Guidance on Rollover Notices, Rollovers to Roth IRAs, Automatic Contribution Arrangements and Other Retirement Savings Incentives (PDF)
4 pages. Excerpt: "The IRS recently released three revenue rulings and five notices on provisions intended to spur retirement savings. One notice provides a new model 402(f) notice for eligible rollover distributions upon termination of employment. Another notice provides guidance clarifying the rules for rollovers from qualified plans to Roth IRAs. The other guidance provides sample plan amendments for adding automatic enrollment features to 401(k) plans and SIMPLE IRAs, affirms that default contribution percentages under automatic contribution arrangements may automatically increase as employee compensation increases, and confirms that employees may be allowed to contribute the dollar equivalent of unused paid time off (PTO) into their 401(k), profit-sharing, or stock bonus plans." (Buck Consultants)

[Guidance Overview] Answers to Readers' Questions About New Rules, Starting Jan. 1, Involving Roth Savings Plans
Excerpt: "[Sample question:] I opened a traditional IRA several years ago in anticipation of the 2010 rule changes. None of my IRA contributions were tax-deductible, because my income is too high. And the market meltdown has left the value of my IRA below the amount invested. I assume that for me -- and many others -- a conversion would involve no tax bite whatsoever. True?" (The Wall Street Journal)

[Guidance Overview] IRS's Additional Guidance on Tax Consequences of Rollovers from Employer Plans to Roth IRAs
Excerpt: "EBIA Comment: In addition to providing additional guidance on the tax consequences of rolling over ERDs to Roth IRAs, Notice 2009-75 includes helpful background on rollovers of pre-tax funds to Roth IRAs (known as conversion rollovers). Note also that the IRS has released two updated model rollover notices under Code Section 402(f) -- one of which applies only to ERDs from designated Roth accounts. In addition to other changes, both model notices include the updated rollover and taxation rules for rollovers to a Roth IRA . . . ." (Employee Benefits Institute of America)

[Guidance Overview] New Safe Harbor 402(f) Explanations
Excerpt: "Plan administrators are not required to use the safe harbor language, but we generally think it wise to do so to the greatest extent possible. At a minimum, the new safe harbor language serves as a great starting point to ensure that a plan's Section 402(f) explanation reflects the current state of the law. If you have questions regarding the appropriate steps to take with respect to your plan in light of this new guidance, please do not hesitate to contact us. Please also keepin mind that even an explanation including the safe harbor language will need to be modified when relevant law changes. Notice 2009-68 includes an explicit reminder of that fact." (Utz, Miller & Eickman, LLC)

[Guidance Overview] IRS Guidance on Rollovers of Pension Plan Distributions to Roth IRAs
Excerpt: "Notice 2009-75 clarifies that if an eligible rollover distribution from an eligible employer plan is rolled over to a Roth IRA and the distribution is not made from a designated Roth account, then the amount that would be includible in gross income were it not part of a qualified rollover contribution is included in the distributee's gross income for the year of the distribution. The amount included in gross income is equal to the amount rolled over, reduced by the amount of any after-tax contributions that are included in the amount rolled over, in the same manner as if the distribution had been rolled over to a nonRoth IRA and that nonRoth IRA had then been immediately converted to a Roth IRA." (Wolters Kluwer)

[Guidance Overview] IRS Response to President Obama's New Initiative Regarding Retirement Savings
Excerpt: "The Internal Revenue Service ('IRS') has followed up on President Obama's . . . call for more opportunities to save for a 'rainy day.' In particular, the IRS guidance relates to: Contribution of the value of unused paid vacation, sick and other leave ('paid time off') to a defined contribution plan; Automatic enrollment arrangements; and Required notice with regard to eligible rollover distributions." (Blank Rome LLP)

[Guidance Overview] IRS Answers to Questions on Taxability of Roth Conversions
Excerpt: "In Notice 2009-75, the Internal Revenue Service provides guidance in the form of a Q&A on the tax treatment of eligible rollover distributions from qualified plans into a Roth IRA. The guidance further clarifies that a qualified plan is a qualified plan described in ? 401(a), an annuity plan described in ? 403(a), a plan described in ?403(b), or a governmental ? 457(b) plan." (PLANSPONSOR.com; free registration required)

[Guidance Overview] New IRS Model Rollover Notices
Excerpt: "President Obama has launched a new Retirement and Savings Initiative. As part of this Initiative, the IRS has announced a package of guidance aimed at making it easier to save. Included is an updated safe-harbor rollover explanation. The purpose is to encourage rollovers by providing a clear explanation of the rules." (Warner Norcross & Judd LLP)

[Official Guidance] Text of IRS 'Employee Plans News' for Practitioners - Special Edition September 2009 (PDF)
2 pages; provides a brief set of links to the recent IRS notices and rulings. Excerpt from an IRS email: 'This special edition discusses the Retirement & Savings Initiatives, Rollovers From Employer Plans to Roth IRAs, the IRS Retirement Plans Navigator and Life Events That Can Affect Retirement Savings." (Internal Revenue Service)

[Official Guidance] Text of IRS 'Retirement News for Employers' - Special Edition September 2009 (PDF)
3 pages. Excerpt from an IRS email: 'This special edition discusses the Retirement & Savings Initiatives, Rollovers From Employer Plans to Roth IRAs, the IRS Retirement Plans Navigator and Life Events That Can Affect Retirement Savings." (Internal Revenue Service)

[Official Guidance] Text of IRS Notice 2009-75: Rollovers from Employer Plans to Roth IRAs (PDF)
8 pages. Excerpt: "This notice describes the federal income tax consequences of rolling over an eligible rollover distribution from a qualified plan described in ? 401(a) of the Internal Revenue Code (Code), an annuity plan described in ? 403(a), a plan described in ? 403(b), or an eligible governmental plan under ? 457(b) to a Roth IRA described in ? 408A. . . . This notice supplements the regulations under ? 408A and Notice 2008-30 to provide additional guidance on a rollover from an eligible employer plan to a Roth IRA." (Internal Revenue Service)

[Official Guidance] Text of IRS Notice 2009-68: Safe Harbor Participant Notices for Eligible Rollover Distributions (PDF)
25 pages. Excerpt: "This notice contains two safe harbor explanations that may be provided to recipients of eligible rollover distributions from an employer plan in order to satisfy section 402(f) . . . . The first safe harbor explanation applies to a distribution not from a designated Roth account . . . . The second safe harbor explanation applies to a distribution from a designated Roth account. These safe harbor explanations update the safe harbor explanations that were published in Notice 2002-3, 2002- 1 C.B. 289, to reflect changes in the law. These safe harbor explanations also reorganize and simplify the presentation of the information." (Internal Revenue Service)

[Official Guidance] Treasury Document: 'Using Your Income Tax Refund to Save By Buying U.S. Savings Bonds' (PDF)
5 pages. Excerpt: "[Question:] If I get a refund on my federal income tax return, can I direct the IRS, on my tax return, to help me save part or all of it by direct deposit? [Answer:] Yes, you can. When you file your tax return, you can tell the IRS you want to save part (or all) of your refund and have the rest (if any) sent to your checking account. You can save part or all of your refund by checking a box when you file your return telling the IRS to make a direct deposit of the amount you designate to an IRA, to buy U.S. savings bonds, or to a savings account or other savings vehicle" (Internal Revenue Service)

[Guidance Overview] Recharacterization Opportunity for Converted Plan or Traditional IRA Funds to Roth in 2008 has Deadline of Oct. 15, 2009
Excerpt: "The market free fall of 2008 was relentless. Many clients who did a Roth conversion last year have seen their account values decline, some drastically so. These clients now have a tax bill on value that they no longer have. For example, in early 2008, assume Allen converted $100,000 to a Roth IRA at a 25% effective marginal bracket, generating a $25,000 tax bill for the conversion. If Allen's account is worth only $30,000 today, he now must pay income tax on $70,000 of account value that no longer exists. Fortunately, though, in one of the great breaks provided by the tax code, clients like Allen can recharacterize their Roth accounts and eliminate the tax liability on the lost account value. Simply stated, a Roth recharacterization is the process of undoing a Roth conversion by transferring the converted funds back to an IRA. Anyone can do a recharacterization for any reason. After the recharacterization, the funds are treated as if they never left the IRA." (Financial Planning and SourceMedia, Inc.)

[Guidance Overview] Transfer of Partial IRA Account Balance Subjects Periodic Payments to 10% Penalty
Excerpt: "A recent IRS ruling illustrates the rigidity of the rules under IRC ? 72(t) by which 'substantially equal periodic payments' are exempt from the 10 percent early distribution tax. An individual's non-taxable transfer of a portion of her individual retirement account to another IRA constituted a prohibited 'modification' of the payments, which the IRS ruled could not be corrected by reversing the transfer. The error resulted in the distributions she had taken over the prior seven years being retroactively subject to the 10 percent early distribution tax and interest. PLR 200925044 (March 23, 2009)." (Deloitte via BenefitsLink.com)

[Guidance Overview] Surviving Spouse Could Roll Over Proceeds of Decedent's IRA Into Her Own IRA Because Decedent's IRA Was Not Inherited IRA
Excerpt: "As sole trustee, the surviving spouse had dominion and and control over the entire trust's assets. The surviving spouse, as trustee, proposed to demand a single distribution from the decedent's IRA and to allocate the proceeds to the required subtrust. She then intended to withdraw the IRA proceeds from the subtrust and roll the proceeds over into her own IRA within 60 days of the distribution from the decedent's IRA to the trust." (Wolters Kluwer Law & Business)

[Guidance Overview] Retiree's Pension Decision: Lump Sum or Annuity?
Excerpt: "Taking the lump sum will give you considerably more flexibility and control over the timing and amount of distributions than the annuity. This could be a big factor in your decision if you need more income over the next 10 years prior to receiving social security. I would be in favor of the lump sum here. If you take the annuity, you will be counting on your company's (or potentially a company that acquires your company in the future) ability to make those payments to you for the rest of your life and your spouse's life. The Pension Benefit Guaranty Corp may or may not insure all of your benefits if your company can't meet its obligations." (The Dallas Morning News)

Most Baby Boomers Not Converting IRAs to Roths
Excerpt: "Seventy-three percent of Baby Boomers who own a traditional IRA are not planning to convert it to a Roth IRA in 2010, when the previous household income limit of $100,000 will be eliminated, USAA Wealth Management found in a survey. Any investor who converts in 2010 will have two years to pay the taxes. Among households with an income of $100,000 or more, 57% don't even know that the income limits on Roth IRA conversions will be eliminated. Sixty-two percent don't know that if they do make the conversion, the money will be subject to tax." (Money Management Executive via On Wall Street)

[Official Guidance] Summer 2009 Edition of 'Retirement News for Employers' by Internal Revenue Service (PDF)
14 pages. Articles include '2009 RMDs from Defined Benefit Plans?', 'ABCs of Loans and Hardship Distributions', 'Correcting a Failure to Implement the Plan's Automatic Enrollment Provisions', 'SIMPLE IRA Plans: The 2-Year Rule on Early Distributions', 'New on the Web', and '7 Steps to Making a Hardship Distribution." (Internal Revenue Service)

[Guidance Overview] Are Distributions to Nonspouse Beneficiaries Subject to 20% Mandatory Withholding?
Excerpt: "[Once new rules are] effective, all nonspouse beneficiary distributions will be subject to the normal rules for eligible rollover distributions, including the 402(f) notice and including the 20% mandatory withholding when the funds are paid to the nonspouse beneficiary, instead of being directly rolled to an inherited IRA." (McKay Hochman Co., Inc.)

Taking Advantage of the Required Minimum Distribution Holiday for IRAs
Excerpt: "The RMD holiday provides some flexibility: Forgoing the distribution is optional; it is not an all-or-nothing provision. The recipient may withdraw any amount, down to and including $0. Because a plan participant may take a distribution as late as the last day of the year, the participant is in a good position to take a distribution that optimizes tax savings. [For example, i]f a taxpayer has unusually high medical expenses, much of the income resulting from an IRA distribution may be shielded from tax. Excess medical expenses cannot be carried over to another tax year, so the deduction will be lost if not offset." (American Institute of Certified Public Accountants)

[Guidance Overview] Trustee-To-Trustee Transfer of Portion of IRA to New IRA After Substantially Equal Periodic Payments Had Begun Was Modification of Substantially Equal Periodic Payments
Excerpt: "A trustee-to-trustee transfer of a portion of an individual's account balance in her IRA to another IRA at a different financial institution after she had begun receiving a series of substantially equal periodic payments was a modification to the series of substantially equal periodic payments that triggers the 10% additional tax on early distributions, according to an IRS letter ruling." (Wolters Kluwer)

Retirement Prospects Dim for Many Near-Retirees
Excerpt: "For many workers, defined contribution (DC) plans and individual retirement accounts (IRAs) are their main savings vehicles. This trend gives employees greater responsibility for accumulating sufficient wealth to see them through retirement. Are workers, especially those approaching the end of their working career, saving enough? An analysis of account balances for near-retirees suggests widespread financial unreadiness for retirement looming, even before the stock and housing markets tumbled." (Watson Wyatt Worldwide)

Who Should Save in a Roth 401(k)? (It's Not Just About Tax Rates)
Excerpt: "We first show that comparing different saving strategies requires making an apples-to-apples comparison, which can be achieved by keeping take-home pay constant. An individual currently saving pre-tax can maintain the same take-home pay by switching to a lower amount of Roth saving. However, some important rules imposed by either 401(k) plans or the IRS encourage 'tax illusion' by treating pre-tax and Roth dollars as if they were equivalent. First, moderate savers need to take care to understand how switching to Roth saving could lose them free money through employer matching contributions. Second, the IRS limit on annual 401(k) contributions means that aggressive savers who save Roth dollars can save more in a tax-advantaged way than those who save pre-tax dollars. For both of these groups, the conventional wisdom can be completely reversed under fairly normal circumstances." (Social Science Research Network)

Questions for a Custodian After Scams Hit IRAs
Excerpt: "Three unrelated Ponzi schemes, including Bernard L. Madoff's, erased more than $1 billion from hundreds of individual retirement accounts set up through a single financial company. At a minimum, this coincidence would appear to be a mystery worthy of investigation by regulators. After all, that financial company is part of an important industry that is supposed to help keep America's retirement savings safe from crooks like Mr. Madoff." (The New York Times; free registration required)

[Guidance Overview] IRS Kills Taxpayer's 72(t) Payment Correction Request
Excerpt: "In an IRS Private Letter Ruling (PLR 200925044), the agency ruled that in attempting to change the IRA investments, the client had modified the 72(t) payment schedule. With so many clients changing investments or custodians these days, financial advisers have to be aware of the special rules that apply when a client takes a series of early withdrawals from an IRA." (Investment News; free registration required)

[Guidance Overview] Borrowing from Retirement Plans Surges
Excerpt: "The Transamerica Center for Retirement Studies, a nonprofit funded by Aegon's . . . Transamerica Life Insurance, purports that participants holding a 401(k) loan jumped from 11% in 2006 to 18% in 2007. Some plans have gone as far as selling debit cards directly linked to 401(k) accounts, offering an automatic loan rather than a typical withdrawal as if one were using a MasterCard . . . or Visa . . . ." (TheStreet.com)

[Opinion] Converting an IRA into a Roth? How's Your Crystal Ball?
Excerpt: "Starting Jan. 1, you'll be able to take a regular I.R.A., say, one that you have in a brokerage account after having rolled an old 401(k) into it, and turn it into a Roth. You'll be able to do this no matter how much money you make, though you'll have to pay income taxes at your current rate on whatever you move. . . . Why would you want to make such a swap? Because you think you or your heirs could end up with more money over the long haul by investing in a Roth instead of a regular I.R.A. . . . It all seems pretty simple, until you consider this: The tax laws might change substantially, throwing all of your careful planning into utter disarray." (The New York Times; free registration required)

[Guidance Overview] May a Designated Roth Account Be Rolled to a Roth IRA?
Excerpt: "Upon the occurrence of a triggering event, such as severance from service, a designated Roth account may be rolled into a Roth IRA without regard to the AGI of the individual. The designated Roth account five-year clock will not be carried over to the Roth IRA. Once rolled into the Roth IRA, the designated Roth accounts funds will be considered under the five-year clock of the Roth IRA. Thus, if it is a new Roth IRA, opened with the rollover money, the five-year clock will start as of the first day of the year in which the Roth IRA is opened." (McKay Hochman Co., Inc.)

The Pros and Cons of the Obama IRA
Excerpt: "Tucked into President Obama's financial regulatory reform legislation still being debated in Congress is a proposal to get more workers saving for retirement. The plan calls for employers to set up mandatory automatic-enrollment IRAs, retirement accounts that allow for tax-deductible contributions. If the measure passes, companies that don't currently offer a tax-deferred retirement-savings plan would funnel employee contributions into IRA accounts through direct payroll deposits. It would also represent the biggest increase in new retirement savers since the creation of the 401(k) in 1980." (The Wall Street Journal)

[Guidance Overview] IRS Says Transfer Results in a Modification of Stream of Substantially Equal Periodic Payments: PLR 200925044
Excerpt: "[An IRA participant] asked the IRS to rule that: The partial transfer from IRA # 1 to IRA # 3 not be considered a modification [and] A proposed correction of reversing the partial transfer (that was made from IRA # 1 to IRA # 3) to IRA # 1, plus any applicable earnings, not be considered a modification. The IRS' Response[:] The IRS noted that the partial transfer ? which was nontaxable- was made before the end of the [series of substantially equal periodic payments] period, (the end would be after five years has elapsed since the inception or until age 59 ? , whichever is longer. You can use this calculator to determine the end-date of a [series of substantially equal periodic payments]). They further stated that the partial transfer resulted in a modification of the [series of substantially equal periodic payments], and added that the modification could not be corrected by reversing the transfer." (RetirementDictionary!)

[Guidance Overview] Tax Court Rules That 72(t) Payment Plan Not Modified When the IRA Holder Took an Additional Distribution for Education
Excerpt: "Although the IRS sought to assess the 10% early withdrawal penalty, the Court ruled in favor of the taxpayer . . . stating that the extra distribution did not trigger the 10% penalty. This decision may give IRA owners some much-needed flexibility if they need more funds for certain purposes. But only time will tell if the IRS will follow the Tax Court's lead." (Financial Planning)

[Opinion] Obama Retirement Plan Places Primary Responsibility for Retirement Saving on Households (PDF)
3 pages. Excerpt: "Tucked into the blueprint for financial regulatory reform1 released last week is an outline of the president's proposals for strengthening retirement plans and encouraging retirement savings. Though some of the proposals in the Department of Treasury's white paper are welcome and overdue, they should not be mistaken for the kind of comprehensive reform that is needed to fix a system in crisis. . . . The White House plan is two-pronged. First, it would require many employers who do not offer retirement plans to set up automatic payroll deductions into Individual Retirement Accounts (IRAs), using inertia to boost participation by having workers opt out rather than opt in. Second, it would expand eligibility for the Saver's Credit and make it refundable, giving low- and moderate-income families who owe little or no income tax an incentive to save." (Economic Policy Institute)

IRS Shoots Down New Roth Ploy: Recent Ruling Finds That Transactions Moving Income Were Similar to Those Outlawed Earlier
Excerpt: "[T]he Internal Revenue Service repeatedly has taken steps to minimize Roth IRA scams. A recent IRS ruling took another step in that direction, determining that transactions entered into by a husband and wife were substantially similar to transactions outlined in IRS Notice 2004-8. An error in reporting the couple's transactions, along with the transactions themselves, has left the two exposed to severe and potentially devastating penalties.' (Investment News; free registration required)

Most Small Employers Would Face Low Costs to Implement Automatic IRAs
Excerpt: "This report finds that most employers would likely face low costs to implement a system of automatic individual retirement accounts (IRAs). Automatic IRAs can be designed to integrate into existing business payroll systems in a way that will minimize an employer's responsibilities. Most small employers will have only small incremental costs to modify their payroll processing systems in order to facilitate enrollment in Automatic IRAs and withholding of Automatic IRA contributions. The widespread adoption of automated payroll systems, including within the small business sector, and the ability of those system providers to build the Automatic IRA into their services, will make this new employee benefit relatively simple to implement." (AARP)

RothRetirement.com Site Educates on the 2010 Roth IRA Conversion Option
Excerpt: "Convergent Retirement Plan Solutions of Brainerd, Minnesota, and Archimedes Systems, of Waltham, Massachusetts, have jointly launched a Web site, RothRetirement.com, to help educate consumers about the 2010 Roth IRA conversion. A news release said the site includes a library of short educational clips on the 2010 Roth IRA conversion, a compendium of nearly 100 frequently asked questions, a consumer version of the Roth IRA Conversion Optimizer calculator, and links to additional online Roth articles and resources. [The site is available at www.convergentrps.com.]" (PLANSPONSOR.com; free registration required)

[Guidance Overview] New Tax Rules Will Give More People Access to a Roth IRA, One of Best Savings Plans for Later Life
Excerpt: "Starting Jan. 1, the income limits that have prevented many individuals . . . from converting a traditional IRA or employer-sponsored retirement plan to a Roth will be eliminated. The change -- one of the biggest and most important on the IRA landscape in years -- will widen the entryway to one of the best deals in retirement planning. With a Roth IRA, virtually all income growth and withdrawals are tax-free." (The Wall Street Journal)

Tax Proposal Has Silver Lining for IRAs, Social Security
Excerpt: "[HR 882] proposes to increase the required age for distributions from qualified retirement plans to 75 from 70?. The effective date would be for years beginning after the date of enactment. Thus, if the bill were to become law this year, the age 75 rule would be effective for 2010 and thereafter. The bill would also provide for contributions to traditional individual retirement accounts to the year prior to age 75 rather than the present rule of 70? ." (Investment News; free registration required)

The U.S. Retirement Market, 2008 (PDF)
Excerpt: "mployer-sponsored retirement plans play a key role in helping American workers save for retirement. The bulk (nearly two-thirds) of Americans' retirement assets was held in employer-sponsored retirement plans at year-end 2008. Furthermore, a significant portion of assets held in IRAs originated in employer plans and were then transferred (or 'rolled over') into IRAs." (Investment Company Institute)

The 401(k): Employers Look to Cut Costs, Workers Crave Stability Following Market Crash
Excerpt: "Retirement plan consultants foresee financial firms and employers embracing hybrid plans with features of both 401(k)s and pensions. Fred Cox, director of compensation and benefits at Evansville-based Vectren Corp., talked with a vendor in late May about adding an annuity option to the gas and electric utility's 401(k) plan. The option would help participants invest in stable choices that guarantee a certain yearly payment upon retirement -- like a pension does. 'What you've created is sort of a floor out of what's going to come out of that annuity,' Cox said. Such tweaks are not enough for Monique Morrissey, an economist at the liberal Economic Policy Institute in Washington, D.C. She wants to see individual retirement accounts mandated, controlled and guaranteed by the government -- because 401(k)s have failed to provide Americans what they need in retirement." (Indianapolis Business Journal)

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