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Using IRAs to Help Children in 5 Easy Steps Thumbnail

Using IRAs to Help Children in 5 Easy Steps

Can children have IRAs? There is no minimum age for having an IRA. Due to the power of compound interst, saving tax-free in an IRA from childhood can provide a significant head start on financial security. Saving $5,500 in an IRA annually from age 14 through 24 and earning 7% per year provides $1.06 million at age 61 — even without contributing after age 24!

Planning for a Disclaimer in 5 Easy Steps Thumbnail

Planning for a Disclaimer in 5 Easy Steps

What is a disclaimer? A disclaimer is a formal refusal of an inheritance (or part of an inheritance) by a beneficiary. By creating a “path” for disclaimed assets to follow, a skilled planner can provide a beneficiary with the option to pass assets to alternate beneficiaries.

Navigating Qualified Charitable Distributions in 5 Easy Steps Thumbnail

Navigating Qualified Charitable Distributions in 5 Easy Steps

What is a qualified charitable distribution (QCD)? A QCD is a distribution from an IRA that goes directly to a qualifying charity and is not included in the taxable income of the IRA owner. A QCD cannot be made from an employer plan. A QCD can be up to $100,000 a year, per individual.

Fixing a Missed RMD in 5 Easy Steps Thumbnail

Fixing a Missed RMD in 5 Easy Steps

What is a missed RMD (required minimum distribution)? RMDs must be taken by IRA owners beginning in the year they turn age 72 and by IRA and non-spouse Roth Beneficiaries beginning in the year after the death of the account owner. RMDs not taken are subject to a penalty of 50% of the amount not taken each year.

Contributing to a Health Savings Account (HSA) in 5 Easy Steps Thumbnail

Contributing to a Health Savings Account (HSA) in 5 Easy Steps

What is an HSA? An HSA is a tax-advantaged medical savings account that can be used tax-free for qualified health expenses. HSAs are designed to be used in conjunction with a High Deductible Health Plan (HDHP). HSAs offer triple tax advantages: contributions are deductible, earnings are tax-deferred while in the HSA, and distributions are tax-free when used for qualified medical expenses.

Choosing the Right Tax Professional in 5 Easy Steps Thumbnail

Choosing the Right Tax Professional in 5 Easy Steps

Why do you need a tax professional? Managing taxes during retirement will be the single most important factor in determining your ultimate lifestyle. In addition to a financial planner and estate planning attorney, a qualified tax professional is an integral part of any planning team.

Calculating the Pro-Rata Rule in 5 Easy Steps Thumbnail

Calculating the Pro-Rata Rule in 5 Easy Steps

What is the pro-rate rule? The pro-rata rule is the formula used to determine how much of a distribution is taxable when the account owner holds both after-tax and pre-tax dollars in their IRA(s). For the purposes of the pro-rata rule, the IRS looks at all your SEP, SIMPLE, and Traditional IRAs as if they were one. Even if you have been making after-tax contributions to a separate account for years, and there have been no earning, you cannot isolate your after-tax amounts and must take your other IRAs into consideration.

Navigating the Health Care Taxes in 5 Easy Steps Thumbnail

Navigating the Health Care Taxes in 5 Easy Steps

What is considered investment income? Investment Income: Interest, dividends, capital gains (long and short), annuities (not those in IRAs or company plans), royalty income, passive rental income, other passive activity income.

Fixing Missed 60-Day Rollover Deadlines with Self-Certification in 5 Easy Steps Thumbnail

Fixing Missed 60-Day Rollover Deadlines with Self-Certification in 5 Easy Steps

If I missed the 60-day deadline for completing an IRA rollover, is there any way to save the rollover amount from tax? Failing to complete a 60-day rollover on time can cause the rollover amount to be taxed as income and perhaps subject to a 10% early withdrawal penalty. However, the deadline may have been missed due to reasons that are not the taxpayer’s fault.

Determining Tax on Roth IRA Distributions in 5 Easy Steps Thumbnail

Determining Tax on Roth IRA Distributions in 5 Easy Steps

What are the ordering rules? Roth IRA distributions can consist of contributions, converted funds and earnings—or any combination of the three. To determine what your distribution is, you must use “ordering rules” which dictate the order in which these categories of Roth IRA money must be withdrawn.

Calculating an IRD Deduction in 5 Easy Steps Thumbnail

Calculating an IRD Deduction in 5 Easy Steps

What is an IRD (Income in Respect of a Decedent) deduction? An IRD deduction is a way of offsetting the impact of double taxation (federal estate tax and income tax) on certain inherited assets. It’s an income tax deduction for the beneficiary (miscellaneous itemized deduction, not subject to limitations).

Avoiding Non-Spouse Beneficiary Mistakes in 5 Easy Steps Thumbnail

Avoiding Non-Spouse Beneficiary Mistakes in 5 Easy Steps

How can I avoid making costly mistakes when I inherit an IRA from a person who was not my spouse? Inheriting an IRA can be a financial windfall, but it’s important to understand the complex, specific rules that apply to non-spouse IRA beneficiaries to avoid critical errors.

Avoiding Charitable IRA Beneficiary Mistakes in 5 Easy Steps Thumbnail

Avoiding Charitable IRA Beneficiary Mistakes in 5 Easy Steps

Can IRAs be used to benefit a charity? IRAs can be a great source of funds to provide a benefit for a favorite charity, but using these funds can create a number of traps that must be avoided in order to maximize benefits to both the charity and other IRA beneficiaries.

Avoiding 72(t) Mistakes in 5 Easy Steps Thumbnail

Avoiding 72(t) Mistakes in 5 Easy Steps

What are 72(t) payments? 72(t) payments are a series of substantially equal periodic payments made from an IRA that can be used to avoid the 10% penalty for early distributions. Payments must last the greater of 5 years or until the IRA owner reaches age 59 1/2. When using a 72(t) schedule, a number of changes are prohibited. If these changes occur, the 10% penalty (and interest) is applied retroactively to all distributions made prior to age 59 1/2.

Choosing the Right Financial Advisor in 5 Easy Steps Thumbnail

Choosing the Right Financial Advisor in 5 Easy Steps

Why do you need a financial advisor? Today’s financial landscape is as complicated as ever. A good financial advisor can help you navigate this complexity so that you can make educated, informed decisions on what is best for you and your family.