Archive for Retirement

Waiver of 60 Day Roll Over Period for Distributions from Tax Deferred Retirement Plans

Harold Goedde

This article explains the “self-certification” waiver of the 60 day roll over requirement based on the provisions of the recently released Rev. Proc. 2016-47. The IRS required certification foe a waiver is also included.

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Ideas for Retirement Savings Reform

Annete Nellen

On 1/28/16, the Senate Finance Committee held a hearing on – Helping Americans Prepare for Retirement: Increasing Access, Participation and Coverage in Retirement Savings Plans.  This isn’t the first time for this topic.  There were a few hearings on this in 2014. I’m not sure if anything is driving the renewed attention to this topic now.  While tax reform is challenging in an election year, this important topic seems good for any year.  There is a need for reform of the tax rules for retirement plans to make them more equitable and simple to help more people save for retirement. Read more

Retirement Plan Options For Small Businesses

Clifford Benjamin1

According to the US Small Business Administration, small businesses employ half of all private sector employees in the United States. However, a majority of small businesses do not offer their workers retirement savings benefits.

If you’re like many other small business owners in the United States, you may be considering the various retirement plan options available for your company. Employer-sponsored retirement plans have become a key component for retirement savings. They are also an increasingly important tool for attracting and retaining the high-quality employees you need to compete in today’s competitive environment. Read more

Other New Developments For 2015 Part 1



1. 401(K). The maximum contribution is $18,000 but increases to $24,000 if age 50 and older (up to $6,000 in catch­-up contributions).

2. Defined Benefit Plans. The maximum benefit amount is $210,000.

3. Defined contribution plan [e.g 401(k), 403(b)) and 457]. The maximum contribution is the lesser of $53,000 or 100% of compensation.

4. Regular and Roth IRA. The maximum contribution is $5,500 plus a $1,000 catch ­up contribution if age 50 and older. Taxpayer must have earned income. Read more

Traditional To Roth IRA Conversions – Should You? Did You? Wish You Hadn’t?

TaxConnections Member Barry Fowler

The tax provision that allows taxpayers to convert a Traditional IRA to a Roth IRA is a great tax-planning tool when used properly, and timing is everything.

To make a conversion, you must pay income taxes on the amount of the traditional IRA converted to a Roth IRA. So why would one want to do that? Well, the answer is that Roth IRAs enjoy tax-free accumulation and distributions, whereas the earnings in and contributions made to a traditional IRA are fully taxable whenever they are withdrawn. (An exception is if the contributions to the traditional IRA were treated as non-deductible. In that case, each distribution is nontaxable or partly nontaxable if only some of the contributions had not been deducted.)

So, you might consider converting during a year in which your income is abnormally low or a year in which your Read more

Transfer of Cross-Border Pensions To Your RRSP

Larry Stolberg - 11-19-15

Below is a CRA confirmation of this.

Numerous immigrants to Canada or those residing in Canada but have worked for say U.S. employers have entitlements to U.S. pensions such as 401K plans and in some circumstances they have U.S. IRAs. The Income Tax Act has provisions to allow transfers including a claim for any U.S. withholding tax or for applicable early withdrawal penalties.

Examination of both the U.S. and Canadian tax provisions should be dealt with before any transfer takes place to ensure the rollover is available in Canada.


QLACs And RMDs: Need a Break On Your Required Minimum Distribution? Read This!

Manasa Nadig - 11-10-15

I had a number of clients hit the magic RMD age this past year. RMD is an acronym for Required Minimum Distributions, if you are getting close to 70 years of age, you will be hearing that a lot. Even if that magic number is quite a ways down the road for you, this is a post you will want to read & remember.

Read more about RMDs in detail here on my blog post.

For a quick recap about what Required Minimum Distributions are, the Internal Revenue Service (IRS) defines it as “Required Minimum Distributions generally are minimum amounts that a retirement plan account owner must withdraw annually starting with the year that he or she reaches 70 ½ years of age or, if later, the year in which he or she retires. However, if the retirement plan account is an IRA or the account owner is a 5% Read more

Have You Taken Your Required Minimum IRA Distribution?

Barry Fowler28

As year-end approaches, this is a good time to make sure you have taken your required minimum distribution (RMD) for 2015.

What is an RMD, you ask? The tax code does not allow IRA owners to keep funds in a traditional IRA indefinitely. Eventually, assets must be distributed and taxes paid. If there are no distributions, or if the distributions are not large enough, the IRA owner may have to pay a 50% penalty on the amount not distributed as required.

Generally, required distribution begins in the year the IRA owner attains the age of 70½. If 2015 is the year you reached 70½, you can avoid a penalty by taking that distribution no later than April 1, 2016. However, delaying the first distribution means you must take two distributions in 2016, one for 2015, when you reached age 70½, and one Read more

2015: Year End – Tax Planning For Individuals, What To Expect!

Manasa Nadig - 11-3-15

It’s November! I am always surprised by it’s arrival and the realization that it’s year-end tax planning time. The shortened day-light hours seem to make that certain without a doubt. So let’s roll-up our sleeves, get down to work and fine-tune possible last-minute strategies for lowering your 2015 tax bill.

Tax Brackets: Let’s take a quick look at the 2015 tax brackets, you will see from the table below that the top tax rate of 39.6% will apply to incomes over $$413,200 (single), $464,851 (married filing jointly and surviving spouse), $232,426 (married filing separately), and $439,000 (heads of households):

The 3.8% net investment income tax and/or the 0.9% Medicare surtax will also apply if you Read more

IRS Releases Pension Limits For 2016

Barry Fowler26

Saving for retirement is one of the most important things you should do. Even though retirement may seem far away now, that time will eventually arrive and you will want to be prepared for it with adequate savings. Contributing to tax-advantaged retirement plans while you are working is one of the best ways to build up a nest egg for your retirement years. That said, the tax law doesn’t allow unlimited annual contributions to these plans.

If you have been wondering how much you can contribute to your retirement plans in 2016, the IRS has released the inflation-adjusted limits for next year’s contributions. Since inflation has been low this past year (at least according to the government’s calculation), most limits won’t increase over what they were in 2015, but some of the AGI phaseout thresholds that work to reduce allowable contributions will change. Here’s a review of the 2016 numbers: Read more

Retirement Plan Distribution Pitfalls

Barry Fowler13

When an individual retires or leaves an employer’s service, the individual will be required to take a distribution from the employer’s retirement plan (if the employer had a plan). Depending on the employee’s age and the plan’s terms, a distribution may not be required immediately, but when it’s time to take the distribution there are a number of tax pitfalls that can create some very big tax headaches for the employee. This article will explore those hazards and discuss how to avoid them.

First and foremost, if the employee does not transfer or roll the distribution over into another employer’s qualified plan or an IRA, the entire taxable amount of the distribution will be included in the employee’s taxed income for the year of the distribution. In addition, if the employee is under 59-1/2 years of age at the time of the distribution, the employee Read more

The Problem of #Americansabroad And Non-U.S. Mutual Funds Explained With Example

John Richardson

This Blog Post on TaxConnections is an effort to respond in a practical way to the questions that people have. Please watch my presentation at the Internet Tax Summit to learn more.

“I Really Wish I Could Do Retirement Planning Like A “Normal” Person. But, I’m an American Abroad. I hear I can’t Invest in Mutual funds in my Country of Residence.

The “Coming into U.S. Tax Compliance Book” is designed to provide an overview of how to bring some sanity to your life.

My Assumptions: This discussion assumes without deciding, that non-U.S. mutual funds are PFICs AKA “Passive Foreign Investment Corporations”. Although a clear majority of Read more