Archive for Retirement
WASHINGTON — The Internal Revenue Service today reminded taxpayers who turned age 70½ during 2017 that, in most cases, they must start receiving required minimum distributions (RMDs) from Individual Retirement Accounts (IRAs) and workplace retirement plans by Sunday, April 1, 2018.
The April 1 deadline applies to all employer-sponsored retirement plans, including profit-sharing plans, 401(k) plans, 403(b) plans and 457(b) plans. The RMD rules also apply to traditional IRAs and IRA-based plans such as SEPs, SARSEPs, and SIMPLE IRAs, however, they do not apply to ROTH IRAs. Read more
Are you a high-income small-business owner who doesn’t currently have a tax-advantaged retirement plan set up for yourself? A Simplified Employee Pension (SEP) may be just what you need, and now may be a great time to establish one. A SEP has high contribution limits and is simple to set up. Best of all, there’s still time to establish a SEP for 2017 and make contributions to it that you can deduct on your 2017 income tax return.
2018 Deadlines For 2017 Read more
Senate Finance Committee Reduction in Retirement Savings of Public Education and Government Employees
I have been focused this past week on understanding the impact and implementation of the House Ways & Means and Senate Finance Committee proposals on U.S. businesses foreign source income. Two proposals that interest me are the ones aimed at transfer pricing, being (1) the minimum deemed distribution of a foreign subsidiary’s earnings above a statutorily defined return on tangible capital and (2) the 20% excise tax on payment to foreign related corporations.
Unlike private creditors, the IRS has wide discretion to exercise its administrative levy powers. Internal Revenue Code (IRC) § 6331(a) says the IRS can generally “levy upon all property and rights to property.” The IRS must make notice and demand for payment and in most instances provide collection due process (CDP) rights prior to levy. And under IRC § 6334, the IRS is prohibited from levying on certain sources of payments, such as unemployment benefits and child support. But overall, the IRS can cast a large net when it chooses to levy a taxpayer’s property, including funds in retirement accounts.
The IRS has announced relief for victims of recent disasters. If you live in a federally-declared disaster area, you qualify for this program. As an affected taxpayer, you may take a loan or hardship distribution from your retirement plan.
Streamlined procedures have been put in place to allow taxpayers quick access to funds in these accounts. The plan must allow for hardship withdrawals. However, these distributions may be made prior to the plan being amended to allow such withdrawals. Contact the human resources department at your company to see if your plan allows these loans or distributions. The IRS is waiving the six-month ban on distributions that normally affects taxpayers taking hardship distributions. Any distribution or loan under this announcement must be made by January 31, 2018.
Many of our clients talk to us about setting up retirement plans, contributing to retirement plans, and focusing on the monetary aspects of retirement. But what they don’t do is spend a lot of time thinking about and planning for the nonfinancial aspects of their retirement; they don’t realize it’s the biggest transition they’ll ever go through.
The consequences of not planning can include sitting around with growing boredom. Retirees watch TV an average of 43.5 hours a week, according to Age Wave 2012, and lack of stimulation can be associated with higher risks of alcoholism or depression. Read more
Normally you have 60 days to rollover retirement plan distributions in order to avoid current taxation and possible penalty. If you have special circumstances challenging your ability to complete the rollover within this 60-day time frame, please be advised that there are several circumstances in which the IRS has repeatedly given taxpayers additional time to complete the rollovers.
In an attempt to help taxpayers avoid costs and time, the IRS released Revenue Procedure 2016-47. This ‘Rev Proc’ in tax geek speak has a self-certification statement which should be completed and given to the financial institution receiving the rollover. Be sure to keep a copy of the statement in question along with the Rev Proc in case audited. Read more
Normally you have 60 days to rollover retirement plan distributions in order to avoid current taxation and possible penalty. If you have special circumstances challenging your ability to complete the rollover within this 60-day time frame, please be advised that there are several circumstances in which the IRS has repeatedly given taxpayers additional time to complete the rollovers. Read more
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.
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