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48 Cards in this Set

  • Front
  • Back
Age Limit for Traditional IRA
70 1/2 at the end of the tax year
Taxable compenstion for purposes of Traditional IRA
Taxable Alimony and non-taxable combat pay are treated as compensation for IRA purpose
What is not considered compensation allowing contributions to an IRA?
Passive earnings
Profits from rental property
Ie: Rental income, interest, divident income, pension, annuity, deferred compensation.
Can everyone deduct contributions to a Traditional IRA?
NO
Taxpayer can deduct
-contributions to a traditinal IRA for the year or
-The general limit(or spousal IRA limit if it applies
Taxpayer may contribute toa Spousal IRA if the spouse has.
No taxable income
Files a joint return
Married couple cannot set up a joint IRA account.
True
Total combined contributions for the year to a Taxpayers IRA and spouses IRA
10,000 (11,000 if 1 50 or older)
12,000 if both are 50 or older
Spouses must file joint if one spouse has no income
True
Due date for contribution to an IRA
By the due date of the return. Not including extensions.
Can you file a tax return before contributing to an IRA
As long as you contribute by the filing deadline.
Types of IRA's
1. An IRA
2. An Individual Retirement Annuity
3. SEP (Simplified Employee Pension)
4. Employer and Employee assoc trust account
5. Simple Plan
6. Roth IRA
Types of IRA's
Is a Coverdell IRA an education savings account or a retirement arrangemet?
An educatin savings account.
Contribution limit to a Roth or Traditional for those under 50

5,000 or total taxable compensation
Contribution limit to a Roth or Traditional for those under 50
Contribution limits can be split between a ROTH IRA and TRADITIONAL IRA as long as they don't exceed contribution limits.
Contribution limits can be split between a ROTH IRA and TRADITIONAL IRA as long as they don't exceed contribution limits.
Contribution limit for those over 50

6,000 or total taxable compensation
Contribution limit for those over 50
Not considered compensation for IRA purposes
1. Rental income
2. Interest and dividends
3. Pension and annuities
4. Deferred compensation
5. Income from partnerships
6. Any amounts excluded from income
Not considered compensation for IRA purposes
Considered income for IRA contribution purposes.
1. Wages, salaries
2. Commissions
3. Self employment income
4. Alimony Received
5. Non-taxable combat pay
6. Statutory employee wages
Considered income for IRA contribution purposes
Exceptions to taxable distributions from TRADITIONAL IRA's
1. Rollover
2. Qualified charitable distributions
3. Tax free withdrawals of contributions.
4. The return of non-deductible contributions
Exceptions to taxable distributions from TRADITIONAL IRA's
Non-exempt distributions from TRADITINAL IRAs are taxed as ordinary income.
Non-exempt distributions from TRADITINAL IRAs are taxed as ordinary income.
Tax deductible contributions to TRADITIONAL IRAS are phased out if a taxpayer is covered by a retirement plan at work.
Tax deductible contributions to TRADITIONAL IRAS are phased out if a taxpayer is covered by a retirement plan at work.
TRADITIONAL IRA phaseout limits if you participate in retirement plan at work.
MFJ:AGI 85,000-105,000
S,HOH: 53,000-63,000
MFS: Under $10,000
TRADITIONAL IRA phaseout limits if you participate in retirement plan at work.
MFJ:AGI 85,000-105,000
S,HOH: 53,000-63,000
MFS: Under $10,000
TRADITIONAL IRAIf taxpayers exceed phaseout limits to receive a deduction for contributing to a TRADITIONAL IRA, they can still contribute to the IRA without the tax deduction. Earnings will grow tax deferred, b/c it is an after tax contribution.
TRADITIONAL IRA If taxpayers exceed phaseout limits to receive a deduction for contributing to a TRADITIONAL IRA, they can still contribute to the IRA without the tax deduction. Earnings will grow tax deferred, b/c it is and after tax contribution.
ROTH IRA contributions are not deductible, but the later distributions are exempt from tax.
ROTH IRA contributions are not deductible, but the later distributions are exempt from tax.
Income phaseout to contribute to a ROTH IRA.
MFJ, HOH: 159,000-169,000
Single: 101,000-116,000
MFS: 0-10,000
Income phaseout to contribute to a ROTH IRA.
MFJ, HOH: 159,000-169,000
Single: 101,000-116,000
MFS: 0-10,000
Contributions can be withdran at any time from and ROTH. To avoid a penalty on withdrawals from a ROTH IRA the account must be 5 years old.
Contributions can be withdran at any time from and ROTH. To avoid a penalty on withdrawals from a ROTH IRA the account must be 5 years old.
If you file MFS and live with your spouse you cannot contribute to a ROTH IRA if agi is over 10,000
If you file MFS and live with your spouse you cannot contribute to a ROTH IRA if AGI is over 10,000
SIMPLE IRA is a Savings incentive match plan for employees.
1. Must have 100 or less employees.
2. Cannot have any other retirement plan
SIMPLE IRA is a Savings incentive match plan for employees.
1. Must have 100 or less employees.
2. Cannot have any other retirement plan
SIMPLE IRA's
1. Employer makes contributions for employee
2. Funded by employer and employee contributions.
3. Employees are 100% vested or has ownership of of all the money.
SIMPLE IRA's
1. Employer makes contributions for employee
2. Funded by employer and employee contributions.
3. Employees are 100% vested or has ownership of of all the money.
Early withdrawal pentalty from SIMPLE IRA is 10% additional tax, or 25% if withdrawn within 2 years.
Report tax on 5329
Early withdrawal pentalty from SIMPLE IRA is 10% additional tax, or 25% if withdrawn within 2 years.
Report tax on 5329
Accounts that can be rolled over into a TRADITIONAL IRA
1. Traditional IRA
2. Employers qualified plan 401k
3. Roth IRA
Accounts that can be rolled over into a TRADITIONAL IRA
1. Traditional IRA
2. Employers qualified plan 401k
3. Roth IRA
In order to rollover distributions directly from qualified plans to a ROTH IRA if MAGI is not more than 101,000
Filing status cannot be MFS
In order to rollover distributions directly from qualified plans to a ROTH IRA if MAGI is not more than 101,000
Filing status cannot be MFS
1. Direct Rollovers-Distributed to account holder. Sent directly to individual. Reported to the IRS.
2. Transfers-Not subject to 20% witholding, not sent to IRS
1. Direct Rollovers-Distributed to account holder. Sent directly to individual. Reported to the IRS.
2. Transfers-Not subject to 20% witholding, not sent to IRS
60 day IRA Rollover Rule-
Has 60 days to make rollover contributins after receiving distribution from a Traditinal IRA or 401k 403 b
-May be waived if can show hardship beyond their control.
-Waive 60 day req if penalizing the taxpayer would be against good equity or conscience.
60 day IRA Rollover Rule-
Has 60 days to make rollover contributins after receiving distribution from a Traditinal IRA or 401k 403 b
-May be waived if can show hardship beyond their control.
-Waive 60 day req if penalizing the taxpayer would be against good equity or conscience.
Rollover extension of 60 day rule if deposit is frozen.
Insolvent, bankrupt
Insolvent, bankruptRollover extension of 60 day rule if deposit is frozen.
Permissable investments for IRAs
1. Stocks
2. Bonds
3. Mutual funds
4. Real estate
5. Some coins-US Gold, Silver minted by treasury dept, Certain platinum, silver, palladium, platinum bullion
6. Money Market funds
Permissable investments for IRAs
1. Stocks
2. Bonds
3. Mutual funds
4. Real estate
5. Some coins-US Gold, Silver minted by treasury dept, Certain platinum, silver, palladium, platinum bullion
6. Money Market funds
Beneficiaries of a TRADITIONAL IRA must include in gross income any taxable distributions they receive.
NO 10% early withdrawal penalty regardless of the age of the beneficiary.
Beneficiaries of a TRADITIONAL IRA must include in gross income any taxable distributions they receive.
NO 10% early withdrawal penalty regardless of the age of the beneficiary.
Inheriting a TRADITIONAL IRA from a spouse.
1. Designate themselves as account owner and treat as their own.
2. Can treat as own and rollover into traditional IRA, Qualified plan, Qualified annuity 403a, Tax sheltered annuity 403b, Deferred compensation of state or local govt section 457 plan.
3. Treat themselves as beneficiary.
Inheriting a TRADITIONAL IRA from a spouse.
1. Designate themselves as account owner and treat as their own.
2. Can treat as own and rollover into traditional IRA, Qualified plan, Qualified annuity 403a, Tax sheltered annuity 403b, Deferred compensation of state or local govt section 457 plan.
3. Treat themselves as beneficiary.
If surviving spouse receives a distribution fron spouses IRA, can roll it over into own within 60 days. As long as not a required distribution.
If surviving spouse receives a distribution fron spouses IRA, can roll it over into own within 60 days. As long as not a required distribution.
Non spouse inherited IRA- Cannot treat as own, make deoposits. Distributions are subject to tax, but not penalized.
Non spouse inherited IRA- Cannot treat as own, make deoposits. Distributions are subject to tax, but not penalized.
When must required minimum distributions from a Traditional IRA begin?
By April 1 of the year following the year they reach 70 1/2 "Required Beginning date"
When must required minimum distributions from a Traditional IRA begin?
By April 1 of the year following the year they reach 70 1/2 "Required Beginning date"
Transfers of an IRA due to Divorce are not taxed or penalized as long as they are rolled over into another IRA. Date of transfer.
Transfers of an IRA due to Divorce are not taxed or penalized as long as they are rolled over into another IRA. Date of transfer.
What happens if a taxpayer or beneficiary engages in prohibited transactions. The IRA stops being an IRA as of the first day of the year.
What happens if a taxpayer or beneficiary engages in prohibited transactions. The IRA stops being an IRA as of the first day of the year.
Prohibited transactions.
Treated as a distribution all its assets to the taxpayr at the FMV on the first day of the year. If total is more than the basis there will be a taxable gain included in income. Subject to additional taxes and penalties.
Prohibited transactions.
Treated as a distribution all its assets to the taxpayr at the FMV on the first day of the year. If total is more than the basis there will be a taxable gain included in income. Subject to additional taxes and penalties.
Taxes on prohibited transactions.
15% on the amount prohibited.
100% additional tax if not corrected.
Taxes on prohibited transactions.
15% on the amount prohibited.
100% additional tax if not corrected.
Excise Tax on Excess Contributions to an IRA.
6% tax if not withdrawn by the due date of the return including extensions.
6% each year remains in the account. Cannot be more than 6% of combined value of a taxpayers IRA as of the end of the year.
Excise Tax on Excess Contributions to an IRA.
6% tax if not withdrawn by the due date of the return including extensions.
6% each year remains in the account. Cannot be more than 6% of combined value of a taxpayers IRA as of the end of the year.
No 6% excise tax if withdrawn by the due date of the return including extensions.
No 6% excise tax if withdrawn by the due date of the return including extensions.
Must withdraw interest and other income earned in excess of the contribution.
Must withdraw interest and other income earned in excess of the contribution.
Earl withdraw penalty on an IRA?
IRA or Annuity before 59 1/2 10% There are some exceptions.
Earl withdraw penalty on an IRA?
IRA or Annuity before 59 1/2 10% There are some exceptions.