If you have access to Tax Notes, a subscription service for tax professionals from Tax Analysts, you’ll see my letter to the editor in today’s issue, responding to an opinion piece by Lee Sheppard. Last week she suggested the IRS should adopt an aggregation rule for use in Roth recharacterizations, to prevent cherry-picking when undoing conversions. I pointed out that the IRS can’t adopt such a rule in the current state of the law, and more importantly, such a rule would be unworkable. (more…)
Archive for the ‘Retirement’ Category
Aggregation Rule for Recharacterizations?
Tuesday, September 7th, 2010Withdrawals That Cause Hardship
Monday, August 23rd, 2010News reports indicate a record number of people are taking hardship withdrawals from their 401k accounts. As the name suggests, the rules permitting these withdrawals are intended to provide a measure of relief from economic hardship. In most cases, though, people taking these withdrawals will end up suffering more hardship, not less. (more…)
Roth Conversion and Medicare Part B Premium
Thursday, July 15th, 2010A Roth conversion can affect the premium you pay for Medicare Part B (the part that provides medical insurance, as opposed to hospital insurance or prescription drug coverage). For the year of the conversion it increases your income, potentially leading to an increase in your premium. On the other hand, in later years when you’re withdrawing money from your retirement account, your income will be smaller as a result of having done the conversion in a prior year, potentially allowing you to pay a smaller premium for many years. The net benefit or detriment will depend on individual circumstances. (more…)
Friday Wrapup
Friday, July 2nd, 2010A rare break in congressional gridlock produced some actual tax legislation this week, albeit of limited scope. In addition, it appears we may be heading toward an expansion in the use of Roth retirement accounts. (more…)
Senate Would Expand Roth Accounts
Wednesday, June 30th, 2010Action in the Senate June 29 may result in expanded access to Roth accounts. One provision would take effect upon enactment, which is on a fast track. Before it can become law, the provision must be approved by the House of Representatives. (more…)
Pension Funding Relief Law Signed
Monday, June 28th, 2010President Obama has signed a law that relaxes funding requirements for employers maintaining defined benefit pension plans. The law will help companies deal with cash shortfalls caused by the poor economic conditions — and also provide revenue to cover the cost of preventing a decrease in Medicare reimbursement levels. (more…)
More Disaster Relief
Saturday, June 26th, 2010In this release the IRS announced it is extending until July 30 the deadline for updating 401k and similar plans for plan sponsors in various areas affected by recent weather-related disasters.
Roth Conversions and the Medicare Tax
Thursday, June 24th, 2010This is the fifth in our series on Roth conversions and tax rates. (For earlier ones, click on the “Roth conversion” tag below this entry.) Our focus here is on how the new Medicare tax on investment income may affect planning for a Roth conversion in 2010 — even though the new tax doesn’t take effect until 2013. (more…)
