Vernoia, Enterline + Brewer, CPA LLC

Posts tagged ‘Roth IRA’

Making 2017 Retirement Plan Contributions in 2018

The clock is ticking down to the tax filing deadline. The good news is that you still may be able to save on your impending 2017 tax bill by making contributions to certain retirement plans. (more…)

IRS Permits High-Earner Roth IRA Rollover Opportunity

ira_3Are you a highly compensated employee (HCE) approaching retirement? If so, and you have a 401(k), you should consider a potentially useful tax-efficient IRA rollover technique. (more…)

Still Time to Contribute to an IRA for 2016

The IRS reminds taxpayers that they still have time to contribute to an IRA for 2016 and, in many cases, qualify for a deduction or even a tax credit. Available since the mid 70s, individual retirement arrangements (IRAs) enable employees and the self-employed to save for retirement. Contributions to traditional IRAs are often deductible, but distributions, usually after age 59½, are generally taxable.

ira (more…)

Age 50 or Older? Catch-Up Contributions Are For You

retireesAre you in your 50s or 60s and thinking more about retirement? If so, and you’re still not completely comfortable with the size of your nest egg, don’t forget about “catch-up” contributions. These are additional amounts beyond the regular annual limits that workers age 50 or older can contribute to certain retirement accounts. (more…)

FAQ: What is the Roth IRA contribution limit for 2016?

senior couple hugging on sail boat or yacht in seaIndividuals may contribute up to $5,500 to a traditional and a Roth IRA for 2016. This is the same limit as 2015. An individual age 50 and older can make a catch-up contribution of an additional $1,000 for the year. The contribution is limited to the taxpayer’s taxable compensation for the year, minus contributions to all non-Roth IRAs. (more…)

Surviving spouse may roll over Roth IRAs payable to trust

In a taxpayer-friendly ruling, the IRS recently determined that a surviving spouse could roll over two Roth IRAs, which were payable to a trust controlled by her, into her own Roth IRA. The taxpayer’s late husband had maintained the Roth IRAs and created the trust.

Roth IRAs

The taxpayer’s husband had two Roth IRAs. He designated a trust as the beneficiary of the two Roth IRAs, with the provision that upon his death, his wife would become the sole trustee of the trust. The husband also directed that the trust be divided into two sub-trusts (Marital Trust and Family Trust).

The husband died and the wife became the sole trustee of the trust. The wife intended to allocate the assets of the trust—except for the Roth IRAs—to Family Trust. The wife also proposed to make a distribution of both Roth IRAs to herself as beneficiary of Marital Trust. Further, the taxpayer intended to roll over the distribution into one or more IRAs set up and maintained in her own name. The taxpayer asked if both Roth IRAs would be treated as inherited IRAs and if she could roll over both IRAs into a Roth IRA maintained in her name.

IRS analysis

The IRS explained that if the proceeds of a decedent’s IRA are payable to a trust, and are paid to the trustee of the trust, who then pays them to the decedent’s surviving spouse as the beneficiary of the trust, the surviving spouse is treated as having received the IRA proceeds from the trust and not from the decedent. The surviving spouse, the IRS further explained, cannot roll over the distributed IRA proceeds into his or her own IRA.

However, this case was different. The surviving spouse was the sole trustee of the trust and had authority under the trust to pay the IRA proceeds to herself. The IRS concluded that the wife could roll over proceeds of both Roth IRAs into a Roth IRA in her own name. The IRS also determined that the Roth IRAs were not inherited IRAs.

LTR 201423043