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  1. Qualified Charitable Distributions (QCDs) Changes in the new tax law (Tax Cuts and Jobs Act of 2017) means it’s less likely you can deduct donations to charity from your taxes. However, the federal government still allows for Qualified Charitable Distributions (QCDs). A QCD is a distribution of funds from your IRA account, payable to a qualified 501(c)(3) charity. If certain rules are met, QCDs can be counted toward satisfying your required minimum distribution (RMD). Benefits A QCD excludes the amount donated from taxable income, which is unlike regular withdrawals from an IRA. Keeping your taxable income lower may reduce the impact to certain tax credits and deductions, including Social Security and Medicare. Rules You must be 70½ or older The maximum annual amount that can qualify for a QCD is $100,000. IRA donations must go directly from the account to the charity. Typically the custodian submits them to the charity or else sends checks made out to the charity to the IRA owner, who sends them on. The distribution can't go to a private foundation nor a donor advised fund. Tax Tip You'll receive Form 1099-R reporting the distribution, but the form does not specify that it was a tax-free transfer to charity. If you work with a tax preparer, it's important to let him or her know that it was a qualified charitable distribution so you don't end up paying taxes on the amount. Operations An IRA distribution form will have a "Method of Payment" section where you complete the charity's name and address. Disclaimer If legal, tax, or other professional advice is required, the services of a competent professional should be sought. This post should not be considered investment advice. This information is subject to change and/or be edited. Past performance is not a guarantee of future results.
  2. A Required Minimum Distribution (RMD) is the minimum amount you must withdraw from your retirement account each year. Minimum distribution rules in this post apply to: Traditional IRAs SEP IRAs SIMPLE IRAs 401(k) Plans 403(b) Plans 457(b) Plans Profit Sharing Plans Other defined contribution plans When to start an RMD An account owner needs to start his/her withdrawals when they reach the age of 70 ½. The first RMD must occur by April 1st of the year after you turn 70 ½ . However, if you still participate in a 401(k), profit-sharing, 403(b), or other defined contribution plan, you can delay taking the RMDs until you retire (unless you own 5% or more of the sponsoring business). When to take an RMD (after the first time) Normally, you must withdraw your RMD by December 31. Tax Tip Don’t wait until April 1st for the first RMD. This will cause you to take both the first and second RMD in the same year. Thus, increasing your tax burden. Instead, your first RMD can be taken out by December 31st of the year you turn 70 ½. Calculating the RMD Take the account balance at the end of the previous year and divide it by the distribution period from the IRS’s “Uniform Lifetime Table”. Previous Year-End Balance/Distribution Period=RMD Penalties for failing to take RMD A 50% excise tax is assessed on untaken RMD amounts. Disclaimer If legal, tax, or other professional advice is required, the services of a competent professional should be sought. This post should not be considered investment advice. This information is subject to change and/or be edited. Past performance is not a guarantee of future results.
  3. A Roth IRA is a personal retirement account where individuals can make direct contributions. The account type is available through most financial institutions. The maximum contribution per year in 2018: Type Age <50 Age >=50 Individual $5,500 +$6,500 See contribution and eligibility details Main Feature Money is contributed on an after-tax basis (no tax deduction), but in return, money can be withdrawn tax-free at retirement. History The Roth IRA was created by the Tax Payer Relief Act in 1997. Senator William Roth Jr., chief legislative sponsor, thought it very important for both the nation and for families that we all saved more. Details A person can contribute to a Roth IRA at any age. There are no Required Minimum Distributions (RMD). Contributions, but not earnings, can be withdrawn tax and penalty free at any time. Earnings can be withdrawn tax and penalty free if the account is held for at least 5 years. Early Withdrawal penalty is 10%. If you earn less than the maximum contribution, you can contribute only as much as you earn. Exceptions for withdrawal requirements include death, disability, purchase of first home, and higher education costs. Senator William Roth Jr., Delaware Disclaimer If legal, tax, or other professional advice is required, the services of a competent professional should be sought. This post should not be considered investment advice. This information is subject to change and/or be edited. Past performance is not a guarantee of future results.
  4. In 2018, individuals can contribute the following amounts: Maximum Retirement Contributions Plan Type Age <50 Age >=501 Employer2 $18,500 $24,500 IRA $5,500 $6,500 Total $24,000 $31,000 1 Individuals that are 50 and over can contribute an additional $6000 to employer plans and $1000 to IRAs. 2 401ks, 403bs, most 457s, and Thrift Savings Plans (TSP) Notes Roth IRA Phaseouts Single: The maximum amount can be contributed to a Roth IRA if modified adjusted gross income (MAGI) is less than $120,000. The contribution amount will phase out completely once MAGI tops $135,000. Married Couples: The maximum amount can be contributed if MAGI is less than $189,000 , with the amount phasing out above $199,000. Traditional IRA Contribution Phaseouts Single: The maximum amount can be contributed to a Traditional IRA if modified adjusted gross income (MAGI) is equal to or less than $63,000. The contribution amount will phase out completely once MAGI tops $73,000. Married Couples: The maximum amount can be contributed if MAGI is equal to or less than $101,000 , with the amount phasing out completely once joint income reaches $121,000. If an individual is not covered by an employer retirement plan at work, they can deduct the entire contribution amount, regardless of income amount. Deadlines for 2018 Contributions IRA: April 15th, 2019 401k: Technically April 15th, 2019 but most employers only allow payroll withdrawals. Which makes the deadlines 12/31/2018. Age Cut-offs for Contributions Traditional IRA: You can no longer contribute to a traditional IRA starting in the calendar year you turn age 70½. Roth IRA: No age restrictions 401k: No age restrictions SEP IRA: No age restrictions Disclaimer If legal, tax, or other professional advice is required, the services of a competent professional should be sought. This post should not be considered investment advice. This information is subject to change and/or be edited. Past performance is not a guarantee of future results. IRS Publication 590a.pdf
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