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Navigating the Health Care Taxes in 5 Easy Steps

What is considered investment income? Investment Income: Interest, dividends, capital gains (long and short), annuities (not those in IRAs or company plans), royalty income, passive rental income, other passive activity income.


Avoiding 60-Day Rollover Mistakes in 5 Easy Steps

What is a 60-day rollover? A 60-day rollover is the distribution of funds from a qualifying retirement account payable to the account owner who then has 60 days to redeposit the funds into another qualifying retirement account. 1. Do trustee-to-trustee transfers instead. The best way to avoid making a 60-day rollover mistake is to avoid 60-day rollovers! Transfer your funds directly to another retirement account.


Examining Qualifying Longevity Annuity Contracts in 5 Easy Steps

What is a QLAC (Qualifying Longevity Annuity Contract)? A QLAC is a type of fixed income annuity that has special attributes and is held in a retirement account. 1. RMD (required minimum distribution) exclusion. The fair market value of your QLAC is excluded from your RMD calcuations. What’s the benefit?


10 Questions Answered on IRAs, RMDs & Tax codes

1: Who is the beneficiary when the primary beneficiary of an Inherited IRA died before claiming it?Answer: John, age 75, has a traditional IRA. He dies with his sister Kathy as his primary beneficiary and Kathy’s children (John’s nephews) named as contingents. Kathy, age 72, qualifies as an eligible designated beneficiary (EDB) because she is not more than 10 years younger than John.


Planning for Health Savings Account (HSA) Distributions in 5 Easy Steps

A Health Savings Account is a tax-advantaged medical savings account that helps people pay for qualified out-of-pocket medical expenses. What are the withdrawal rules for HSAs? Are there special considerations that must be taken into account? 1. Withdrawals can be taken at any time. There is no holding period like with Roth IRAs. The entire withdrawal (including any earnings) is tax-free as long as there is a corresponding qualified medical expense.


Determining Tax on Roth IRA Distributions in 5 Easy Steps

What are the ordering rules? Roth IRA distributions can consist of contributions, converted funds and earnings – or any combination of the three. To determine what your distribution is, you must use “ordering rules” which dictate the order in which these categories of Roth IRA money must be withdrawn. All Roth IRAs are considered one Roth IRA for distribution purposes. A Roth IRA distribution will consist first of any Roth IRA contributions.


Calculating Your RMD in 5 Easy Steps

What is an RMD (required minimum distribution)? An RMD is the minimum amount that must be withdrawn from a retirement account each year. When are you subject to RMDs? Traditional IRA owners are subject to RMDs beginning in the year in which they turn age 73. The RMD age used to be 70½, but the SECURE Act raised the age to 72 for anyone who turned 70½ in 2020 or later.


Navigating Qualified Charitable Distributions in 5 Easy Steps

What is a qualified charitable distribution (QCD)? A QCD is a distribution from an IRA that goes directly to a qualifying charity and is not included in the taxable income of the IRA owner. A QCD cannot be made from an employer plan. A QCD can be up to $100,000 a year, per individual. 1. Either an IRA owner or a beneficiary can do a QCD.


Protecting an IRA from Prohibited Transactions in 5 Easy Steps

What is a prohibited transaction? A prohibited transaction occurs when an IRA owner uses IRA assets in a self-serving or self-dealing manner that improperly benefits the IRA owner. When should you look for a prohibited transaction?


To Convert or NOT To Convert in 5 Easy Steps

What is a Roth IRA conversion? A Roth IRA conversion is the process of moving IRA or employer plan assets to a Roth IRA. 1. When will you need the money? If you have an immediate need for the funds or need them to continue your current standard of living, then a Roth IRA conversion is probably not for you.