Individual Retirement Account Answer Book

by Lockwood, Steven G.; Levy, Donald R.; Fleisher, Martin

• ISBN13: 9780735532298
• ISBN10: 073553229X
• Edition: 9th
• Format: Hardcover
• Copyright: 2002-12-01
• Publisher: Wolters Kluwer

Summary

This complete guide to IRAs will keep administrators, financial planners, employers, & participants up-to-date on the latest IRA developments. It explains all the new rules & restrictions facing IRAs & gives you straightforward answers to all your IRA questions, including: How has the Taxpayer Relief Act of 1997 affected IRA planning? How do you make tax-advantaged rollovers with respect to ROTH IRAs & Education IRAs? How do I avoid IRA pitfalls that trigger unnecessary taxes? What are the new trustee-to-trustee transfer rules, & how can I avoid withholding on transfers? How can employers encourage IRA development? How do IRAs fit into retirement & estate planning? How will the Small Business Job Protection Act of 1996 impact IRA distributions? How can I best use IRAs to roll over pension distributions? How frequently can investments be changed? Covering the full range of IRA issues -- including contributions, investments, distributions, taxation, reporting, disclosure, & rollovers -- this is the one reference you need to keep abreast of this rapidly changing field.

Table of Contents

List of Questions	p. xxxv
Introduction to IRAs	p. 1
Types of IRAs	p. 3
Financial Planning	p. 17
Adopting a Traditional or Roth IRA	p. 1
Common Account-Opening Questions	p. 2
Trustees and Custodians	p. 4
Traditional IRA Documentation	p. 7
IRS-Approved Model	p. 9
IRS-Approved Prototype	p. 10
Beneficiary Election for the Traditional IRA	p. 17
Distribution Clauses	p. 17
Additional Provisions for Traditional IRAs	p. 20
Roth IRA Account-Opening Questions	p. 27
Roth IRA Documentation	p. 29
Establishing Roth Conversion IRAs	p. 33
Contributions to Traditional and Roth IRAs	p. 1
Overview	p. 2
Contribution Amount	p. 3
Contribution Deadline	p. 6
Spousal IRAs	p. 9
Earned Income (Compensation) Defined	p. 12
Deductibility of Traditional IRA Contributions	p. 16
Active Participation Rules	p. 22
Roth IRA Eligibility	p. 29
Active Participation	p. 37
Roth IRA Annual Contributions	p. 37
Transfer and Rollover Contributions: Roth IRA to Roth IRA	p. 39
Roth IRA Conversion Contributions	p. 40
Tax Consequences of Conversion	p. 49
Four-Year Tax Spread Rules	p. 50
Premature Distribution Penalty	p. 52
Nondeductible Contributions	p. 52
Withholding	p. 54
Restrictions on Qualified Plans, SEPs, and SIMPLE IRAs	p. 54
Distributions from Traditional IRAs	p. 1
General Rules	p. 2
Advisability of Withdrawing Entire IRA Amount	p. 9
Minimum Distributions	p. 10
Joint Life Expectancy	p. 14
Recalculation Method	p. 18
Estate as Beneficiary	p. 24
Trust as Beneficiary	p. 26
Spouse as Beneficiary	p. 30
Children as Beneficiaries	p. 35
Early Distributions	p. 35
Death Distribution Commencement Dates	p. 43
Determining Which General Rule Applies	p. 45
Operational Rules	p. 48
Other Transfers and Rollovers	p. 52
HIPAA and TRA '97	p. 53
Roth IRA Distributions, Taxation, and Investments	p. 1
Distributions	p. 2
Qualified Distributions	p. 4
Nonqualified Distributions	p. 5
10 Percent Premature Distribution Penalty	p. 8
Conversion Contributions	p. 11
Ordering Rules for Distributions	p. 17
Conversion Contributions	p. 23
Tracking Contributions	p. 24
Five-Year Holding Period	p. 24
Contributory Roth IRAs	p. 24
Roth Conversion IRAs	p. 27
Qualified First-Time Homebuyer Distributions	p. 30
Lifetime Limit	p. 33
Qualified Higher Education Expenses Distributions	p. 35
Miscellaneous Distribution Issues	p. 39
Excess Contributions	p. 40
Recharacterizing Contributions	p. 42
Required Minimum Distributions	p. 49
Post-Death Distributions	p. 50
Withholding	p. 60
State Law Issues	p. 62
Investments	p. 63
Rollovers	p. 1
Overview	p. 2
Traditional IRA to Traditional IRA Rollovers	p. 5
Roth IRAs	p. 8
Education IRAs	p. 12
Qualified Plan Rollovers and Direct Rollovers to Traditional IRAs	p. 14
Distribution of Noncash Property	p. 18
Withholding	p. 18
Notice	p. 21
Conduit IRAs	p. 21
Transferring and Receiving Qualified Plans	p. 23
60-Day Rule	p. 29
Security Agreements	p. 31
Special Rules	p. 31
Surviving Spouse	p. 32
Divorce	p. 35
Rollovers and Transfers from SIMPLE IRAs	p. 38
Disclosure, Filings, Penalties, and Withholding	p. 1
Disclosure	p. 3
Reports to the IRS and the IRA Owner	p. 6
Taxpayer Reporting	p. 9
Withholding	p. 10
Penalties	p. 13
Excess Distributions	p. 35
Reporting Nondeductible Contributions on Form 8606	p. 36
General Filing Information	p. 48
Form 990-T	p. 53
Form 1040	p. 58
Form 1099-R	p. 62
Form 5329	p. 98
Form 5330	p. 104
Form 5498	p. 108
Annual Participant Statement	p. 11
Form 5500	p. 126
Other Filings and Registrations	p. 127
Estate Planning and Administration	p. 1
IRA Estate Planning in General	p. 2
Income Tax	p. 2
New Elections During Estate Administration	p. 7
Estate Tax Ramifications	p. 14
Inter Vivos Gifts	p. 15
Trusts	p. 16
QTIP Trust	p. 16
Payment of Taxes	p. 19
Earlier-Than-Planned Liquidation of IRAs	p. 20
Placement of IRAs in Estate's Plan	p. 22
Beneficiaries	p. 24
Annually Recalculated and Fixed Life Expectancies	p. 28
Other Considerations for the Surviving Spouse	p. 30
Size of the Estate	p. 32
The Large Estate	p. 34
Miscellaneous	p. 36
Converting Traditional IRAs to Roth IRAs: Estate and Income Tax Strategies	p. 1
General Rules	p. 3
Conversion of Traditional IRA to Roth IRA in 1998	p. 6
$100,000 MAGI Limit	p. 8
Taxation of Distributions from Roth IRAs	p. 18
Timing of Distributions from Roth IRAs	p. 21
Beneficiary Designations	p. 25
Special Roth IRA Conversion Issues	p. 33
Estate Planning Strategies Involving Roth IRAs	p. 35
Generation-Skipping Strategies with Roth IRAs	p. 39
Miscellaneous Issues	p. 40
Income and Estate Planning Concerns for Large IRA Balances	p. 1
General Rules	p. 3
Unified Credit	p. 5
Distributions	p. 13
Beneficiaries	p. 19
Continuing the IRA for Future Generations	p. 29
IRA Assets and Generation Skipping	p. 31
Life Insurance as a Funding Vehicle	p. 34
Tax Strategies	p. 41
Calculation of Aggregate Estate and Income Taxes on Large IRA Balances	p. 44
Calculation of Income in Respect of a Decedent	p. 46
IRAs versus Qualified Plans	p. 49
Taxpayer Relief Act of 1997	p. 50
Tax Planning Strategies: IRAs and Life Insurance	p. 1
General Rules	p. 2
Premature IRA Distributions to Purchase Life Insurance	p. 6
Rolling IRA Assets Back to Qualified Plans	p. 7
Incidentality Rules Regarding Life Insurance Held in Qualified Plans	p. 15
Tax Consequences of Life Insurance Held in Qualified Plans	p. 18
Removing Life Insurance from Qualified Plans	p. 21
Life Insurance Strategies Involving IRAs and Charities	p. 25
Use of Life Insurance in Generation-Skipping Strategies with IRAs	p. 27
Use of Life Insurance with QTIP Trusts	p. 31
Simplified Employee Pension Arrangements	p. 1
Overview	p. 2
SEP Arrangement Forms	p. 6
Eligibility	p. 12
Employee Contributions	p. 17
Employer Contributions	p. 18
Partnerships and Sole Proprietorships	p. 41
Participants' Exclusion of Contributions	p. 47
Salary Reduction SEPs	p. 49
Miscellaneous	p. 54
Roth IRA Conversions and Recharacterizations	p. 56
Simple IRA Arrangements	p. 1
Basic Concepts	p. 2
Qualified Salary Reduction Agreement	p. 6
Establishing a SIMPLE	p. 7
Employer Eligibility	p. 13
Employee Eligibility	p. 19
Compensation	p. 22
Contributions	p. 29
Employee Elections	p. 36
Vesting Requirements	p. 40
Employer Administrative and Notification Requirements	p. 40
Trustee Administrative Requirements	p. 45
Tax Treatment of SIMPLE IRAs	p. 49
Designated Financial Institutions	p. 59
Fiduciary Responsibility	p. 66
Miscellaneous Rules	p. 67
401(k) SIMPLEs	p. 69
Roth IRA Conversions and Recharacterizations	p. 75
Education IRA	p. 1
Overview	p. 2
Education IRA versus Other IRAs	p. 3
Parties	p. 6
Responsible Individual	p. 7
Contributor	p. 10
Changing the Designated Beneficiary	p. 11
Eligibility	p. 13
Contributions	p. 18
Trustees and Custodians	p. 22
Documentation	p. 23
Distributions	p. 28
Distributions at Age 30	p. 36
Distributions After Death	p. 36
Distributions of Excess Contributions	p. 37
Qualified Higher Education Expenses	p. 39
Reporting	p. 41
Investments	p. 44
State Tax Rules Regarding Traditional IRAs	p. 1
Traditional IRA Contributions	p. 2
Traditional IRA Distributions	p. 3
Tax on Post-1995 Distributions Received from Traditional IRAs by Former Residents	p. 6
Tax on Pre-1996 Distributions Received by Former Residents	p. 9
Special Purpose Distributions	p. 11
Conversion Rollovers to Roth IRAs	p. 13
Penalties	p. 14
Withholding and Reporting	p. 16
Future State Legislation	p. 17
Enforcement	p. 20
Choosing a State for Retirement	p. 21
IRS Publication 590--Individual Retirement Arrangements (IRAs)	p. 1
Tables
Private Letter Rulings	p. 1
Internal Revenue Code Sections	p. 5
Treasury Regulations Sections	p. 13
Revenue Rulings and Procedures	p. 17
IRS Notices and Announcements	p. 19
ERISA Sections and Opinion Letters	p. 21
Internal Revenue Service Forms and Publications	p. 23
Department of Labor Advisory Opinions and Regulations Sections	p. 27
Miscellaneous Code sections	p. 29
Cases	p. 31
Index	p. 1
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