IRA INFORMATION

We all know that tax law is peculiar and subject to change.  The following three changes to tax law regarding IRAs may be financial opportunities to you or someone you know.

IRS Guidance on 2009 Required Minimum Distribution Waiver

--- November 30, 2009 Deadline ---

Generally, a required minimum distribution is the smallest annual amount that must be withdrawn from an IRA or an employer’s plan beginning with the year the account owner reaches age 70 ½.  The 2008 law waives required minimum distributions for 2009 for IRAs and defined contribution plans (such as 401(k)s) and, if you took a distribution from your IRA anyway, allows the distribution to be rolled over into an IRA or another retirement plan.  Individuals generally have until the later of November 30, 2009, or 60 days after the date the distribution was received, to roll over the distribution.  More information:

http://www.irs.gov/newsroom/article/0,,id=213561,00.html

2010 Roth IRA Conversion – Tax Increase Prevention and Reconciliation Act of 2005 changes

Beginning in tax year 2010, conversions are no longer subject to the modified adjusted gross income requirement of $100,000.  Taxpayers have two tax years to report the full amount of the conversion.  More information:

http://www.irs.gov/instructions/i8606/ch01.html

Qualified IRA Charitable Distribution Rule

If you're over age 70½, have a Traditional or Roth IRA, and plan to give money to charity, the Emergency Economic Stabilization Act of 2008 (EESA) extends your opportunity to make tax-free distributions of up to $100,000 directly to a qualified charitable organization through December 31, 2009.  Please note that this IRS rule does not allow these distributions from SEP IRAs, SIMPLE IRAs, or employer-sponsored retirement plans.  To receive tax-free treatment your donation must be made to a qualified charity, which doesn’t include certain types of charitable giving such as gifts to grant-making foundations, charitable gift annuities, and donor-advised funds.  More information:

http://www.irs.gov/newsroom/article/0,,id=201076,00.html

These are complex issues and should be investigated thoroughly with your tax advisor before any action is taken.  Please call us at Monarch if you need additional information.