Q. I am the beneficiary of an Individual Retirement Account (IRA). Because I am not the spouse, do I have to take the money out in a lump sum or do I have other options?
A. Non-spouse beneficiaries sometimes THINK they have to take the money out of an IRA in a lump sum but that is not the case. A non-spouse beneficiary has different options than a spousal beneficiary. A non-spouse beneficiary can take a required minimum distribution (RMD) out over their life expectancy starting no later than December 31 of the year following the year of death. (The life expectancy may differ if there are more than one beneficiary so be alert to other options if this is the case.) If the beneficiary does not set up the RMD timely, then they may be locked into taking a lump sum before 5 years after death. This might have significant tax consequences. The life expectancy distribution method is at a minimum. If you find that you need more money or you can afford to have more income on your tax return to play tax brackets, you can always take out more. Because the distribution was because of death, even if you are under age 59 ½, you will not be subject to the early withdrawal penalty of 10% that would otherwise apply to your own retirement account withdrawals.
See 2-15-08 FAQ for more information on beneficiary IRA and always seek professional help.
IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. federal tax advice contained in this communication, including any attachments, is not intended or written to be used, and cannot be used, for the purpose of 1. avoiding penalties under the Internal Revenue Code or 2. promoting, marketing, or recommending to another party any transaction or matter addressed herein.
Securities offered through Valley National Investments, Inc. - an independent broker/dealer and member FINRA and SIPC.
Friday, February 29, 2008
Friday, February 22, 2008
FAQ FRIDAY - 2/22/08
Q. If I haven’t had to file a tax return for several years, will I be eligible for the stimulus payment?
A. You must have qualifying income of $3,000. Qualifying income includes social security, social security disability, railroad retirement benefits and certain veteran’s payments. You will need to file a 2007 tax return to get the advance payment. If you only have any of the above income, you will file a Federal Form 1040A. Write across the top Stimulus Payment and complete Line Item 14a with your benefits. You do not have to have a tax liability to get the payment. With no other income, single people who qualify will get $300 and joint filers will get $600. This will be a freebee for a lot of people.
IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. federal tax advice contained in this communication, including any attachments, is not intended or written to be used, and cannot be used, for the purpose of 1. avoiding penalties under the Internal Revenue Code or 2. promoting, marketing, or recommending to another party any transaction or matter addressed herein.
Securities offered through Valley National Investments, Inc. - an independent broker/dealer and member FINRA and SIPC.
A. You must have qualifying income of $3,000. Qualifying income includes social security, social security disability, railroad retirement benefits and certain veteran’s payments. You will need to file a 2007 tax return to get the advance payment. If you only have any of the above income, you will file a Federal Form 1040A. Write across the top Stimulus Payment and complete Line Item 14a with your benefits. You do not have to have a tax liability to get the payment. With no other income, single people who qualify will get $300 and joint filers will get $600. This will be a freebee for a lot of people.
IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. federal tax advice contained in this communication, including any attachments, is not intended or written to be used, and cannot be used, for the purpose of 1. avoiding penalties under the Internal Revenue Code or 2. promoting, marketing, or recommending to another party any transaction or matter addressed herein.
Securities offered through Valley National Investments, Inc. - an independent broker/dealer and member FINRA and SIPC.
Friday, February 15, 2008
FAQ FRIDAY 2/15/08
Q. I am the beneficiary of an Individual Retirement Account (IRA). Can I roll it over into my own IRA?
A. No. A beneficiary IRA is differentiated from a Traditional IRA that you might have for yourself and the tax rules are different. You can do a Trustee to Trustee transfer of the IRA of the decedent into a specially designated IRA such as ‘Decedent IRA FBO Beneficiary’, where ‘Decedent’ is the person from whom you inherited it and ‘beneficiary’ is your name. FBO means ‘For the Benefit of’. There are very, very strict rules on these types of transfers and you must fully understand them before you make any irrevocable elections.
Next time, we’ll continue with further questions on this topic.
IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. federal tax advice contained in this communication, including any attachments, is not intended or written to be used, and cannot be used, for the purpose of 1. avoiding penalties under the Internal Revenue Code or 2. promoting, marketing, or recommending to another party any transaction or matter addressed herein.
Securities offered through Valley National Investments, Inc. - an independent broker/dealer and member FINRA and SIPC.
A. No. A beneficiary IRA is differentiated from a Traditional IRA that you might have for yourself and the tax rules are different. You can do a Trustee to Trustee transfer of the IRA of the decedent into a specially designated IRA such as ‘Decedent IRA FBO Beneficiary’, where ‘Decedent’ is the person from whom you inherited it and ‘beneficiary’ is your name. FBO means ‘For the Benefit of’. There are very, very strict rules on these types of transfers and you must fully understand them before you make any irrevocable elections.
Next time, we’ll continue with further questions on this topic.
IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. federal tax advice contained in this communication, including any attachments, is not intended or written to be used, and cannot be used, for the purpose of 1. avoiding penalties under the Internal Revenue Code or 2. promoting, marketing, or recommending to another party any transaction or matter addressed herein.
Securities offered through Valley National Investments, Inc. - an independent broker/dealer and member FINRA and SIPC.
Monday, February 11, 2008
Valentine's Day Bears a Hefty Price Tag!
$120. It could be a car insurance payment, three full tanks of gas or (according to the National Retail Federation) the average amount Americans spend on Valentine's day. Shocking? Not really, once you add it all up!Valentine's Day, for most, is separated into two parts.
1. The Date
2. The Gift
Here are some ways to help you make great financial choices this year for Valentine's Day!
1. Valentine's day falls on a Thursday this year. Why not celebrate the following weekend, or even the weekend after? There are many benefits to doing this. Number one, you can scoop up candy, cards, and other sentiments at a hefty discount. Number two, you'll have an easier time finding a sitter for the kids at that time. Three, restaurants are notorious for overbooking on Valentine's Day; trying to get as many happy couples in and out of their seats as quickly as possible. You will most likely enjoy a much more leisurely experience when opting not to celebrate on Valentine's day itself.
Our friend and personal finance expert Greg Karp preaches the importance of spending on "experiences" vs. "stuff" - experiences last much longer! Create an experience by making your own Valentine's Day meal. You can eat exactly what you want AND without being rushed. Another upside: no 18% added gratuity!
2. The price of greeting cards has skyrocketed. But Shoebox can always be counted on for a variety of cute cards with a 99 cent price tag. A cheaper card does not hold less sentiment! It's what you're adding to the card yourself that counts. OR, dare we say it, make your own card!
3. Boxed chocolate can run you upwards of $40. More if you're springing for a fancy brand like Godiva. A dozen roses run in the same price range. Why not select one or two gourmet chocolates, along with a single rose? Regardless if you give one or twelve, flowers are going to die. And your partner will appreciate your respect of his/her New Years Resolution to lose weight by only allowing them an indulgence of one piece of candy!
4. The bottom line - what is Valentine's Day supposed to be about? It's a day for showing loved ones how much they mean to you. With all of the modern technology that's designed to help us communicate, sometimes we still don't express the sentiments we should. Taking time out of your day to tell someone you love them doesn't have to cost a penny.
Have your own idea for saving money this Valentine's Day? Tell us about it!
IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. federal tax advice contained in this communication, including any attachments, is not intended or written to be used, and cannot be used, for the purpose of 1. avoiding penalties under the Internal Revenue Code or 2. promoting, marketing, or recommending to another party any transaction or matter addressed herein.
Securities offered through Valley National Investments, Inc. - an independent broker/dealer and member FINRA and SIPC.
FAQ FRIDAY - 2/8/08
Q. I received a notice from the Internal Revenue Service (IRS) that says I did not report income from sales of stock? I owe a lot of money. What do I do?
A. First, stay calm. The IRS has a matching program with payors of income that are required to report that income to them. There are several circumstances where the IRS assessment may not be correct.
You may have missed reporting sale proceeds on a stock or mutual fund sale because you thought you had a loss and wouldn’t be required to report it. The IRS only gets information on the sales proceeds. They don’t know how much you paid for something. Research the cost basis and consider using a tax professional to make sure that nothing else was missed and that you properly respond to the notice. If you think you reported the amounts then you may have reported it on the wrong schedule or in a format that prevents their programs from matching up the information to what you reported.
IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. federal tax advice contained in this communication, including any attachments, is not intended or written to be used, and cannot be used, for the purpose of 1. avoiding penalties under the Internal Revenue Code or 2. promoting, marketing, or recommending to another party any transaction or matter addressed herein.
Securities offered through Valley National Investments, Inc. - an independent broker/dealer and member FINRA and SIPC.
A. First, stay calm. The IRS has a matching program with payors of income that are required to report that income to them. There are several circumstances where the IRS assessment may not be correct.
You may have missed reporting sale proceeds on a stock or mutual fund sale because you thought you had a loss and wouldn’t be required to report it. The IRS only gets information on the sales proceeds. They don’t know how much you paid for something. Research the cost basis and consider using a tax professional to make sure that nothing else was missed and that you properly respond to the notice. If you think you reported the amounts then you may have reported it on the wrong schedule or in a format that prevents their programs from matching up the information to what you reported.
IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. federal tax advice contained in this communication, including any attachments, is not intended or written to be used, and cannot be used, for the purpose of 1. avoiding penalties under the Internal Revenue Code or 2. promoting, marketing, or recommending to another party any transaction or matter addressed herein.
Securities offered through Valley National Investments, Inc. - an independent broker/dealer and member FINRA and SIPC.
Thursday, February 7, 2008
THIS SATURDAY 2/9- "Living Rich by Spending Smart"
Did your New Year's Resolution involve saving more and spending less? Are you finding it to be harder than you imagined?
Then you have no excuse for not tuning into "Your Financial Choices" this Saturday at 9 a.m.
Then you have no excuse for not tuning into "Your Financial Choices" this Saturday at 9 a.m.
We are very excited to have award-winning personal finance columninst, newly published author AND authority on controlling your spending Greg Karp joining us for Saturday's show!
Greg's "Spending Smart" newspaper column reaches millions of readers nationwide and offers sound advice on how to spend smarter. His book, Living Rich by Spending Smart offers even more expertise on how to "plug the leaks of wasteful spending and redirect hard-earned cash to what you truly care about."
Greg's "Spending Smart" newspaper column reaches millions of readers nationwide and offers sound advice on how to spend smarter. His book, Living Rich by Spending Smart offers even more expertise on how to "plug the leaks of wasteful spending and redirect hard-earned cash to what you truly care about."
Check out more about Greg and his writings at http://www.gregkarp.com/ His book is available at Barnes & Noble, Amazon.com and other booksellers.
Join us Saturday, February 9 at 9 a.m. on NEWS TALK AM 790 WAEB or listen online at www.waeb.com
As always, we welcome your questions during the broadcast! Call 610-720-7900!
As always, we welcome your questions during the broadcast! Call 610-720-7900!
IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. federal tax advice contained in this communication, including any attachments, is not intended or written to be used, and cannot be used, for the purpose of 1. avoiding penalties under the Internal Revenue Code or 2. promoting, marketing, or recommending to another party any transaction or matter addressed herein.
Securities offered through Valley National Investments, Inc. - an independent broker/dealer and member FINRA and SIPC.
Securities offered through Valley National Investments, Inc. - an independent broker/dealer and member FINRA and SIPC.
Monday, February 4, 2008
FAQ Friday (on Monday - this week only!)
Due to technical issues we were unable to get our FAQ Friday posted until today...We will resume this Friday with our regular Friday posting of a Frequently Asked Question!
Q. Do I have to file a special form with my tax return when I have a nondeductible IRA?
A. The form to file when you have a nondeductible IRA is called a Form 8606. File this form when you make nondeductible contributions to an IRA or when you convert a traditional IRA to a ROTH IRA. You must also file this form when you take distributions from a nondeductible IRA or a ROTH IRA. While this form is only required when any of the above occur, filing each year to reflect the contribution amounts is a good idea. It is a very easy way to keep track of those dollars that will not be taxed in the future.
Have a great week!
IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. federal tax advice contained in this communication, including any attachments, is not intended or written to be used, and cannot be used, for the purpose of 1. avoiding penalties under the Internal Revenue Code or 2. promoting, marketing, or recommending to another party any transaction or matter addressed herein.
Securities offered through Valley National Investments, Inc. - an independent broker/dealer and member FINRA and SIPC.
Q. Do I have to file a special form with my tax return when I have a nondeductible IRA?
A. The form to file when you have a nondeductible IRA is called a Form 8606. File this form when you make nondeductible contributions to an IRA or when you convert a traditional IRA to a ROTH IRA. You must also file this form when you take distributions from a nondeductible IRA or a ROTH IRA. While this form is only required when any of the above occur, filing each year to reflect the contribution amounts is a good idea. It is a very easy way to keep track of those dollars that will not be taxed in the future.
Have a great week!
IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. federal tax advice contained in this communication, including any attachments, is not intended or written to be used, and cannot be used, for the purpose of 1. avoiding penalties under the Internal Revenue Code or 2. promoting, marketing, or recommending to another party any transaction or matter addressed herein.
Securities offered through Valley National Investments, Inc. - an independent broker/dealer and member FINRA and SIPC.
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