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What are the Contribution Deadlines for My SEP IRA?
Generally SEPs can be set up and funded by the tax filing deadline. If an employer chooses to make an annual contribution into a SEP IRA on behalf of all of his employees, it must be made by the same due date as his Federal Income Taxes. In most cases, this is April15th, but if an extension has been filed, the SEP does not have to be set up until October 15th. Because SEPs do not require continuous annual contributions, and because contributions can be added after January 1, they are very flexible and attractive to small businesses. Employees are even able to make traditional IRA contributions as part of a SEP arrangement. Continue reading...
What are the IRS Guidelines for Filing a Form 4868 Tax Return Extension?
IRS Link to Form — Found Here An individual can automatically have their tax return due date extended by 6 months by filing a Form 4868. Tax returns are generally due by April 15, so this gives a person until October 15 to have the 1040 return submitted. This also goes for other tax return forms such as 1040-A and 1040-EZ. Please note that the IRS expects your taxes to be paid by April 18th, using your best-guess at what you owe, in order to avoid additional charges. People often do not have their tax returns completed by April 15, for various reasons. Continue reading...
What are the Withdrawal Rules for My SEP IRA?
SEP IRAs are subject to the same withdrawal rules as Traditional IRAs. SEP IRA contributions and earnings may be withdrawn at any time, but there are penalties that may apply, using the same rules as those applied to Traditional IRA withdrawals. If you are under the age of 59½, you must pay a 10% penalty fee in addition to income taxes on your withdrawal. Of course, there are certain exceptions to the penalties: first time home-buyers expenses up to $10,000, medical bills, educational expenses, and a few others. Continue reading...
When are My IRA Withdrawals Penalty Free?
The surest way to make tax-free withdrawals is to wait until you are older than 59½, but there are a few other ways. If you are 59½ or older, you can make penalty-free withdrawals. Of course, you will need to pay income taxes on the amount you withdraw from your Traditional IRA. There is a 10% penalty assessed by the IRS on early withdrawals (withdrawals made before age 59½) and these are generally not a good idea. Continue reading...
What are the Withdrawal Rules for My Keogh Plan?
Withdrawal rules for Keoghs will be essentially the same as rules for IRAs and 401(k)s. Once you are age 59½, you may begin to make penalty-free withdrawals and only pay income taxes on the amount you withdraw, similar to a traditional IRA. If you decide to withdraw money before age 59½, you may have to pay a 10% penalty fee in addition to income taxes on the amount of your withdrawal. Of course, there are exceptions. One exception for most qualified plans is for employees who separate from service at or after age 55: this is the early retirement exception, and the 10% penalty will not apply. Keoghs will technically use the early withdrawal rules for 401(k)s and not IRAs, which differ slightly. Continue reading...
Can I Rollover My 401(k) into an IRA?
Yes, in fact this is what most people do. This is a very popular choice. Because Traditional IRAs receive the same kind of tax treatment as 401(k)s, with pretax contributions, tax-deferred growth, and taxable withdrawals, the IRS allows you to move funds over without creating a taxable event. Of course, you need to have an IRA account to do so, but it can be as easy as opening an account online and telling the custodian company the account information for your old 401(k). Continue reading...
What’s So Special about an IRA?
When compared to other methods of investing, there are benefits to using an IRA. An IRA provides tax deferred growth of your assets, and the result of such growth, over the years, can be quite remarkable in comparison with a regular savings account. Using an advanced calculator online – or asking an advisor or a CPA to run some calculations for you – can be an eye-opening experience. For most investors, mutual funds will be their best option for cost-efficient diversification. Holding mutual funds outside of an IRA or 401(k) means that the investor will have some taxes, whether long term gains or short term gains, passed on to him or her from the mutual fund company every year that the fund experiences gains. Continue reading...
Who Can Put Money into an IRA?
There are some income limits and contribution limits on who can contribute to an IRA. Generally speaking, as long as you or your spouse is earning taxable income, you can contribute money to an IRA, be it a Roth or a Traditional IRA. There are limits at which you cannot contribute to a Roth IRA (in 2016, the limit is $132,000 for a single filer and $194,000 for a married couple). There are also income limits at which you are no longer able to deduct contributions to a Traditional IRA, but these are only applicable if you or your spouse has a qualified retirement plan at work. Continue reading...
Can I Hold Bitcoins and other Cryptocurrencies in an IRA?
It is becoming increasingly popular today to have an IRA just for bitcoin. If you create a Self-Directed IRA, you can hold almost anything you want within it, if you can find a custodian and trustee willing to facilitate it. This isn’t overly difficult to do since many new companies are jumping at the opportunity to facilitate bitcoin and cryptocurrency IRAs. Examples of assets that can be held within a self-directed IRA include real estate, cryptocurrencies, precious metals, intellectual property, private businesses, hedge funds, private equity, tax lien certificates, livestock, and more. Continue reading...
How Does a 401(k) Compare With Other Retirement Plans?
There are several types of retirement plans that employers can provide, but 401(k)s are one of the most popular. Other employer-sponsored retirement plans include SIMPLEs, SEPs, and various kinds of defined benefit plans. SIMPLE IRAs are sometimes called SIMPLE 401(k)s, because they operate under the same laws as Safe Harbor 401(k)s. They both are primarily employee-funded, and have rigid standards for employer contributions. Continue reading...
What are My SIMPLE IRA Investment Options?
SIMPLE IRAs will have various kinds of investment options, depending on the trustee company that holds the plan assets. SIMPLE IRA investments are determined by the financial institution at which your SIMPLE IRA is established. When opening a SIMPLE IRA, be sure to check what investment options the financial institution offers as well as the fee structure. Standard ERISA rules apply, meaning that all employees must be offered the same thing. SIMPLE IRAs can only be held at trustee companies whose business model is on the IRS’s list of approved SIMPLE Trustees. Continue reading...
What is a Traditional IRA?
A Traditional IRA holds money tax-deferred until retirement. An Individual Retirement Account (IRA) is an account which allows tax-deferred growth of assets. As its name implies, an IRA has to be opened in the name of the individual. A person can contribute to one, up to the annual limit, and deduct the entire amount from his or her taxes unless they are prevented from taking deductions due to participation in a workplace retirement plan and having income that exceeds certain limits. Continue reading...
What is Form 1099-R?
IRS Link to Form — Found Here Sources of retirement plan income, such as pensions, annuities, and IRAs, will be associated with a 1099-R filing. The form is filed by the company making the distribution. The taxpayer uses the information on it for when filing income taxes. The IRS receives Form 1099-R from the companies making distributions from retirement plans. They have categorized all annuity contracts as retirement plans by default, so those are included, as are pensions, profit sharing plans, other forms of employer-sponsored retirement plans, cash-value life insurance distributions, and individual retirement accounts (IRAs). The company making the distribution sends the 1099-R to the IRS and the account owner. Continue reading...
When Do I Have to Withdraw Money from My Roth IRA?
Roth IRAs are not subject to RMDs, which means you aren’t forced to make withdrawals. In most retirement accounts, Required Minimum Distributions will be mandatory once the account holder turns 70 ½ years old. This does not apply to Roth IRAs. They are basically the only tax-advantaged retirement account that does not have to take RMDs. This is partially because the IRS wants to make sure they get some of the taxes out of the money that was invested on a pretax basis. Continue reading...
Do I Have to Pay Taxes on My Bitcoins?
The IRS currently requires that bitcoin and other cryptocurrencies be reported as personal property and capital assets. The IRS has published guidance that, yes, you do have to report gains/losses/income in the form of bitcoin and other “convertible virtual currencies.” Generally, the IRS treats bitcoin as property, instructing taxpayers to follow the existing IRS guidelines for personal property taxation. You can claim them as a capital asset, allowing you to treat them as stocks, essentially, with the ability to only pay long-term capital gains taxes on them if you hold them for a while. You can get paid in bitcoin by your employer, but employers must still withhold the usual amount of taxes, and you must report your bitcoin income the same way you would your regular income. Continue reading...
What Should I Know About Roth IRAs?
Roth IRAs are a very popular and useful accumulation vehicle, and there are some things you should be aware of. Along with Traditional IRAs, Roth IRAs are very important retirement tools and should be taken into careful consideration while deciding upon the account that is right for you. The first thing you’ll want to know is whether you can contribute, based on income limitations, so check the current IRS website to find out. Continue reading...
Where do I Get Started in Saving for Retirement?
Your employer is usually the best place to start, but you can also open your own retirement account (an IRA or Roth IRA, for instance) at your bank or a major custodian (like Charles Schwab or Fidelity). In some cases, there are income limits for contributing to a retirement account, which a financial advisor can discuss with you. A smart idea is to set up an automatic contribution to your retirement account, such as 10% of your monthly income. That way you’re automatically saving, and saving regularly. Continue reading...
How Do I Take Money From My 401(k) After I Retire?
Different 401(k) custodians will have different distribution options available to participants in retirement. After you retire, you have at least two disbursement options: lump-sum distribution and periodic distribution. If you take a lump-sum distribution that is not bound for an IRA, you will incur a significant tax bill, since all 401(k) distributions are taxable. Periodic distributions may mean that every so often you can choose an amount to be paid out to you on a quarterly basis, for example, while your investments remain intact and you attempt to accrue more interest on your money. Continue reading...
Should I buy gold coins?
Gold bullion are an asset that will hold value due to their gold content; gold coins which are more numismatic, that is, collector’s items, may not retain the same value. The value of gold coins is twofold: the price of the gold in the coin and the numismatic value of the coin. There is an important distinction to be made, because some gold coins will have a lot of one, and not the other, and, if you want to make sure your investment is an investment in precious metal and not just a collector’s item, you should make sure you’re getting a coin that qualifies as bullion. Continue reading...
What are Required Minimum Distributions?
RMDs are withdrawals that are mandatory for an individual to take from an IRA or 401(k) after the person has reached 70 ½. The government created laws that help and encourage people to save for their retirement by deferring taxes on the growth on certain qualified retirement investment accounts. On Traditional IRAs and 401(k) accounts, they are only waiting to get the tax revenue from distributions/withdrawals that are fully taxable as income. Continue reading...