Many taxpayers have one or more Individual Retirement Accounts (IRA's). Some things you need to remember are:
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This one is important: Each IRA can be rolled over no more than once every 12 months. If you do a rollover sooner than 12 months, it will be considered a premature taxable distribution.
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IRA contributions are the lesser of taxable compensation or ($4,000 for 2005 - 2007, and $5,000 beginning in 2008.) This limitation applies to all Traditional and ROTH IRA contributions, unless you're 50 or older; then you can contribute a little more.( Compensation includes wages, self-employment income, non-passive partnership income and alimony.)
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Form 5498 is an information form showing the value of your account at the end of the tax year along with the amount of contributions for the year. It is not attached to your income tax return.
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If you are making a contribution between January 1 and April 15, be sure to indicate to which tax year the contribution should be credited.
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Fees to set up or manage your IRA are deducted as miscellaneous deductions, subject to a 2% income adjustment IF you pay the fee separately. Fees taken from your account are not deductible.
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If your spouse does not work, or makes less than $4,000 for the year, a spousal IRA can be set up.
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There are some limitations on deductibility. A contribution that is more than the amount permitted is an excess contribution. If that excess amount remains in your IRA, a 6% excise tax is assessed. Also, if you make a contribution in the year you turn 70 1/2, that contribution is considered to be an excess contribution. However, if you withdraw your excess contributions plus the interest earned on that amount prior to filing your tax return, there is no excise tax.
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You cannot borrow money from an IRA or use it as security for a loan.
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If you are an active participant in an employer- sponsored pension plan, you may still make an IRA contribution, but the deductibility may be limited.
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Traditional IRAs must always be kept separate from ROTH IRAs.
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The above list is meant to serve as a guide for you regarding your IRA. Be sure to call the office to discuss your particular situation regarding your retirement accounts.
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Helpful Links: |
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TAX Updates
- Advantax 
- Tax$avers
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Newsletter & other current information |
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Download Adobe Acrobat |
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