Tax Strategy Scan for IRA

Posted by Kim Chen on September 9th, 2016

IRS eases a costly tax pitfall for retirement savers: If you miss the 60-day deadline for transferring money from a retirement account to an IRA, you can fix the mistake and avoid paying income taxes by explaining your case to the IRS. The IRS may waive the 60-day rollover requirement in certain situations if you missed the deadline because of circumstances beyond your control. You can make a written self-certification citing one of the acceptable circumstances for why they failed to transfer the money on time. If a waiver is granted, you have 60-days from the date the letter is issued to complete the rollover.

Tax-smart ways to save when you are too old for a traditional IRA: You no longer qualify to contribute to a traditional IRA if you have reached the age of 70-1/2, according to Kiplinger. Those who still want to save may consider contributing to a Roth IRA, as the account has no age limit for contributions and offers tax-free growth on savings as well as tax-exempt distributions. Your income for this year should not exceed $132,000 (if you are single) or $194,000 (if you are married couples filing joint returns) to contribute to a Roth IRA. — Kiplinger

What’s a qualified personal residence trust, and why should you have one? Creating a qualified personal residence trust is a tax-saving strategy that investors can use to take advantage of the current estate tax exemptions, according to the Motley Fool. You can use a QPRT to give your primary home or a vacation home to your loved ones at a specified date in the future based on a discounted value, thus reducing the amount of gift and estate taxes you pay. In some cases, a QPRT can eliminate the entire tax liability. — Motley Fool

If you have any questions on your retirement plan, please feel free to contact one of CPAs in our Naples or Marco Office.