1 / 21

Back to Basics

Back to Basics. Individual Retirement Accounts IRA’s. January 2009. Agenda. Basic IRA Information Compensation Contribution Limits Catch up Rule Spousal Contributions Rollovers & Direct Transfers Traditional IRA Roth IRA Coverdell ESA Forms (IRA Direct) Resources & Questions.

aman
Download Presentation

Back to Basics

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Back to Basics Individual Retirement Accounts IRA’s January 2009

  2. Agenda • Basic IRA Information • Compensation • Contribution Limits • Catch up Rule • Spousal Contributions • Rollovers & Direct Transfers • Traditional IRA • Roth IRA • Coverdell ESA • Forms (IRA Direct) • Resources & Questions

  3. Write Down One Question that you would like to have answered during today’s session

  4. Compensation Must have earned compensation • Wages, salaries, fees, tips, bonuses, commissions, taxable alimony, and separate maintenance payments. • Not included are: • Interest, dividends, rental income, retirement income (Social Security), disability, child support payments, and unemployment compensation.

  5. Contribution Limits2008-2009

  6. Catch Up Rule • For individuals who are 50 and older by the end of the year for which the contribution applies can make additional contributions. • Catch up limits • 2008 = $1,000 • 2009 = $1,000

  7. If you have any other questions regarding Spousal Contributions, please seek help from a CUNA representative, Cora , Michelle G. or Karrie Spousal Contributions • Contributions can be made if a spouse makes little to no income. • Requirements: • Each owner must have separate IRA’s. • Able to contribute to both up to the maximum annual contribution limits. • File joint income tax return.

  8. Rollovers & Direct Transfers Rollovers: • Withdrawn assets from an IRA and then re-deposits them within 60 days into the same or another IRA. • 60 Day Rule • Once a Year Direct Transfers: • A direct transfer is a transaction in which the owner moves assets directly from one IRA to another. • No 60 Day Rule • Unlimited

  9. C100123456789 January 1st, 2009 Pay to the Order of $8,592.37 Wells Fargo (name of the institution) FBO: John Smith (member’s name)/IRA Account Eight thousand five hundred ninety two dollars and 37 cents TSCU Representative 10100123456 322173149 100123456789 QRP (Qualified Retirement Plan) to IRA = Direct RolloverCheck Must be Made Payable as shown below IRA to IRA = Direct TransferCheck Must be Made Payable as shown below

  10. C100123456789 January 1st, 2009 Pay to the Order of $8,592.37 John Smith (member’s name) Eight thousand five hundred ninety two dollars and 37 cents TSCU Representative 10100123456 322173149 100123456789 IRA to Member = RolloverChecks that are made payable directly to the member are considered a Rollover and the 60-day rule would apply. Pay to the Order of

  11. Quick Reference Guide to Understanding how to code IRA funds

  12. Traditional IRA • Tax deductible contributions (depending on income level) • Withdraws begin at 59 ½ and are mandatory by age 70 ½. • Taxes are paid on earnings when withdrawn from the IRA. • Available to everyone, no income restrictions (must have earned income) • All funds withdrawn before 59 ½ are subject to a 10% penalty.

  13. ROTH IRA • The Roth IRA was born on January 1st, 1998 as a result of the Taxpayer Relief Act of 1997. • Contributions are not tax deductible. • No mandatory distribution age. • All earnings and principal are 100% tax free if rules and regulations are followed. • Available only to single-filers making up to $95k or married couples making a combined maximum of $150k annually. • Principal contributions can be withdrawn at any time without penalty (subject to the 5 year rule).

  14. From January 1st thru Tax Day (April 15th) of each year, member’s are required to sign a contribution form to contribute to the prior year.

  15. 8 Ways to Avoid Penalties • Permanent disability of an IRA owner. • Death of an IRA owner • Withdrawals used to pay non-reimbursed medical expenses. • Withdrawals used to pay for 1st time home purchase. • Higher education costs. • Funds used to pay back taxes to the IRS after a levy has been placed against the IRA. • Withdrawals used to pay medical insurance premiums. • Made on or after the day the IRA owner turns 59 ½.

  16. Coverdell ESA • Created as a part of the Taxpayer Relief Act of 1997. • A special type of savings with the sole purpose of helping to pay for higher education expenses of the child named on the account (designated beneficiary). • Parents & Guardians are allowed to make non-deductible contributions for a child (under the age of 18) or special needs beneficiary. • Contributions are not tax deductible. • Amounts deposited grow tax-free until distributed.

  17. Coverdell ESA - Contributions • The annual contribution limit is $2,000 for each beneficiary. • Distributions may be tax-free if they are not more then the beneficiary’s adjusted qualified education expenses for the year. • Amounts must be distributed when the designated beneficiary reaches age 30. • Transfers to members of the beneficiary’s family are permitted.

  18. Traditional IRA Contribution Form

  19. Roth IRA Contribution Form

  20. Resources • CUNA Mutual • By Web at www.cunamutual.com • By phone at #1-800-356-9140 (For IRA and IRA Direct questions) • www.irs.gov or #1-800-829-1040 • IRA Projection Table • IRA post 70 ½ Periodic Payment Estimator • Silver Cloud • Traditional IRA Contribution Form • Roth IRA Contribution Form

  21. Questions

More Related