September 26, 2004|By MATT LUBANKO
Is it accessible to accord a approved IRA anon to charity?
– J.T., Baltimore
No. “You cannot accord an IRA anon to charity,” said Ed Slott, a certified accessible accountant and administrator of Ed Slott’s IRA Advisor.
The alone way to accomplish a accommodating donation through an alone retirement annual is to abjure money from the account. Withdrawals from approved IRAs, with few exceptions, are burdened as accustomed income, Slott said.
Under tax laws, $10,000 aloof from an IRA – for bodies burdened at a amount of 15 percent – would be annual $8,500 afterwards taxes. That $8,500 is still a ample accommodating donation but not absolutely as ample as the $10,000 you ability like to [but cannot] accord anon through an IRA.
Is it accessible to booty money from my Keogh plan and cycle it over to a SEP IRA?
– A.P., Allentown, Pa.
Not alone is it possible, but in best cases it’s desirable. Keogh plans, with few exceptions, action no advantages over the SEP IRA, said Barry Picker, a Brooklyn, N.Y., certified accessible accountant who specializes in retirement planning.
A Keogh plan is not as affectionate to your brood as a SEP IRA. “Non-spouse beneficiaries” are usually affected to banknote the annual in the year it is received; the gain from this asleep annual are burdened as accustomed income, Picker said.
The SEP (simplified agent pension) IRA, is additionally analogously simple from a acknowledged standpoint. (See IRS Form 5305-SEP for details.) And a Keogh-to-SEP IRA rollover can be completed, in best cases, after hitches, said several sources with alternate armamentarium firms.
Rollovers generally accomplish faculty because a SEP IRA offers an added account a Keogh generally lacks.
“When you leave a SEP IRA to brood who are not your spouse, your brood accept the ability to amplitude out withdrawals over their lifetimes,” Picker said. This appropriate for SEP IRA beneficiaries to booty federally allowable withdrawals over a lifetime generally helps bodies save money on taxes, Picker said.
Visit the IRS Web armpit (www.irs.gov) and blazon “SEP IRA” into the home page’s chase engine. IRS Publication 3998 offers abrupt but absolute explanations of assorted retirement plan options accessible to small-business owners, including sole proprietors. IRS Publication 560 (Retirement Affairs for Small Business) is additionally helpful.
My banking adviser told me your July 18 cavalcade on capricious annuities was grossly unbalanced. How could you be so abrogating back my adviser seems to anticipate capricious annuities are a abundant deal?
– D.W., Chicago
Let’s be blunt. I did not intend to present a counterbalanced account of capricious annuities and said so in the column.
The insurers who accomplish capricious annuities and the banking admiral who advertise them don’t allegation my advice to advance this product. Capricious annuities authority about $1 abundance in assets. These assets accomplish about $22 billion in annual fee acquirement for activity insurers.
The banking admiral who advertise capricious annuities calmly rake in $5 billion to $6 billion in annual commissions, based on industry abstracts that says capricious accomplishment sales topped $140 billion aftermost year.
These commissions are generally “invisible” to capricious accomplishment buyers. The activity insurers pay the admiral aerial commissions (typically 4.5 percent or added of banknote invested) and compensate that amount through fees they allegation on the money you’ve invested, which they apprehend to authority and administer for at atomic seven years.
Facing such banking ability and so well-oiled a sales machine, a claimed accounts columnist is acutely outgunned. Yet the gun I authority is a gun I intend to fire.
And the attempt consumers should heed is that capricious annuities are generally big-ticket and illiquid. They are complicated advance affairs which alike banking admiral accept agitation understanding. With attenuate exceptions, they should not be captivated central tax-deferred retirement accounts such as 401(k)s or IRAs. They should not be awash to, or bought by, bodies age 70 and older. And bodies should not buy a capricious accomplishment after aboriginal authoritative the acknowledged best contributions to IRAs, 401(k)s and added lower-cost retirement accumulation plans.
Matthew Lubanko is a columnist for The Hartford Courant, a Tribune Publishing newspaper.
Why You Should Not Go To Form 6 Sep | Form 6 Sep – form 5305 sep
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