New IRA Rules For Seniors

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Personal Budget - The Best Way
If you want to know how to do a personal budget the right way, first you need to understand what the wrong way is. The wrong way to do a personal budget is to not do one at all. Just doing your budget in any way that makes sense to you will put you far ahead of the average person who tends to fly by the seat of their pants more often than not when it comes to money.

There is a very comm... Read personal finance article



Retirement and Estate Planning
According to the U.S. Census Bureau, people today can expect to live longer in retirement than ever before. Increased life expectancies mean we'll all probably have to do a better job of planning for our retirement and protecting our estate assets than previous generations. Working out a sound retirement plan now - before you need it - may help achieve retirement and other important financial goal... Read personal finance article



New IRA Rules For Seniors
Under the Pension Protection Act of 2006, there are some new items beneficial to IRA owners that the average IRA owner will miss:

First, if you leave your employer and you had a tax sheltered annuity (typically the type of plan at school districts and governments), you can roll both the pre-tax and after-tax amounts to an IRA. That way, the whole account can continue to grow tax deferred.

Next, the silly requirement to first roll your company account into a regular IRA and then into a Roth IRA has been dropped. Under the new rule, when you retiree, you can roll your company account directly into a Roth IRA (of course, you pay the income tax due and then the Roth will grow tax free). This is effective January 1, 2008.

The nonsensical prior rule that a non-spouse beneficiary of a company plan could not roll over the money had been dropped. Here's an example. Dad worked for Chevron. He listed his son as beneficiary on his 401k. If Dad dies, the son can now do a trustee-to trustee transfer of Dad's account into an inherited IRA. Previously, only a spouse could move money from a deceased's 401k into an inherited IRA or their own IRA. The non-spouse beneficiary still cannot take possession of the money or else it will be taxed - there is no 60 day rollover provision.

There's more good news about the above. Let's say Dad died in 2003 and the son was subject to the 5 year rule which required that the IRA be emptied by 2008. Now, the son can just do the rollover in 2007 (the rule is effective January 1, 2007) and take advantage of the new rule even though Dad dies a while back.

If you're charitably inclined, it has always made sense to give IRA funds or retirement finds to charity. Since each dollar in a retirement plan is only worth 65 cents (after an assumed 35 cent tax), it's always made sense to give retirement funds rather than non-retirement funds to charity. Previously, if you wanted to give a lifetime gift of your IRA funds, you needed to include the distribution from your IRA on your tax return and then show a charitable deduction. For limitation reasons, this was not always favorable.

Now, you can distribute up to $100,000 directly to a public charity and not show it on your tax return, provided you are also past age 70 ½ (this does not apply to transfers to foundations, donor advised accounts or charitable remainder trusts - only outright gifts to public charities). You would not show the IRA distribution or the charitable deduction.

This is really a rule for seniors because you must be age 70 ½ to use it and it helps people, typically seniors, that have the following issues/limitations: helps people who could not previously make full immediate use of the charitable deduction because of the 50% of AGI limitation, those who paid tax on social security income, those who had a limit on their itemized deductions and those that did not itemize deductions.

The best news is that these transfers to charity count toward the taxpayer's required mandatory distribution. One more good thing - these transfers to charity are exempt from the normal "pro-rata" rule. Therefore, if the taxpayer has after--tax funds in their IRA, the transfers to charity are only from pre-tax funds and will not affect basis in the IRA. Beware, this rule is immediately effective and set to expire at the end of 2007!

Last, good for seniors, starting in 2010, the $100,000 MAGI limitation on Roth conversion is repealed. Therefore, retirees, for whom Roth conversions are most appealing, will be able to do a Roth conversion without limitation and also spread the tax so that half is paid in 2011 and half in 2012.

Copyright 2006 Larry Klein

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Online Bank For Financial Need

Online banking helps a borrower enjoy a faster and simpler means to handle multiple financial needs. Services of an online bank vary from transaction accounts, balance check, accessing records, electronic money transfer and loan applications. The greatest advantage of an online bank is the convenience of enjoying banking services through a personal computer. The borrower no longer needs to battle long lines at the bank and wait for services. youronlinebank.co.uk lets the borrower benefit from online banking services.

A borrower can reap all the benefits of online banking even with minimal internet knowledge because online banks have extremely user friendly and interactive websites. An online bank account is a great option for anyone who is looking for means to manage their finances from the comfort of their home or office. Increased competition has led to competitive interest rates and exciting offers to attract customers. With appropriate amount of research on online banking and exerting care and caution while choosing services of an online bank, a borrower can be assured of a convenient means to manage finances.

Advantages of online banking:

24/7 service: An online bank allows a customer to access their accounts and manage their money 24 hours a day and 7 days a week from any part of the world. All that a customer requires is a personal computer with access to the internet and an online bank account.

Enjoy convenient services like balance check, accessing records, electronic money transfer, pay bills etc regardless of time and your location.

Cost effective means to manage finances: An online bank saves the customer time and money by letting him/her enjoy services from the comfortable confines of their home or office.

Options for loan applications: Online banks offer a plethora of services which also include options to apply for a wide variety of loans ranging from car loans to personal loans depending on the borrowers needs. No more tedious paperwork: Online banking enables customers to avoid the extensive paperwork which the customer encounters with regular banking services.

The borrower can enjoy all these advantages and more at youronlinebank.co.uk.

The dependence on internet has been increasing steadily for a range of services like information, shopping, communication and now with the opportunity to handle all banking services through an online bank, information technology seems to have revolutionized lives to a great extent.




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New IRA Rules For Seniors
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