If you are considering taking an early distribution from your retirement plan, here are some things you need to know:
1. Payments you receive from your Individual Retirement Arrangement before you reach age 59 ½ are generally considered early or premature distributions.
2. Early distributions are usually subject to an additional 10 percent tax.
3. Early distributions must also be reported to the IRS.
4. Distributions you rollover to another IRA or qualified retirement plan are not subject to the additional 10 percent tax. You must complete the rollover within 60 days after the day you received the distribution.
5. The amount you roll over is generally taxed when the new plan makes a distribution to you or your beneficiary.
6. If you made nondeductible contributions to an IRA and later take early distributions from that same IRA, the portion of the distribution attributable to those contributions is not taxed.
7. If you received an early distribution from a Roth IRA the distribution attributable to contributions is not taxed.
8. If you received a distribution from any other qualified retirement plan, generally the entire distribution is taxable unless you made after-tax employee contributions to the plan.
9. There are several exceptions to the additional 10 percent early distribution, such as when the distributions are used for purchase of a first home, certain medical and educational expenses or if you become disabled.
10. At age 50 you can start taking distributions without the 10% penalty if you take the money over a specified time period. If you are considering this option, make sure you discuss this with your investment advisor.
Friday, May 29, 2009
CONSUMER CONFIDENCE HITS EIGHT MONTH HIGH
GREAT NEWS
Defying negative news on employment and housing prices, consumer confidence increased this month in the U.S., reaching its highest level in eight months, according to The Conference Board. The optimism substantially topped analysts' forecasts. "Looking ahead, consumers are considerably less pessimistic than they were earlier this year," said Lynn Franco, head of The Conference Board's Consumer Research Center. USA TODAY
Larry Kopsa CPA
Defying negative news on employment and housing prices, consumer confidence increased this month in the U.S., reaching its highest level in eight months, according to The Conference Board. The optimism substantially topped analysts' forecasts. "Looking ahead, consumers are considerably less pessimistic than they were earlier this year," said Lynn Franco, head of The Conference Board's Consumer Research Center. USA TODAY
Larry Kopsa CPA
Thursday, May 28, 2009
HEY RETIRED PEOPLE - YOUR STIMULUS CHECK IS IN THE MAIL
Stimulus Payments Being Mailed to Retirees
Eligible working taxpayers most likely have a little more money ($400) in their pocket because they had reduced withholding.
For those whose income consists primarily of social security benefits, supplemental security income, disabled veterans benefits or railroad retirement benefits, the government will send checks for $250 based on information that it already has. Eligible individuals who are collecting these benefits while continuing to work will receive a Making Work Pay Credit of the greater of $250 or $400.
But watch out, this is a one-time payment that will be taxable as ordinary income if the retiree has sufficient income this year.
Larry Kopsa CPA
Eligible working taxpayers most likely have a little more money ($400) in their pocket because they had reduced withholding.
For those whose income consists primarily of social security benefits, supplemental security income, disabled veterans benefits or railroad retirement benefits, the government will send checks for $250 based on information that it already has. Eligible individuals who are collecting these benefits while continuing to work will receive a Making Work Pay Credit of the greater of $250 or $400.
But watch out, this is a one-time payment that will be taxable as ordinary income if the retiree has sufficient income this year.
Larry Kopsa CPA
ARE YOU READY FOR A NATIONAL SALES TAX?
To paraphrase Ronald Regan, "There is nothing so permanent as a temporary tax."
(Washington Post) -- The Washington Post is reporting that "with budget deficits soaring and President Obama pushing a trillion-dollar-plus expansion of health coverage, some Washington policymakers are taking a fresh look at a money-making idea long considered politically taboo: a national sales tax."
According to the Post story, the "value-added tax, or VAT," has advocates that say it could "generate the kind of money the nation will need to avert fiscal calamity." A key Senate leader, Sen. Kent Conrad (D-N.D.), said in an interview: "I think a VAT and a high-end income tax have got to be on the table."
According to the story, "a VAT is a tax on the transfer of goods and services that ultimately is borne by the consumer. Highly visible, it would increase the cost of just about everything, from a carton of eggs to a visit with a lawyer. ... Because producers, wholesalers and retailers are each required to record their transactions and pay a portion of the VAT, the tax is hard to dodge. It punishes spending rather than savings, which the administration hopes to encourage."
Read the story at <http://www.washingtonpost.com/wpdyn/content/article/2009/05/26/AR2009052602909_pf.html>
(Washington Post) -- The Washington Post is reporting that "with budget deficits soaring and President Obama pushing a trillion-dollar-plus expansion of health coverage, some Washington policymakers are taking a fresh look at a money-making idea long considered politically taboo: a national sales tax."
According to the Post story, the "value-added tax, or VAT," has advocates that say it could "generate the kind of money the nation will need to avert fiscal calamity." A key Senate leader, Sen. Kent Conrad (D-N.D.), said in an interview: "I think a VAT and a high-end income tax have got to be on the table."
According to the story, "a VAT is a tax on the transfer of goods and services that ultimately is borne by the consumer. Highly visible, it would increase the cost of just about everything, from a carton of eggs to a visit with a lawyer. ... Because producers, wholesalers and retailers are each required to record their transactions and pay a portion of the VAT, the tax is hard to dodge. It punishes spending rather than savings, which the administration hopes to encourage."
Read the story at <http://www.washingtonpost.com/wpdyn/content/article/2009/05/26/AR2009052602909_pf.html>
Wednesday, May 27, 2009
ACCOUNTABLE EXPENSE REIMBURSEMENT PLAN
Larry, I run a small business and have two full-time employees. One of the employees is always asking for an advance on her paycheck. I am hesitant to do this without some type of agreement. Do you have any type of agreement so I can make sure I get reimbursed?
Sammie
Sammie, we have a client who recently went through an audit and they did not have a reimbursement plan in place. The auditor was quite fussy regarding this detail. If you don't have a plan in place, go to Accountable Expense Reimbursement Plan on our website to learn about recording your business expenses.
Larry Kopsa CPA
Sammie
Sammie, we have a client who recently went through an audit and they did not have a reimbursement plan in place. The auditor was quite fussy regarding this detail. If you don't have a plan in place, go to Accountable Expense Reimbursement Plan on our website to learn about recording your business expenses.
Larry Kopsa CPA
THE IRS IS FEELING THE ECONOMIC PINCH
IRS tax revenue falls 34%
(USA TODAY) – USA TODAY reports that "federal tax revenue plunged $138 billion, or 34%, in April vs. a year ago." That is the biggest April drop since 1981 according to a study by the American Institute for Economic Research. "Big revenue losses mean that the U.S. budget deficit may be larger than predicted this year and in future years," according to the story. The Congressional Budget Office already projects a $1.7 trillion budget deficit for fiscal year 2009.
See the story at <http://www.usatoday.com/money/perfi/taxes/2009-05-26-irs-tax-revenue-down_N.htm>
(USA TODAY) – USA TODAY reports that "federal tax revenue plunged $138 billion, or 34%, in April vs. a year ago." That is the biggest April drop since 1981 according to a study by the American Institute for Economic Research. "Big revenue losses mean that the U.S. budget deficit may be larger than predicted this year and in future years," according to the story. The Congressional Budget Office already projects a $1.7 trillion budget deficit for fiscal year 2009.
See the story at <http://www.usatoday.com/money/perfi/taxes/2009-05-26-irs-tax-revenue-down_N.htm>
Tuesday, May 26, 2009
REMEMBERING THE PAST
Cartoon from 1934 Chicago Tribune
Those who cannot remember the past are condemned to repeat it.
George Santayana, The Life of Reason, Volume 1, 1905
Those who cannot remember the past are condemned to repeat it.
George Santayana, The Life of Reason, Volume 1, 1905
Subscribe to:
Posts (Atom)
