A single dad wanted to designate his two children as beneficiaries of his retirement benefits. He mailed his beneficiary designation form to his employer with a cover letter explaining his wishes. When he died, the benefits administrator noticed the designation form wasn’t signed. Should the plan assets pass to the estate or the children? (more…)
What are the lessons investors and advisors have learned from the Great Recession? Investment Partners’ Doug Bambeck shares these four tips. (more…)
In July 2011, federal solutions group RSA’s Anti-Fraud Command Center detected more than 25,000 phishing attacks, the most recorded in a one-month period. A part of the reason: Employees are increasingly being deceived into providing personal information through their employee benefit accounts. (more…)
“Medical concierge” physician practices are growing in popularity with both physicians and patients. In this type of practice, patients pay a set fee that entitles them to much quicker access and more dedicated time with their physician as well as the opportunity to participate in additional diagnostics, wellness services and preventive care programs. (more…)
Late in the year last year, Congress extended several tax law provisions but only for a short period of time. Below are items that may expire at the end of this year if no action is taken by Congress. (more…)
A reader asked: I wanted to do a hardship with my 401k and was wondering if would be penalized 10 percent of the balance? I borrowed from my 401k and haven’t paid all of it back yet. Will I be able to do a hardship with remaining balance left? (more…)
The Internal Revenue Service sends millions of letters and notices to taxpayers for a variety of reasons each year. Here are some things to know if you receive one. (more…)
If you converted a traditional IRA to a Roth IRA account last year, you may be facing an account that is worth much less than when you converted it. But you might also be facing a tax bill on value you no longer have. You do have an option, but only if you act quickly – reverse your 2010 Roth conversion.
If you converted your traditional IRA to a Roth IRA last year, the transaction triggered a taxable distribution from the traditional IRA, followed by a contribution to your Roth account. That tax will be based on the value of the traditional IRA on its conversion date. That means if your account is worth less now, you will owe taxes on money that no longer exists.
How to Reverse Your Roth IRA
Thankfully, the Roth conversion regulations allowed for the ability to reverse the conversion – but only if you do so before October 17. This involves completing the proper paperwork with your IRA custodian or trustee. When properly filed, the IRS considers your account as being “recharacterized” from a Roth account back to traditional IRA status. It’s as if the conversion never happened, and your tax liability disappears.
You’ll need to amend your 2010 tax return to allow for the reversal, or adjust your 2010 return if you have filed for an extension. Your reversal of the Roth conversion this year will also trigger some additional documentation requirements for your 2011 tax return.
Reconverting to Roth
Now that you’ve lessened your tax liability on phantom income that vanished due to the market’s versatility, you might consider using the down market to your advantage. You can reconvert your now traditional IRA back to a Roth – and pay less tax on it than you would have paid last year. You must wait 30 days after the reversal to reconvert it. Reconverting your traditional IRA account to a Roth can make sense if you expect your assets to appreciate quickly.
Your tax professional can assist you in amending your 2010 tax return or adjusting your extended 2010 return. He or she can also walk you through the reporting process that will be required should you decide to reconvert your IRA.
By now you may have heard that the Ohio Department of Taxation has changed the process for businesses and individuals to voluntarily come forward to declare use tax they owe. A voluntary disclosure program that started earlier this year was suspended when the Ohio legislature approved a new Use Tax Amnesty Program as part of the biennial budget bill. (more…)
Ohio business and individual taxpayers, as well as their tax professionals, faced a great amount of uncertainty in 2010 as they waited to see what tax rules would apply to them for 2011 and 2012, until the 2010 Tax Relief Act was signed into law in December. Now, the recently approved debt ceiling legislation averted another immediate crisis, but continued this guessing game as Americans wait to see if comprehensive tax reform will be accomplished. (more…)
Corporate Headquarters 419 West High Avenue, P.O. Box 1020 New Philadelphia, Ohio 44663-5120
p. 330-339-6651 f. 330-308-9506
Copyright © 2012. All rights reserved. Rea & Associates Inc. Privacy Policy