|
|
|
|
|
|
|
|
|
|
Ed Slott’s Free IRA Update |
|
|
January 2008 |
Volume 1, Number 1 |
|
|
In This Issue ·
Ed Slott’s Free Monthly
IRA Update ·
Make a List- Marketing
Tips ·
Question of the Month ·
Ed Slott’s IRA
Advisor- January’s issue ·
Ed Slott’s IRA
Advisor Newsletter |
|
Introducing
Ed Slott’s Free Monthly IRA Update For many financial
professionals, January is the month to make a fresh start, weed out
deterrents to success, and resolve to make improvements that will
benefit themselves and their clients. January also presents an
opportunity to meet with clients and plan for the year. Fittingly,
this January issue is the first of our Free Monthly IRA Update, in
which we bring you IRA information and helpful tips that can be used to
make a smooth start for the year. |
|
Make
a List and Check it Twice Christmas is not the only
time for list-making. In fact, January is one of the best months to
make lists for financial and estate planning. If you do not already
schedule annual meetings with your clients, you may want to consider
doing so. Be sure to include a 2007 financial and estate planning
review on the meeting agenda. Use this as an opportunity to: §
Review beneficiary
designation forms, and make changes where necessary §
Review contributions made
throughout the year. If IRA contributions were not maximized,
additional contributions can be made up to April 15, for 2007 §
Discuss retirement
planning with small business clients. Small business owners can shelter
up to $45,000 from taxes, by contributing that amount to an
employer-plan. While it is too late
to establish a qualified plan, such as profit
sharing or 401(k) plan for the 2007 calendar year, SEP IRAs can still
be established. Business owners have up to their tax filing deadline,
including extensions, to establish and fund
a SEP IRA.
Note:
Contributions to SEP IRAs are limited to the lesser of $45,000 or 25%
of compensation (20% of modified net profit for unincorporated business
owners) These meetings should be
conducted before clients file their tax returns, so that it is not
necessary to make changes to their tax returns if tax relation
transactions are conducted as a result of the meeting. More marketing tips,
including strategies for getting more assets under management are
available in Ed Slott’s Instant IRA
Success Multimedia Kit. |
||
|
·
Find an Ed Slott Trained
IRA Advisor ·
Find an Ed Slott Trained
Attorney |
Set
yourself apart from the competition, and bring in millions in new IRA
rollover business by subscribing to Ed Slott’s IRA
Advisor Newsletter and
attending Ed Slott’s IRA Workshops. Click here
to see
a schedule of upcoming workshops.
|
|
|
|
||
|
|
Rollovers
Trends (Qualified Plans to IRAs)
According to the Employee
Benefit Research Institute (EBRI), IRA assets reached a record $4.23
trillion in 2006, a growth rate of 16.5 percent from 2005. The EBRI
also explained that IRA growth continues to be fueled by rollovers
from employment-based tax-qualified retirement plans, amounting to
about $200 billion annually. One related question we often receive
from financial advisors who want to capture their share of this
rollover market is “How do I help clients
initiate rollovers to IRAs?” The answer often lies with the plan
administrator, and/or within the plan document. If you are one of these
financial advisors who want to work with your clients to complete
rollovers from qualified plans to IRAs, bear the following in mind: §
An individual cannot make
withdrawals from his qualified plan account unless he satisfies the
triggering event requirements of the plan. Triggering events include:
reaching the age of retirement (as defined under the plan), separating
from service with the employer, or termination of the plan. Individuals
who want to make withdrawals should check their summary plan
description (SPD), or check with the plan administrator. §
The client’s
account-statement should be reviewed to determine if the account
balance includes assets that may receive more favorable tax treatment
if they are not rolled over §
Mistakes can kill a
rollover, either through loss of tax-efficient strategies, or IRS
assessed penalties for mistakes. One of the best ways to
ensure rollovers are completed correctly and smoothly, is to have the
client work with the plan administrator. The plan administrator can
help to ensure that the proper paperwork is completed. A large number
of rollover requests are rejected because of improper paperwork. Bear in mind that even
your most intelligent clients may not be ‘rollover savvy’, and will
likely need your help to ensure the rollover is completed properly.
Providing them with a check-list, or step-by-step procedures can help. |
|
|
|
Question
of the Month
Question: Due to an error made by
his financial institution, my client’s substantially equal periodic
payment (SEPP) for December was not processed until January. I
understand that this could disqualify his SEPP and subject him to
retroactive early distribution penalties, plus interest for the amounts
already taken under the SEPP. Is there any way this can be avoided? Answer: Possibly. You may want
to look at private letter ruling (PLR) 200503036, which addressed a
similar fact pattern. In this PLR, the IRS ruled that ‘the failure to distribute the entire
required annual payment from the IRA for the calendar year and the
subsequent "make-up" distribution for the calendar year made will not
be considered a modification of a series of substantially equal
periodic payments under Code section 72(t)(2)(A)(iv) and, therefore
will not be subject to the 10 percent additional tax imposed on
premature distributions under section 72(t)(1) of Code.’ Bear in mind that PLRs
cannot be used as legal reference nor cited as precedence. However,
they give a good idea of how the IRS may address issues with similar
fact patterns. If the balance involved is significant, it may make
sense for the client to get his own PLR. For information on PLR fees,
see IRS Super-Sizes
Fees for IRA and Plan Private Letter Rulings. |
|
|
|
Highlights
from Ed Slott’s IRA Advisor Newsletter- January 2008 Issue
Top
IRA Rulings from 2007
Review some of the top
rulings for 2007, and consider how they may impact your business. An
overview of these rulings are provided in the January issue of Ed Slott’s IRA
Advisor, available here.
The following topics are highlighted: ·
Plan Transfers to
Non-Spouse Beneficiaries IRS Notice 2007-7 §
The “Special Rule” §
IRS Changes from
Voluntary to Mandatory ·
IRS Approves a Combined
IRA, Charity and Life Insurance Strategy PLR 200741016 §
Ruling Requests Approved §
Potential Benefits of the
Ruling §
Negatives of the Ruling §
Planning Opportunities ·
Post-Death Beneficiary
Designation Correction Denied PLR 200742026 ·
Spousal Rollover Through
a Trust PLR 200705032 ·
Non-Profit Plans - New
403(b) Regulations §
No More 90-24 Transfers §
Death Benefit Impact If you
do not already subscribe to Ed Slott’s IRA Advisor Newsletter, you may
do so by clicking here
and providing the required information, or by calling 800-663-1340.
Each issue is 8 full pages of must-have tax information.
Individuals
who subscribe to the online version of the Ed
Slott’s IRA Advisor Newsletter, receive access to
back issues at no additional cost. |
|
|
|
|
To
unsubscribe to this free IRA Update, please send an Email to [email protected],
and include the word “Unsubscribe” in the subject field. Ed
Slott and Company- |
