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Personal Finance

We are dedicated to keeping clients abreast of the latest developments and tax-saving strategies. This section includes a library of hundreds of timely articles about business, taxes, finances, trends and the like. The articles are categorized by subject matter, which can be accessed from the links. Click on your topic of interest and find a wealth of information.

IRAS, PENSION PLANS & RETIREMENT

It is never too early to plan for your retirement. This section includes a number of features to assist you with your retirement questions. For a more comprehensive look at your retirement planning needs, please call this office.

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401(k) Contribution Limits
Many employers offer what are commonly referred to as 401(k) plans, named after the tax code section that created the plans. These plans allow employees to defer part of their earnings for retirement. Some employers offer matching contributions that increase the attractiveness of the programs.

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Don't Mix Required Minimum Distributions!
Taxpayers who have reached the age of 70½ and have qualified retirement plans are generally required to take minimum distributions from those plans annually. Quite frequently, taxpayers have multiple IRA accounts in addition to one or more types of qualified plans.This gives rise to a commonly asked question, "Must I take a distribution from each individual account?"

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Substantially Equal Payment Exception
The decline in the stock market has adversely affected the value of taxpayer’s retirement investments. This decline in value of retirement accounts has uniquely affected taxpayers who have taken early retirement.

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Pension Start-Up Credit
This is a nonrefundable income tax credit for 50% of the administrative and retirement-education expenses for any small business (less than 100 employees) that adopts a new qualified defined benefit or defined contribution plan (including a Code Sec. 401(k) plan), SIMPLE plan, or simplified employee pension ("SEP").

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Avoiding Premature Traditional IRA Distribution Penalties
You may encounter certain financial situations making it necessary to withdraw funds from your IRA account. Funds withdrawn from a Traditional IRA are taxed at the regular income tax rates AND are subject to a 10% early withdrawal penalty if you are under 59-1/2 years of age at the time of the withdrawal.

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Parents Should Encourage Roth IRAs For Their Children
The long-term benefits of tax-free accumulation provided by Roth IRAs are hard to ignore. Parents can do their children a real service by encouraging them to establish a Roth IRA at the first opportunity. A Roth IRA, left untouched until retirement, will ensure that your child has a substantial nest egg.

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Saver's Credit
The Saver's Credit provides a nonrefundable tax credit for contributions made by eligible, low income taxpayers to IRAs and qualified elective income deferrals. The plan provides incentives for lower income individuals to save for their retirement through available qualified plans.

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Self-Employed Pension Plan Contribution Limits
Tax laws provide for plans that allow self-employed individuals to establish retirement plans for themselves and their employees, if they have any. Those most frequently encountered are the SEP (Simplified Employee Pension) and Keogh Profit Sharing Plans. Even though they are not IRAs, the SEP plans utilize an IRA account as the depository for the SEP plan contribution, thus minimizing the administration requirements of the employer.

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How Taxable Distributions from a Roth IRA are Determined
Withdrawals from a Roth IRA are tax-free if the funds have met the five year aging requirement and the following criteria is met.

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Planning Your Taxable IRA Withdrawals
Your age at the time you make a taxable withdrawal from your Traditional IRA account can make a big difference in the amount of tax you will pay. Generally, there are three periods within your lifetime where different tax rules apply.

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Minimum Required IRA Distributions
The IRS does not allow IRA owners to keep funds in a Traditional IRA indefinitely. Eventually, assets must be distributed and taxes paid. If there are no distributions, or if the distributions are not large enough, the IRA owner may have to pay a 50% penalty on the amount not distributed as required. Generally, distribution begins in the year the IRA owner attains the age of 70.

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IRA Contribution Limits and Catch-Up Contributions
For those who annually contribute to their IRA account and wish they could contribute more, there is good news. The annual contribution limit is inflation adjusted each year and is slowly increasing.

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Retired Spouse IRA Strategy
When one spouse works and the other does not, tax law allows the non-working spouse to base their contribution to an IRA on the income of the working spouse.

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