By Beverly DeVeny, Ed Slott and Company, LLC
Did you do a Qualified Charitable Distribution (QCD) last year? Make sure the tax preparer knows about it.
The IRA custodian is not required to report a QCD transaction on Form 1099-R. Instead, it will show up as a regular distribution to the IRA owner. A regular distribution is normally a taxable event. A tax preparer, especially at this time of year, will simply look at the 1099-R and include the entire amount in the IRA owner’s income where it will become taxable.
What is the pro-rata rule?
The pro-rata rule is the formula used to determine how much of a distribution is taxable when the account owner holds both after-tax and pre-tax dollars in their IRA(s). For the purposes of the pro-rata rule, the IRS looks at all your SEP, SIMPLE, and Traditional IRAs as if they were one. Even if you have been making after-tax contributions to a separate account for years, and there have been no earnings, you cannot isolate your after-tax amounts and must take your other IRAs into consideration.
Giving another person the ability to make significant financial decisions and/or take actions on your behalf is not an easy thing to do. That said, various situations may arise where you no longer want to, or are able to, manager your own finances. In such cases, you want to make sure someone else can act on your behalf.
Typically, this is done via what’s known as a Power of Attorney (POA) document. This form, which is generally prepared by an estate planning attorney, grants a person – known as your attorney-in-fact (or agent – the ability to step into your shoes and make what are often critical and important decisions.
Clearly, great thought should be given to whom you name as your attorney-in-act. All too often through, that’s where the thought stops. In reality, a commensurate level of thought and discussion should take place regarding the document itself and the provisions that are incorporated into your POA.
by Scott Smith, CIMA®
Thank you to those who attended our quarterly client roundtable last month recapping first quarter 2015 market trends. We appreciate the opportunity to engage and educate clients on topics important to them. For those who were unable to attend the client roundtable, a brief summary of our discussion is shown below.
• Monetary policy from the Federal Reserve has been a major driver of equity market returns in recent years and is the reason why equity markets have gained disproportionately to the overall economy and corporate earnings.
50 Years of Profitable Partnership
By Scott Smith, CIMA®
I recently had the privilege of attending the 50th annual Berkshire Hathaway shareholders meeting in Omaha, Nebraska. A friend and I arrived about 20 minutes after the CenturyLink Center door’s opened at 7:00 in the morning. By the time we found a seat, we were in the second to last row of the upper deck. Needless to say, there was a buzz and excitement in the air.
Article Credits: Copyright Ed Slott and Company 2014 | By Beverly DeVeny, IRA Technical Expert
The “I” in IRA stands for individual. Here are 5 things you 100% can never do with your IRA.
1. If you are married, you cannot treat the IRA as a joint asset – even if you live in a community property state. Contributions must be made on an individual basis. Spouses cannot add their contribution amounts together and then allocate the contribution between their respective IRAs.