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Flashcards in Taxes: Retirement Plans Deck (9)
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1

Taxes:
Retirement Plans
Modified AGI

Modified AGI:
AGI
+ IRA Deduction
+ Domestic Production Activities Deduction
+ Student Loan Interest
+ Foreign Earned Income Exclusion & Housing Exclusion
+ Exclusion for Employer Provided Adoption Assistance

2

Taxes:
Retirement Plans
Traditional IRA's

Traditional IRA's
- contributions limit is $5,500 per individual (extra $1,000 if over 50)
- there is a phaseout
- IRA Deductions: contributions are a for AGI deduction
- married spouse can deduct if inactive even though spouse is active
- taxpayers who cannot deduct can still defer
- must be made by due date of the return

3

Taxes:
Retirement Plans
Roth IRA's

Roth IRA's
- contributions limit is $5,500 per individual (extra $1,000 if over 50)
- there is a phaseout
- conversion of traditional to roth is taxable event
- gain at time of conversion to extent conversion amount exceeds tax basis
- same as rules for 401(k)s

4

Taxes:
Retirement Plans
Coverdell Educational Savings Account

Coverdell Educational Savings Account
- contributions are not deductible, but may not be subject to tax
- established exclusively to pay higher education costs for a beneficiary under age of 18
- limited to $2,000 per beneficiary per year

5

Taxes:
Retirement Plans
Retirement Distributions

Retirement Distributions
- withdrawal from IRA is taxed as income in year of withdrawal
- early withdrawal penalties of 10% if before 59.5
- exempt if: death, disability, medical, first time home buyer ($10k), higher education, military duty
- withdrawals begin when taxpayer reaches 70.5
- up to $100,000 tax free if given to charity
- if recieves distribution that would be subject to the penalty, has 60 days to deposit in new plan

6

Taxes:
Retirement Plans
Withdrawal from Roth or Coverdell

Withdrawal from Roth
- not taxed as income
- may be tax exempt
- not taxed if 5 years after contribution and age 59.5
Coverdell
- used for higher education expenses

7

Taxes:
Retirement Plans
Retirement Distributions
Qualified Plans

Qualified Plans
- most taxpayers don't have basis in these plans because they receive a deduction
- annuity rules used to determine taxable portion of payment

8

Taxes:
Retirement Plans
Retirement Distributions
Special Retirement Plans

Special Retirement Plans
- self employed taxpayers may make contributions to special retirement plans
- Keogh Plans: based on self employment earnings

9

Taxes:
Health Savings Accounts

Health Savings Accounts
- deduction for AGI in year made
- nonqualified distributions get 20% penalty

Decks in REG Class (109):