Abstracts » Law

Use trusts as beneficiaries to extend IRA tax deferral

Article Abstract:

The tax and estate planning benefits of using trusts as beneficiaries of IRA and qualified benefit retirement plans is the subject of this article which focuses upon tax deferral issues.

Personal Tax Planning, Usage, Personal finance, Qualified benefit plans, Trusts and trustees, Trustees, Trusts (Law)

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IRA planning: when does what went in have to come out?

Article Abstract:

IRA distribution rules for tax purposes are explained. Important factors to consider include overall estate plan, choice of beneficiaries, and choice of life expectancy calculation method.

Personal Income Tax Administratn, Tax administration, Personal income tax

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IRA benefits can outweigh the penalty on excess contributions

Article Abstract:

Individual retirement accounts (IRAs) are slapped a 6% excise tax under Section 4973 of the tax code for excessive contributions. The excise tax reduces the rate of return of IRAs so long as excessive contributions remain. As such, tax practioners and taxpayers seek to avoid paying the 6% excise tax at all costs. However, this strategy may not always be in the best interests of taxpayers. Tax-free compounding and the relocation of investment earnings from taxpayers' Form 1040 to an off-tax-return IRA account offset the effects of the 6% excise tax. This approach makes IRAs with excessive contributions better than other investments such as taxable mutual funds.

Excise Taxes, Taxation

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