IRA Rules

Archive for January, 2007

Question: URGENT: tax question: IRA Withdrawal with medical exclusion. Is this also an itemized deduction? ?

I took an early IRA withdraw of $44,000. $32,000 was spent on medical expenses for my dependent mother. Can I take this as an itemized deduction in addition to excluding it from my tax penalty? I must file 9/22/08

Answer: 1. You must be able to claim your mother as a dependent for medical purposes on your tax return in order to put the amount on your schedule A.

2. Yes, you can list the amount on schedule A *and* use it to on form 5329 to avoid the 10% penalty. It’s not double dipping because it’s 2 different taxes.

Tax Deduction Tips : Types of Medical Expense Tax Deductions

The most important thing to remember about Rollover IRA rules is the 60 day Rollover IRA rules which we discussed earlier. If you are leaving your job and you have not inquired about your retirement plan, whether it be a 401k retirement account, 403b retirement account, or any other retirement accounts, you need to do so. 

Many people get so involved in their new job or finding a new job that they let the subject of their retirement account slip. Soon, the are faced with a tax bill that they have no idea how it happens. Don’t let this happen to you. Uncle Sam is more than happy to send you a tax bill when the time comes. It is up to you to not give the IRS any reasons to bill you any more taxes than you need to. 

Remember the IRA rollover rules of 60 days and sort out your retirement account arrangement before you leave your job or immediately after. If your employer happens to cut you a check, it could get lost in the mail and you will be faced with a tax bill. 

IRA Rollover Contribution Minimum

The IRA rules regarding IRA rollover contribution minimum are the same as Traditional IRA rules and Roth IRA rules. Other Rollover IRA rules are discussed under the Rollover IRA section of this Ira Rules website. 

Important things you need to know for IRA Rollover:

• Firstly, your 401k retirement plan may contain both PRE-TAX and AFTER-TAX money.

The Pre-tax money should go into a Traditional IRA and the after-tax money in the Roth IRA individual retirement account. However, you can open just one IRA account and keep the money mixed. But, remember to keep track of which money you already paid taxes on and always bring it up when your accountant is doing your books. 

• Secondly, when you leave your job, you should ensure that the company does not cut you the retirement check by calling them and express your intention to either leave the retirement with the employer for the time being or provide the name of the financial institution where you set up an IRA account to rollover into. This will ensure that you will not violate the 60 day Rollover Ira Rules.

Suze Orman Roth IRA Rollover in 2010 for 401k’s