IRA Rules

Archive for October, 2007

Question: Old people say they are on a fixed income, could they mean they are getting 50K month in income?

If it’s from an annuity or a pension it would be FIXED.
Also money from CD investments, and dividend paying stocks would be fixed.
So why are all these old people complaining about being on a fixed income?

Why don’t they just say all they have is social security?
It would make it much more simple to understand.

When I think of fixed income for some reason I see vairous amounts of retirement accounts that have been well invested and planned with products that pay steady income. I see pensions and RMD’s out of IRA accounts.

Fixed income to me means well invested wealth that is coming in.
Why does it mean to old people that they have nothing to their name.
Is it an expression?

Isn’t everyone that is retired on a fixed income.
Even if you are sitting in stocks, you are probably following a certain rule such as 4% out a year, and adjusting for inflation.
Thats’ Fixed.
Even ss gives you an inflation adjustment. You follow the same number for your retirement.

Answer: A fixed income generally means you cant increase your income through job changes, promotions and performance raises and bonuses. In retirement you’re generally more in a spending phase than a savings and investment phase. Generally you get only cost of living raises and whatever your savings and investments return, which is probably less than it was before retirement because you cant afford to take as much risk. And then there is inflation and maybe taxes. Health care costs can be higher too. If one has saved and invested well and keeps costs low they can live well in retirement though.

Carma Bums “Rules of the Road”

Retirement Planning : Requirements for Early Medical Retirement

Question: Where can I e-file if the IRS has a glitch and rejects all returns with error code 0448?

If anyone else has had a rejected return i figured this info might help. This is not the tax sites error. . this is global for many of the companies like TaxBrain, TT, TaxAct, and most others. Here is the IRS notice:

Subject: Individual Filers- Error Reject Code 0448 Auto forwarded by a Rule

ATTN: Software Developers, Return Transmitters and Authorized IRS e-file
Providers/EROs:
We are experiencing a problem with Error Reject Code 0448 rejecting returns in error. The problem is being researched. When the problem has been corrected, we will issue another Quick Alert. Error Reject Code 0448 reads:
Form 1040/1040A – If taxpayer age is 70 1/2 at the end of tax year and IRA Deduction of Form 1040 (SEQ 0700) and Form 1040A (SEQ 0626) is significant, taxpayer cannot deduct any contributions to traditional IRA or treat them as nondeductible contributions for they are ineligible for IRA Deduction.

Answer: Give it time, they will have the glitch fixed soon, if not already… There are too many millions of taxpayers that E-file for the system to stay down long….

Buying Real Estate Within Your IRA or 401K in Cleveland market