IRA Rules

Archive for February, 2009

Question: IRA Minimum Distribution Rules?

If somebody withdraws their stock dividends in their IRA does that count toward the Minimum IRA Distribution rule?

Answer: Yes. All dividends, interest and invested funds are equal in the eyes if the IRS (they all are taxed as ordinary income when withdrawn).

Part 7: Inherited IRA and 5 year rule for distributions.

Question: Required minimum distributions on IRA and annuity?

I know when you reach the age of 70 1/2 in 2006, then you must make a required minimum distribution/withdrawal from the IRA by 4/1/07 and make an annual withdrawal after that. My questions are:

1) Can you calculate how much you need to withdraw for 2006 and 2007, and make one single withdrawal by 4/1/07 to satisfy the fact that you must make the first withdrawal for 2006 by this date, and a withdrawal for 2007?

2) If I purchase an annuity at a bank with my own money (non-employer related), do I need to follow this rule as well? What if I bought the annuity a few years ago and haven’t reach the period for making withdrawals yet?

Answer: 1) You can make a single withdrawal by 4/1/07 to satisfy the minimum distribution requirements for 2006 and 2007. Your 2006 RMD is based on the value of your account on 12/31/2005. Your 2007 RMD is based on the value of your account on 12/31/2006. You do not reduce the value of your account on 12/31/2006 by the RMD for 2006 if the withdrawal is taken in 2007.

2) The RMD rules do not apply to an after-tax annuity.

2010 Roth IRA Conversion Rules

Question: Can I transfer my Rollover IRA account to a different broker?

Recently, I had to transfer my 401K account to a Rollover IRA account at my wife’s employer – an investment bank (IB). According to the IB rules my wife or any immediate family member cannot have any trading or IRA accounts with any other IB or brokerage. Unfortunately, the IB charges extremely high commission on stock transactions. So, I am looking for a way to transfer my money out of my wife’s IB and into a brokerage like Ameritrade. Does anyone know if there is a legal way to do that without getting in trouble with the employer?

Answer: Yes, employees of securities firms generally have to have all accounts under their control (yours is assumed to be) at their own firm. Some firms allow outside accounts with duplicate statements going to them, but they don’t have to. The reason for all this is to scrutinize all activity for inappropriate insider trading and the like.

Self Directed IRA VIDEO :: CUSTODIAN :: Rollover 401k To IRA :: Real Estate IRA Services