IRA Rules

Archive for June, 2010

Stretch IRA rules : Example 1:

A designated spouse beneficiary of a stretch out IRA account has various payout options. One of these options, available only to a designated spouse beneficiary, is to rollover the decedent’s IRA into the spouse’s own existing or new IRA. This choice, under stretch IRA rules, permits the spouse to name his or her own primary beneficiaries who could, in turn, eventually name their own remainder beneficiary.

Stretch IRA rules : Example 2:

A Roth IRA account owner, age 75 names his child, age 55, as his designated beneficiary. If the Roth IRA account owner dies, his child has the option to take IRA distributions based on his or her own single Life Expectancy. (IRA Distributions must begin by December 31st of the year following the year of the Roth IRA owner’s death.)

In this situation, assume the designated beneficiary is 59 years old in the year the distributions are required to begin. At age 59, the single Life Expectancy factor is 26.1. The designated beneficiary should now name his or her own remainder beneficiary so that if the designated beneficiary does not survive the Life Expectancy of 26.1 years, the remainder beneficiary will be able to continue the annual minimum distributions until the IRA is exhausted in the 26th year.

Stretch Ira Rules : Example 3:

An IRA account owner passed away at age 64 and had named her spouse as the sole primary designated beneficiary. Rather than moving the inherited IRA into his existing IRA, the spouse chose to keep the assets as a Beneficiary IRA. (A Beneficiary IRA remains in the name of the deceased IRA owner, F/B/O the designated beneficiary.) The spouse decided to delay distributions until his wife would have turned age 70 �* and he also named his daughter as the remainder beneficiary. The spouse beneficiary passed away at age 65 (before his wife would have turned age 70 �). In the year following the spouse beneficiary’s death, the remainder beneficiary could continue annual minimum distributions based on the remaining Life Expectancy of the spouse beneficiary in the year of the spouse beneficiary’s death. In this case, the remainder beneficiary would start with a Life Expectancy factor of 21.0. The remainder beneficiary (the daughter) would have 21 years to deplete the IRA.

*Only a sole-designated spouse beneficiary can chose to delay mandatory distributions until the original IRA owner would have turned 70 � years old.

Ulster Troubles (Part 13 of 24)

Question: Income tax on Social Security benefits?

If a USA citizen goes to India for longer time, does Social Security benefits received by US govt. taxable in India? What about under new Direct Taxation rules coming in 2012? Under this proposed rules US citizen with OCI visa would become resident after 60 days stay and worldwide income taxable. Is SS benefits taxable under this? How about IRA (independent retirement account) withdrawals from US account?

Answer: Check it out all the information on
1) http://www.tax4india.com/investment-in-india/nri-investments.html
2) http://www.tax4india.com/income-tax-india/income-tax-india.html
3) http://www.tax4india.com/income-tax-india/non-resident-n-taxation.html

New Years resolutions for managing your money and investing