Final regulations issued on Wednesday (T.D. 9673) permit individual retirement account (IRA) participants to enter into contracts for annuities that begin at an advanced age (often called longevity annuities), using a certain amount of their account balances, without having these amounts count for calculating required minimum distributions from the IRAs
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Personal financial planning
Guidance issued on application of Windsor to retirement plans
Qualified plans must recognize same-sex marriages after the Windsor decision and must be amended, if need be, to make them conform to the results of that decision. Under guidance issued by the IRS, administrators of qualified retirement plans must recognize the same-sex spouses of legally married participants as of June
Supreme Court holds inherited IRAs are not retirement funds
In a unanimous opinion written by Justice Sonia Sotomayor, the U.S. Supreme Court on Thursday held that funds from an inherited IRA were not retirement funds that were exempt from the debtor’s bankruptcy estate (Clark v. Rameker, No. 13-299 (U.S. 6/12/14), aff’g 714 F.3d 559 (7th Cir. 2013)). The Supreme
Considerations when working with an aging client base
CPAs should be cognizant of the professional liability risks that may exist when working with aging clients.
Notice clarifies midyear amendment of certain retirement plans post-Windsor
The IRS clarified that a qualified retirement plan will continue to be a qualified 401(k) or 401(m) safe-harbor plan if it adopts a midyear amendment to its plan to comply with the rules in Notice 2014-19 requiring qualified plans to conform to the Windsor decision (Notice 2014-37). A safe-harbor 401(k)
Final rules govern tax treatment of distributions to pay accident or health insurance premiums
On Friday, the IRS finalized regulations that provide that distributions from qualified retirement plans to pay accident or health insurance premiums are taxable unless a statutory exclusion applies (T.D. 9665). However, arrangements where amounts are used to pay premiums for disability insurance to replace retirement plan contributions in the event
Rollover contribution to second IRA disallowed
The Tax Court held that a taxpayer who received distributions from two individual retirement accounts (IRAs) and later transferred the amounts back into his IRAs had taxable income equal to the amount of the second transfer. According to the court, the plain language of Sec. 408(d)(3)(B) allows a taxpayer to
IRS issues 2015 inflation adjustments for HSAs
The IRS issued the calendar year 2015 inflation-adjusted figures for the annual contribution limits for health savings accounts (HSAs) and the minimum deductible amounts and maximum out-of-pocket expense amounts for high-deductible health plans (Rev. Proc. 2014-30). Individuals who participate in a health plan with a high deductible are permitted a
Avoiding the squeeze: Trusts, estates, and the new ATRA tax regime
The American Taxpayer Relief Act of 2012 raised the top income tax rate to 39.6%, and a new 3.8% tax on net investment income also applies beginning in 2013. Both taxes apply to trusts and estates with income in excess of $11,950 in 2013, in contrast to much higher thresholds for individuals. This new tax regime necessitates drafting wills and trusts to give executors and trustees maximum discretion so they can reduce these taxes.
The accidental investment adviser
CPAs often are solicited for advice regarding potential investments. A CPA should refrain from providing specific investment advice unless he or she has been adequately trained and licensed to serve as an investment adviser.
The new PFP standards
Understand that the statement applies to the individual, not the firm. The statement applies to employees in the firm who provide PFP services. Recognize that the foundation of the statement begins with the AICPA Code of Professional Conduct (the code). The hallmark of the code is to perform services with
Trader or investor?
In two decisions in 2013, Endicott, T.C. Memo. 2013-199, and Nelson, T.C. Memo. 2013-259, the Tax Court maintained a high hurdle that taxpayers must clear to show they are in the trade or business of trading in marketable securities rather than acting as investors. Aside from dealers in securities (those
Details of new myRA retirement savings vehicle revealed
Following up on announcement made by President Barack Obama in his annual State of the Union speech on Tuesday, the White House released details of a new retirement savings account to be made available to employees through their employers. These accounts, myRAs (presumably an abbreviation for “my retirement account”), which
How to protect investors’ assets
The recent financial crisis magnified the importance of investor protection. Regulators can play a vital role in ensuring that securities firms protect client assets. The International Organization of Securities Commissions (IOSCO) on Wednesday published eight principles to guide regulators as they supervise securities firms on the protection of client assets.
SEC issues reminder on investment adviser due diligence
Investment advisers need to follow appropriate due-diligence processes when recommending or placing clients’ assets in alternative investments such as hedge funds, private-equity funds, or funds of private funds, the SEC said in a risk alert issued Tuesday. According to the alert from the SEC’s Office of Compliance Inspections and Examinations
AICPA issues personal financial planning standards
The AICPA on Tuesday issued additional authoritative guidance for CPAs who offer personal financial planning services. The AICPA Statement on Standards in Personal Financial Planning Services covers all aspects of the planning process—from obtaining information to communicating and implementing recommendations. The standards, which will take effect July 1, require complete
Immediate year-end planning opportunity for existing CRTs
On Dec. 2, the Treasury Department issued final regulations addressing the 3.8% net investment income tax under Sec. 1411 (T.D. 9644). Regs. Sec. 1.1411-3 addresses estates and trusts, including charitable remainder trusts (CRTs). The final regulations include an additional accounting method to tax CRT distributions. Distributions of income from a
How to help clients make the right Social Security election
As the wave of Baby Boomer retirements continues, it is more important than ever for CPAs to understand how to help clients be in the best position to maximize Social Security benefits. Mastering the intricacies of the rules is no easy task, especially for accountants who don’t concentrate full time
Final and proposed regs. issued on 3.8% net investment income tax
Late on Tuesday, the IRS issued final and proposed regulations giving guidance on the application and computation of the 3.8% net investment income tax imposed by Sec. 1411 (T.D. 9644 and REG-130843-13). The final regulations adopt, with changes, proposed regulations issued late in 2012. Starting in 2013, Sec. 1411 imposes
Act before the deadline: Exclusion of 100% of QSBS gain
Taxpayers have a short window in which to act if they want to take advantage of the Sec. 1202 provision that allows exclusion of 100% of the gain realized on the sale or exchange of qualified small business stock (QSBS). Unless the law is amended, for QSBS acquired after Dec.
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