Important April D
eadlines
Take note of the following important April deadlines:
April 1: Deadline for investors who turned 701⁄2 in 2014 to take their Required Minimum Distribution (RMD).
April 10: Final deadline for the second installment of property tax payments. Payments received after this date are considered delinquent.
April 15: Deadline for 2012 contributions (must be post-marked by April 15), and deadline for filing your tax return (or requesting an extension).
If you have missed any of these deadlines, please contact your accountant to find out what the repercussions are and/or the penalties you may be subject to, if any.
Paperless Notifications for Property Tax and Expense Payments
For those of you who have opted to go paperless, we applaud your actions.
As part of our continuing efforts in this regard, if you hold real estate directly in your account, we will be e-mailing our Property Tax Payment Request form, along with any property tax bills we receive, beginning May 1, 2015. This form can simply be completed, then faxed or e-mailed back to us. You may instruct us either to send the check with the original tax document to you for filing or directly to the tax authority We ask that requests be submitted as promptly as possible to allow us to make timely processing of your payments.
In addition, we occasionally receive asset summaries, insurance policies, utility bills, and similar documents, pertaining to assets held in your account. We will forward these promptly to the e-mail address indicated on your account. If a payment is required, we will also attach the Expense Payment Request form for your convenience. Once we receive your instructions indicated on that form we will forward the payment to the authorized provider.
Also, we suggest clients consider arranging with their providers to have bills sent directly to them at their residence or primary address. This will provide more time for receipt and processing of payment requests. Please note: if you require the original document to be sent to you, a $5.00 forwarding fee will apply, charged to your account.
Consider the benefits of a Roth IRA
Roth IRAs are designed to leave more money in your hands down the road. Establishing a Roth IRA now or converting some of your Traditional IRA may save you money in taxes, especially over longer periods, growing yourself a bigger nest egg.
Qualified Distributions are tax-free
Once you are over the age of 59 1⁄2, having held a Roth IRA for at least 5 years’ time, the funds can be distributed tax-free. They can also remain in the Roth IRA indefinitely to grow even further until you need them.
Funds held in a Roth IRA, unlike the Traditional IRA, are not subject to mandatory withdrawals starting at age 70 1⁄2, so you are free to maintain the balance of funds in your Roth IRA even after the age 70 1⁄2 milestone at which Traditional IRAs must begin.
Converting money from Traditional IRA to Roth IRA will reduce the amount remaining in
Traditional IRAs that is subject to the Required Minimum Distributions.
You can take physical possession of your ‘hard assets’ like real estate or precious metals, tax-free. This is possible when you make Qualified Distributions (over the age of 59 1⁄2, with 5 years in the Roth IRA). Now they are yours to hold and to use as you wish.
No eligibility age limit for contributions
New contributions to your Roth IRA are still permitted after 701⁄2, as long as you have earned income. If your income (MAGI) exceeds $6,500 but is less than $116,000 (or $183,000 if filing jointly), you may be entitled up to the maximum contribution, including the catch-up provision of $6,500.
No RMDs for sole spousal beneficiaries
A spouse, who is the sole beneficiary of a Roth IRA that meets the criteria for qualified distributions, may make the Roth IRA their own, tax-free. Not only that, they can even make new Contributions to it going forward, as long as they have earned income. A non-spouse beneficiary (or a spouse who is not sole beneficiary) may elect to take distributions according to his or her own life expectancy. These too will be tax-free to the beneficiary (again, assuming the original Roth IRA owner had met the criteria for qualified distributions at the time of death).
No income limits for converting to Roth IRA
Even if your earnings are too great to allow you to make new Contributions to a Roth IRA, you are allowed to make Conversions to a Roth IRA without limitations from your existing Traditional IRA. Yes, it will be taxable in the year you convert, but this could still pay off handsomely in the long run, as you may be able to keep the money working for you indefinitely, before ultimately withdrawing it tax-free. However, you should consult with your tax advisor to determine what is best for you and your tax situation.
Thinking of your legacy (children and grand-children)?
For a parent of a child who has earned income, a Custodial Roth IRA can be a great way to teach the value of saving and investing. Besides getting a head start on saving and investing, the child can learn and see how a small investment made today (especially when repeated periodically) can grow into a large pile of funds over time. Down the road, the child could tap into it for qualified higher education expenses, and similarly, they could use up to $10,000 towards their first home purchase – without tax or penalty, in either case.
While we’re on the subject of legacy (children and grand-children), be sure to consider an ESA (Education Savings Account, formerly known as a Coverdell account). An ESA allows you to make an annual non-deductible contribution of up to $2000 to a specially designated investment trust account, which will grow free of federal income taxes. Withdrawals from the account will generally be tax-free as well, when used for qualified K-12 or college expenses.
Your Responsibilities
As a self-directed IRA account holder, it is important for you to know and understand your responsibilities:
- Choosing your investment(s)
- Performing due diligence on your investment(s)
- Understanding the risks related to your investment(s)
- Monitoring your investment(s)’ performance
- Knowing whether your investment is liquid and how to liquidate
- Understanding Prohibited Transaction rules and avoiding them
- Ensuring that valuations are provided to us for all assets on at least an annual basis
- Understanding our fees and minimum balance requirement
Please read our Fee Schedule and Financial Disclosure.
You are solely responsible for the success of your investments. IRA Services Trust Company does not assume responsibility for any investment decision. Therefore, it is important that you choose suitable professionals (accountants, tax advisors, attorneys and financial advisors) to assist you with your investment decisions.
