The IRS Audit Blog

Posts Tagged ‘retirement’

Raytheon Reports Solid Fourth Quarter and Full-Year 2010 Results

Raytheon Company announced fourth quarter 2010 Adjusted EPS of $1.57 per diluted share compared to $1.31 per diluted share in the fourth quarter 2009, up 20 percent. Â The increase was primarily driven by operational improvements and capital deployment actions. Â Fourth quarter 2010 EPS from continuing operations was $1.37 compared to $1.30 in the fourth quarter 2009.

IRS on alert for tax cheats, scams

Question: Was 2/18 was an inside job?

Did 0bama plan and execute the assault on the IRS in Texas?

Answer: Didn’t you hear? Obama blamed it on Bush.

Dirty laundry stealing spotlight from elections

WASHINGTON — It’s hard to see over the pile of dirty political laundry this election.Drunk driving arrests, a teenage flirtation with witchcraft, bitter divorces, unpaid taxes — it all sounds like material for a police blotter or the parodies on N …

Ron Paul: “Grand coalition” forming. 1/23/10 speech Part 6 of 6

Question: Traditional IRA to Roth IRA recharacterization.?

I contributed 4000 to my traditional IRA (T-IRA) in oct 2007 for 2007 and then 5000 again for 2008. Now I want to recharacterize my 2007 contribution which is 4000 to Roth IRA.

I follow the IRS 590 publication I am unable to decide what will be my account opening balance and what would be my account closing balance.
Since I have made 2008 contribution of 5000, I am not sure how to find the earnings for my 2007 contribution of 4000. Can anyone help?
I have called my IRA manager byt they have asked me to calculate the earning, thats why I have posted it here.
i know the formula earnings= contribution x(account closing balance – account opening balance )/account opening balance
this works great if I did not put the 5000 for 2008. Now my problem is I have earnings from my 2008 contributions also

Answer: Couldn’t you just break this math problem down into multiple pieces and then total the results?

1. You contributed $4K in Oct 2007.
2. The balance immediately prior to (i.e., the day before) your $5K contribution in 2008 would be totally allocated to the $4K contribution, right? What is that amount?
3. Next add that total amount to your $5K contribution. What percent of the total is that prior amount? (i.e., what is the ratio?)
4. Any gains that you received from that point on, you should pro-rate (by that ratio) between your original $4K contribution and your final $5K contribution.
5. Add those pro-rated gains (allocatable to the $4K contribution) to #2 above. That should give you the total amount associated with your initial $4K contribution.

“Any problem can be made simple if you break it into small enough pieces.”
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New Roth retirement account options for 2010

When deciding whether to save for retirement using a traditional or Roth IRA, many people wrestle with the question, “When I retire, will my tax rate be higher or lower than it is today?”

dylan burns as michael jackson

Lake preservation board releases financial review

The Lake Allatoona Preservation Authority released a financial review Thursday that claims several discrepancies within the organization’s financial records, maintained by former General Manager Ro…

IRS Presentation on 403(b) Final Regulations – pt 3

Question: Can U withdraw all yor money fr a 401K @ age 55 after leaving yor current employer & not incur a 10% penalty?

Please inlcude financial articles such as Money Magazine, Kiplinger’s, etc. or interpretation of IRS Publication.

Answer: Usually. Almost all 401(k) plans provide for a retirement age of 55, withdrawals prior to which would incur the 10% penalty. If you did take a full distribution however, the plan would withhold 20% for taxes. Remember, you haven’t paid any taxes on this income yet. You would also have to declare the entire amount on your 1040 form for the year you take it out and pay the taxes. You’ll probably find yourself in a tax bracket you didn’t even know existed.

Do you really need the entire amount on day one of your retirement? If so, all your remaining years will probably be spent at poverty level. If you are retiring now, you should only take out what you need this until age 59 1/2, and roll the rest into an IRA to continue to get tax deferral.

You really should consult with a financial planner (I am one) as there are too many things that I don’t know about your situation that would help determine the best way to recreate your paycheck in retirement.

Best of wishes and I hope your retirement is all you’ve hoped it would be.

Company owners face retirement plan deadlines

NEW YORK — Memo to small business owners thinking about starting or contributing to retirement plans: Keep an eye on the calendar. Business – Pension – Human resources – Compensation and Benefits – 401k and Retirement

When Do I Want to Establish MY Self-Directed IRA or 401K?