Warady & Davis E-Alert
                    


Tips to get the most from an IRA

  • There is still time for a 2009 IRA. If you didn't make contributions to an IRA in 2009, you can still set up and contribute to an IRA for 2009. The deadline for doing so is April 15, 2010. An IRA is a great way to save for your retirement, and with a deductible IRA, you may also be able to cut your current tax bill.

    Note: If your 2009 deductible IRA wasn't fully funded by December 31, 2009, and you make any IRA contributions prior to April 15, 2010, designate to the bank or trustee that these 2010 contributions are for 2009 (up to the maximum allowed). You can then deduct these amounts on your 2009 income tax return for a quicker tax benefit.

  • Make your 2010 IRA contributions early. Consider making your 2010 IRA contribution as early this year as possible to maximize the time you have for tax-deferred growth in the fund.

  • Consider converting a traditional IRA to a Roth IRA this year. The previous rule that excluded taxpayers with incomes over $100,000 from doing a conversion to a Roth is eliminated as of January 1, 2010. You'll have to pay tax on the amount converted, but qualifying distributions from the Roth IRA are tax-free thereafter. Furthermore, you won't have to take annual distributions from your Roth IRA when you reach age 70½ if you don't want to.

Note: While converting a traditional IRA to a Roth IRA is now open to everyone, regardless of income, contributing to a Roth IRA is still not allowed for higher-income taxpayers. For 2010, Roth IRA eligibility phases out for singles once income reaches $105,000 and for joint filers once income reaches $167,000.

  • Annual Minimum Distributions. For 2010, annual minimum distributions from most retirement plans are once again required for those aged 70½ and older. In 2009, these required minimum distributions (RMDs) were suspended. 2010 required distributions must be taken by December 31, 2010. Taxpayers who turn 70½ in 2010 may choose to delay taking their first distribution until April 1, 2011.

For additional information or assistance with IRA decisions, please contact us at 847-267-9600 or if you would like to get together to discuss your tax-cutting options.





Visit www.waradydavis.com for additional information and articles of interest.

 

Contact:

Marc Heller, CPA, JD, Partner
Warady & Davis LLP
847-267-9600
mheller@waradydavis.com
www.waradydavis.com





Disclaimer: Pursuant to Internal Revenue Service Circular No. 230, be advised that the information contained herein was not intended or written to be used and cannot be used by any taxpayer for the purpose of avoiding any Internal Revenue Code penalties that may be imposed on the taxpayer. It was written with the intent of disseminating general information related to the transaction(s) or matter(s) addressed herein.