Waypoint

News You Can Use

Useful Information for Waypoint Clients and Friends

 

Legislative Updates

 

Required Minimum Distributions Suspended for 2009 - Congress passed a bill that suspends required minimum distributions from IRAs, 401(k), 403(b), and other defined contribution plans during 2009. Please contact your tax advisor for further information.

Charitable IRA Rollover Extended in Financial Rescue Bill - Congress passed the Emergency Economic Stabilization Act of 2008 on October 3, 2008 which included an extension of the Charitable IRA Rollover for 2008 and 2009. The bill makes the extension retroactive to January 1, 2008. The rollover allows individuals to make qualified charitable distributions from their IRAs tax-free.

Charitable IRA Rollover May Be Renewed - Several pieces of legislation include language to extend the Charitable IRA Rollover. The bills are in varying states of debate in the House and Senate but would extend taxpayers' ability to make qualified charitable distributions tax-free by one or two years. As the bills move through the legislative process, we will post updates here. 11/30/07

Section 529 College Savings Plans Comparison - Since Section 529 college savings plans were made permanent in 2006, several tools have been created to help families determine which plan makes the most sense for them. The College Savings Plan Network, a non-profit group, has created an online tool that helps each family sort through the taxes, fees and investment options of the various state-sponsored plans to determine which plan best meets the family's goals. Use the "Compare 529 Plans" link on www.collegesavings.org to access this tool.

Don't Rush To Do Your Taxes - Several brokerage houses requested extensions to mail Form 1099s (usually mailed by January 31) and warned some may have to be corrected after their initial mailing. In addition, Congress extended several tax deductions too late in 2006 for the deductions to be included on this year's printed tax forms. With those issues in mind, many accountants have suggested that their clients not rush their taxes this year.

Charitable IRA Rollover Allowed Under the Pension Protection Act of 2006 - The new law allows for "qualified charitable distributions" of up to $100,000 per year made directly from traditional and Roth IRAs to be excluded from gross income for plan owners age 70½ and older during 2006 and 2007.

Please Note:

  • Qualified charitable distributions must be made directly from the plan administrator to the public charity.
  • Gifts to donor advised funds and private foundations are not qualified. However, unrestricted gifts and gifts to field of interest funds at community foundations will qualify.
  • A receipt substantiating the gift is required.
  • Absolutely no goods or services should be provided to the donor in exchange of the gift. If the deductible amount of the gift is reduced in any way due to a benefit received in exchange for the gift, the entire gift amount will not qualify.

Kiddie Tax Age Limit Raised - The age limit for the kiddie tax on unearned income has been raised from age 14 to age 18. The new rules are retroactive to January 1, 2006. Unearned income over $1,700 for dependent children under the age of 18 will be taxed at their parents' income tax rate. (TIPRA 5/17/06)

Special Capital Gains Tax Rate Extended - The 15% tax rate for qualified dividends and long-term capital gains has been extended by two years. The special rate will now expire in 2010. (TIPRA 5/17/06)

Roth IRA Conversion - Previously ineligible taxpayers will be allowed to convert traditional IRAs to Roth IRAs in 2010. (TIPRA 5/17/06)

Roth 401(k) Made Permanent - The Roth 401(k), originally scheduled to expire in 2010, has been made permanent under the Pension Protection Act of 2006.

ALL Beneficiaries of Qualified Retirement Plans Now Allowed to Roll Over Assets Into An IRA - Under the old law, only spouses were able to roll over their deceased spouse's interest in a qualified retirement plan (401(k), IRA, etc.) to an IRA, forcing all non-spouse beneficiaries to take lump-sum payments and pay income taxes on those payments immediately. Under the Pension Protection Act of 2006, ALL non-spouse beneficiaries will be able to roll over those assets into an IRA.

Section 529 College Savings Plans Made Permanent - Section 529 college savings plans have been made permanent under the Pension Protection Act of 2006 with more stringent rules for operation to prevent abuse.

Virginia's Estate Tax Repealed - On August 28th, Virginia's General Assembly voted to repeal the estate, or "death," tax on estates valued at $2 million or more. The repeal takes effect July 1, 2007.

Enhancements Made to Virginia's Conservation Tax Credit Program - The cap on annual conservation tax credits has been raised to $100 million and restrictions based on geographic location have been repealed.

 

The information contained here is general in nature and is not intended as legal, tax or investment advice. Furthermore, the information contained herein may not be applicable to or suitable for the individuals' specific circumstances or needs and may require consideration of other matters. The information contained herein should not be used in any actual transaction without the advice and guidance of a professional tax advisor who is familiar with all the relevant facts.