FINANCIAL CORNER
IRA SEASON

As IRA season is upon us again, I thought the following information might be of interest to some of the readers:

TAX-FREE Charitable Contributions from IRAs Extended Once Again: The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 extended the provision through 2011 that allows taxpayers age 70 1/2 or older to exclude up to $100,000 from gross income otherwise taxable distributions from their IRA that were paid directly to a qualified charity. Please consult your tax professional to discuss the tax benefit applicable to your own situation.

IRA & Roth IRA: Individuals who are eligible may contribute up to $5,000 to IRAs for taxation year 2010. The $5,000 remains unchanged for year 2011. Additionally, individuals aged 50 and older may make an additional catch-up contribution of $1,000 for 2010 and 2011.

ROTH Conversion: The Roth conversion rules, taking effect in 2010, do away with the restrictions that prevent many people from converting a traditional IRA to a Roth IRA. In addition, if you made a conversion in 2010, you will be able to report half of the income from the conversion on your 2011 tax return and the other half on your 2012 return. The rules and process of Roth conversion can get rather complicated, especially if you have both deductible and non-deductible traditional IRAs. Please consult with your tax advisor to see if a Roth conversion is right for you.

SEP IRA: For 2010, employers may be able to contribute up to the lesser of $49,000 or 25% of compensation to SEP IRAs. The $49,000 remains unchanged for year 2011.

If you are making plans for 2011, here is some additional information for those who are eligible to keep in mind:

SIMPLE IRA: Plan participants may elect to defer as much as $11,500 in 2011. Participants aged 50 and older may defer an additional $2,500 in 2011 for a total of $14,000.

401(k): Plan participants may defer up to $16,500 in 2011. Participants aged 50 and older may make an additional catch-up deferral of $5,500 in 2011 for a total of $22,000.

By Lily M. Hazelton, CLU, ChFC, CFPR
吳美華 - February 3, 2011

The information contained herein is not intended as a substitute for direct financial or legal advice. Securities America, Inc. does not provide tax advice. Please contact a tax or financial professional for further information.

Lily Hazelton, Registered Representative – CA Insurance License #0B13629
Securities offered through Securities America, Inc., a Registered Broker/Dealer, Member FINRA/SIPC
Advisory services offered through Securities America Advisors, Inc., an SEC Registered Investment Advisory Firm