It makes sense when we say that greater risk has the potential of yielding greater returns. If you do not want to take risk, you would invest your money in certificates of deposit or money market funds that provide a risk-free interest rate upon maturity. However, these interest rates are lower than the percentage returns provided by riskier stocks. If you make losses on your IRA (Individual Retirement Account) investments, you can deduct them from your tax return ONLY if certain conditions are fulfilled. We look at these conditions next:

1) Withdraw Full Balance to Claim Losses

In order to be eligible to claim losses on your tax return from your IRA investments, you MUST withdraw the entire balance from that account. For example, if you faced a loss of $5000 this year on your Roth IRA account, you must withdraw the full balance from your IRA in order to be eligible to deduct this $5000 allowable capital loss from your tax return. On the other hand, if you faced a similar loss from your SEP, SIMPLE or Traditional IRA, you must withdraw the entire balances from all these Traditional IRAs in order to deduct any losses.

2) Losses on your Traditional IRA

You can deduct losses made on your Traditional IRA only if:

* the total balance you withdraw is LESS than the after-tax amounts (basis amounts) remaining in your Traditional IRA.

* the IRA basis is any non-deductible contributions + after-tax IRA rollovers from 403b plans, 457 plans or other qualified retirement plans.

* you fill out IRS Form 8606 which is used to determine the basis of your withdrawal amounts from your Traditional IRA. IRS Form 8606 is also used to calculate your actual IRA loss to be included in your income tax return, and the total amount of your IRA withdrawal.

Example of a Traditional IRA Investment Loss

* Beginning January 1st, 2004, John had a balance of $30,000.

* $20,000 is the After-Tax balance

* On December 31st, 2004, John’s IRA lost $13000 in value. This means his Traditional IRA balance is now: $30,000 – $13000 = $17,000

* This $17000 is now less than the after-tax balance of $20,000.

* This means John can claim a loss on his income tax return if he withdraws his total balance from his Traditional IRA.

* His income tax loss deduction would be calculated as follows:

$30,000 January 1st, 2004 Balance- $13000 IRA Investment Loss for the year 2004$17,000 Value of his Traditional IRA at Dec 31st, 2004

$20,000 After-Tax Basis Amount- $17,000 Value of his Traditional IRA at Dec 31st, 2004$3,000 His Income Tax Deduction from IRA Investment Losses – 2004

Example of an Investment Loss

* Beginning January 1st, 2004, John had a Roth IRA balance of $20,000.

* Of this Roth IRA balance, $12000 is attributed to Earnings and $8000 is attributed to contributions.

* Since IRA contributions are non-deductible for tax purposes, the entire $8000 of contributions is considered an after-tax basis amount.

* During 2004, John’s Roth IRA lost $2000 in value, declining his Roth IRA’s total value to $18000 ($20,000 – $2000).

* Since this $18,000 is more than the basis amount of $8000 (after-tax), John is NOT eligible to deduct this loss from his income tax return if he withdraws the entire balance from his Roth IRA.

* Here’s the calculation:

$20,000 January 1st, 2004 Balance- $2000 Losses on the Roth IRA Investment$18,000 Value of his Roth IRA at Dec 31st, 2004

$8000 After-Tax Basis Amount- $18,000 Value of his Roth IRA at Dec 31st, 2004$-10,000 This $10,000 is NOT deductible from his income tax return.

Why invest in preferred stock when there are so many available types of fixed income investments? Listen to the CIO of indexgurus.com discuss why preferred shares are a good option for generating income, given the rates available in April 2010.

I worked in a school district and setup a 403b with AIG Valic. I am trying to roll that money into a rollover IRA with Fidelity. After talking to Valic, they have stated that they can do the transfer, but they will need to charge me a 5% fee because I have made a contribution within the last 5 years. Is this legal? Can they charge me 5% of the value of the money that I put in myself?

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Greedy bankers cut CD interest rates again. Let me educate you on a better way to grow your money with a Free Consultation Today 888-315-2381. Watch this!! www.cravenassociates.com

past 59 1/2, need to access my rollover IRA (been voluntarily retired for more than 2 years, might not make it to 62 before needing to take some money from the IRA….can I take say $20,000 from it as one time deal, when I file my income tax, that would be my only money I have (no employment), and married filing jointly, standard deduction, 2 personal deductions, wouldn’t I (we) only be liable for about $1300 in federal income taxes? (about $130-150 net). standard ded = $11,400 + 7,300 personal deductions, = 18,700 from 20,000…please advise…my hope is that the financial company that oversees my IRA doesn’t take out 20%,(off the top b-4 I receive it) if they did, how do I get that back?

Interestingly, there are 11 different types of IRAs ranging from Individual Retirement Accounts, Employer and Employee Association Trust Account, Spousal IRAs, Rollover Conduit IRA, etc. The most common are the traditional IRAs and the Roth IRA. In this article, we will explain the differences & similarities between the two.

Traditional IRA

In Traditional IRA, the contributions you make towards the account are not taxed. Whatever capital gains & earnings you make on your IRA are also not taxed up until retirement, when you withdraw money from your account. For example, imagine you made $50,000 this year and contributed $5000 to a traditional IRA. You will be taxed on $50,000 – $5000 = $45,000. Furthermore, your $5000 contribution will grow tax-deferred for many years, until you retire and decide to withdraw it. The setback with this is that your $5000 (which would have probably grown to $50,000 upon retirement) will then be taxed at your ordinary income tax rate.

Note: You can only withdraw this money after you turn 59 and 1/2 years or older. Any withdrawals made before this age will be subject to income taxes as well as a 10% early withdrawal penalty. However if you use the withdrawn funds to finance higher education expenses or for the below list of 8 exceptions, you will not have to pay the 10% early withdrawal penalty.

8 Exceptions that Eliminate the 10% Early Withdrawal Penalty

There are 8 exceptions to the 10% early withdrawal penalty (i.e. withdrawals that are taken before the age of 59 and 1/2). They are for distributions that:

i) Are taken because of the IRA owner’s disability

ii) Are taken because of the IRA owner’s death

iii) Are a series of loan repayments made over the life expectancy of the IRA investor

iv) Are used to pay for unreimbursed medical expenses that exceed 7.5% of the adjusted gross income of the IRA owner

v) Are used to pay for medical insurance premiums if the IRA investor has been unemployed for more than 12 weeks

vi) Are used to pay for the purchase of a principal residence (maximum of $10,000 can be withdrawn). Also, the IRA investor must not have previously owned a home within the last 24 months.

vii) Are used to pay for higher education expenses of the IRA owner or eligible dependants/family

viii) Are used to pay back taxes of an IRS levy placed against the IRA

Traditional IRAs are commonly associated with the old way of investing: certificates of deposits. This stereotype is because most banks sell CDs and they are the ones that offer Traditional IRA accounts for investors. But remember, you are not limited to investing Certificates of Deposit or bonds only, you can make higher risk investments such as cyclical stocks, commodities, futures, ETFs, etc.

Traditional IRAs are commonly associated with the old way of investing: certificates of deposits. This stereotype is because most banks sell CDs and they are the ones that offer Traditional IRA accounts for investors. But remember, you are not limited to investing Certificates of Deposit or bonds only, you can make higher risk investments such as cyclical stocks, commodities, futures, ETFs, etc.

The Roth IRA

Pioneered by the late Senator William V. Roth, Jr., the Roth IRA came into existence on January 1, 1998 thanks to the Taxpayer Relief Act of 2007. The Roth IRA is unique from all the other retirement accounts because all the earnings you accumulate on your savings will grow tax-free when you withdraw them upon retirement. The only catch to this is that when you make the initial Roth IRA contributions, you will receive no deductions on your income tax return. Other benefits of the Roth IRA include the elimination of the minimum required distributions rule when you turn 70 and 1/2 years old (more on this below).

By making after-tax contributions to your Roth IRA, you will not owe a single dime of tax to Uncle Sam when you retire and withdraw your money. This adds the advantage of being able to grow your earnings tax-free not for the government, but for yourself! Which retirement plan is therefore the right choice for you? Well it depends on your personal situation. If you expect to be in a higher tax bracket when you retire, it is better off to pay the taxes right now and grow your savings tax-free in a Roth IRA. Because a Roth IRA holds after-tax dollars, you can maximize your contributions by adding greater tax leverage to your retirement savings.

After-Tax Contributions

Consider Jackson who earns a $65,000 annual salary. Jackson is currently in the 25% tax bracket and contributes $3500 a month to his Roth IRA. Jackson would therefore pay income taxes of $3500 x 25% = $875 and would contribute $3500 – $875 = $2625 to his Roth IRA. If Jackson expects to be in a 33% tax bracket upon retirement, he will have to pay $3500 x 33% = $1155 upon his retirement. Therefore by making after-tax Roth IRA contributions now and getting taxed at the lower 25%, Jackson avoids having to pay taxes @ 33% when he hits retirement.

investmentrarities.com Investment Rarities Incorporated 7850 Metro Parkway Minneapolis MN, 55425 1-800-328-1860 Hi Ho Silver! Investment Rarities started selling precious metals in 1973. We have sold and delivered almost $3 billion in silver and gold. *Video Produced by Riverview Media Partners* Interview with James R Cook, President of Investment Rarities Inc located in Minneapolis MN. You are bordering on arrogance when you think you can beat the futures market. Furthermore, you have to be pretty egotistical to think you can pick a few junior silver stocks and hit a home run. The world is full of large egos who are trying to make a big score in stocks. Unfortunately, only one mining company in a hundred that has a silver claim will ever prove out. Other types of silver investments, such as SLV funds, undermine your patience. You think youre smart enough to time your way to big profits, but premature selling will invariably limit your gains. These funds are too easy to sell, and a small gain inevitably proves too tempting. Owning physical silver is a more modest, conservative and humble way to go. Fortunately, this humble approach offers the greatest opportunity for gains and the least risk. By purchasing actual physical silver, and taking it into your possession, you put yourself in the best position to capitalize on a rise in the silver price. By owning it outright, you are far more likely to continue holding for the time period necessary to maximize profits. Too much …

I currently have a rollover ira in a vanguard target fund but I wanted to move some money into Dodge and Cox International Fund. Will that be possible if I set a new account as a traditional IRA or do I have to move all the funds?

Ex-Illinois Governor Blagojevich Trial Jury Ask About Deadlock
Jurors in the corruption trial of former Illinois Governor Rod Blagojevich asked the judge today for guidance on what they should do if they cannot reach a unanimous verdict, the judge said in a hearing.

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An IRA to ROTH IRA conversion is a legitimate conversion, you have to fill out the appropriate forms, but I’m being penalized as if that was a distribution. Do I have grounds to protest?

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MONDAY, AUG. 2 Career-Prospectors, www.career-prospectors.com, a job-search networking group, meets every Monday at 7:30 a.m., community room at Corporate Headquarters — Watkins Centre, 15521 Midlothian Turnpike. Details: Michael Soden, (804) 594-7065 or Fred Carreras, (804) 378-2021. “Retirement Planning and 401(k) Rollover Options,” Merrill Lynch and William …

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Suze Orman teaches about converting a 401k retirement account to a Roth IRA . Check out more personal finance videos and walk throughs about Term Life Insurance, Whole Life Insurance, Debt, 401k Investing, and Financial Planning with Suze Orman, Dave Ramsey, and Greg Olney here at www.youtube.com Suze Orman, Dave Ramsey, Personal Finance 101, Investments, Mutual Funds, Suze Tips, Saving Basics, retirement planning www.lifeinsuranceira401kinvestments.com

Death, Taxes, and teenage texting – these are the certainties of life. The tax code is far too complicated for anyone to understand, and why teenagers can text all day but never write a thank you note is an unsolved mystery.Death on the other hand is somewhat more straightforward. One day youre reading the newspaper and the next day youre in it. Lets take a look at what happens to your property once everyone knows where to send the flowers.First, and surprising to a number of people, most of your property will probably not end up in probate court. Only what passes by will goes through the process. If you dont have a will, dont worry, the state has one for you. Of course the state has never met you and doesnt know how youd want things distributed, but whose fault is that? Dying without a will is called intestacy. You dont want to die intestate. Go see an estate planning attorney and get cured.Now that weve solved that, heres how property passes.Life Insurance and AnnuitiesThe death benefits are paid to named beneficiaries. Unless you name your estate as beneficiary, the death benefits will escape probate. Generally, its not a good idea to name your estate as beneficiary. One reason is that assets in your estate are available to creditors. The benefits also are slower to reach the hands of your heirs. An heir has not yet been born that wants your money later than sooner.If you have exposure to estate taxes, you may want to consider an irrevocable life insurance trust (ILIT). An ILIT keeps the death proceeds out of your taxable estate.Life insurance companies used to send a check directly to the beneficiary. Today they are more likely to send a checkbook that the beneficiary can access. Life insurance companies claim this is more convenient for the beneficiary. Call me crazy, but I think they do it to hold on to the money a little bit longer. Most beneficiaries already have a checking account. Why would they want another?Retirement PlansDeferred Retirement Plans, including Individual Retirement Accounts, pass by beneficiary. Same rules apply to surviving spouse that exist for annuities. It obviously helps to have a surviving spouse. The people who wrote this tax code were probably married.A Roth IRA also passes by beneficiary, but has no income tax ramifications to the beneficiary, even if the beneficiary is not the surviving spouse. The people who wrote this portion of the tax code were probably divorced, but had a slew of children.If taxes are due when received by a beneficiary, the taxes may be strung out over a number of years by different techniques including a rollover beneficiary IRA. Go see a financial planner to see what works for you.Jointly Owned PropertyA lot of property like real estate, bank accounts, and brokerage accounts are owned jointly. The most common form of joint ownership is joint tenants with right of survivorship (JTWROS). The surviving owner automatically gets the asset upon the death of another owner.JTWROS should not be confused by another type of joint ownership called tenancy in common. Tenancy in common divides the property in actual shares and when an owner dies, they can leave the property by will to whomever they want. Take a shoreline cottage jointly owned tenancy in common by two married brothers. If one dies, he can leave his portion to his wife and children. They can then continue to enjoy their seaside vacations. Naturally, as this passes through the generations, a real family rats nest is created, but if you cant fight with family over who gets the prime summer weeks, who can you fight with?Property In Your Own NameNow we come to the property that passes by will. If you solely own something that doesnt pass in the manners described above, it becomes part of your probate estate. For example, if you own a savings account in your name alone, it passes by your will. Your will names an executor, a thankless but necessary job. It is up to the executor to inventory your probate estate and eventually distribute it to your heirs.Many people are establishing and funding living trusts. These trusts are established during your lifetime and funded with assets that would otherwise pass by will. Since most people are their own trustees, control of the assets isnt an issue. At the death of the individual, the assets fall under the control of a new trustee. Since the assets are already in trust, they escape the probate process. The assets are still exposed to estate taxes because you controlled them during your lifetime.Thats the basics. See a financial planner and an estate planning attorney to work on the details. This is an area that is not fertile ground for doing it yourself, and death doesnt allow for mulligans.[The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly.]Copyright 2010 Living Trust Network, LLC. All rights reserved.

Hi, I have a rollover IRA in Etrade that I have not contributed to in a few years. The maximum I am allowed to contribute is $5000 for the year. Do I simply move $5000 from my bank to my Etrade IRA?? And that’s it? What about the fees if I were to use that $5000 to buy stocks? Do the fees count against the allowable $5000? What if I tried to deposit $7000? Would the system reject it?

Thanks for any info

Serious financial problems rarely happen when you expect them. Personal injuries or other illnesses that leave you disabled can cause huge medical bills to pile up yet cut off the only source of funds you have to pay off your debts. Sixty-two percent of all bankruptcies filed in 2007 were linked to medical expenses. That is almost 20 percentage points higher than 2001. Unfortunately, the numbers aren’t getting any more encouraging. One would expect these figures to indicate a large amount of uninsured individuals, yet for people filing for bankruptcy in 2007, nearly 80 percent had health insurance. As medical costs rise, this is going to be an increasing issue.

For individuals suddenly stricken with illness or disability, the inability to work is a new experience. Many people who have invested wisely throughout their working careers to build a nest egg for retirement are tempted to liquidate investments in order to pay off pending debts. This doesn’t have to be the case. If your savings are in a 401K or an IRA account, there are ways that these assets can be protected from creditor judgements.

 

In 2005, the government realized that individuals filing for bankruptcy need to have certain assets available to them in order to move forward after filing. Stemming from this and other realizations, the government changed bankruptcy law. The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 protects tax-qualified retirement plans including pensions, profit-sharing, and IRA plans valued at up to $1 million from creditors in the event of a bankruptcy.

 

IRAs are the largest component of the U.S. retirement market and most investors hold these assets in traditional IRAs, which are funded by rollovers from employee-sponsored retirement plans and other contributions. They often provide easier access to money, have a wider range of investment choices, and may have lower fees. For investments in a 401K, the traditional form of retirement sponsored by employers, creditor protection in bankruptcy is unlimited. When filing for bankruptcy, you simply need to declare your 401K as an asset exempt under the federal or state provisions.

 

The emotions involved in these decisions can be confusing. It is important to obtain competent legal help that can address these and many other issues that arise in a bankruptcy case. If you are seriously considering bankruptcy and you live in Utah, contact the Utah bankruptcy lawyers at Lincoln Law. Lincoln Law is the nation’s leading bankruptcy law firm and can put an end to the hassle of collection calls, help you keep your home and protect your credit score. For information on how to file a Utah bankruptcy, call Lincoln Law at 800-722-6578 for a free same-day consultation.