From: owner-persfin-digest@lists.xmission.com (persfin-digest) To: persfin-digest@lists.xmission.com Subject: persfin-digest V5 #121 Reply-To: persfin Sender: owner-persfin-digest@lists.xmission.com Errors-To: owner-persfin-digest@lists.xmission.com Precedence: bulk Content-Transfer-Encoding: quoted-printable X-No-Archive: yes persfin-digest Tuesday, January 11 2000 Volume 05 : Number 121 In this issue of the Personal Finance Digest: RE: 401-K Limits Re: Take distributions from IRA or from taxable accounts at retirement? Re: 401(k) limits stock transfer and income tax filing The messages posted to the Persfin-Digest are opinions and are not intended to substitute for qualified professional advice. Subscribers should seek the services of qualified professionals for such advice. The publisher, Internet provider, and Digest contributors cannot be held responsible for any loss incurred as a result of the application of any of the information provided here. 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Subscribe: e-mail majordomo@xmission.com, text: subscribe persfin-digest Unsubscribe: e-mail majordomo@xmission.com, text: unsubscribe persfin-digest ---------------------------------------------------------------------- Date: Mon, 10 Jan 2000 17:35:14 -0600 From: "Harold R. Justice" Subject: RE: 401-K Limits Diane, The dollar limit for 1999 was $10,000. For 2000, it is $10,500. I don't know the percentage, but your total tax deferred contribution to all plans cannot exceed 25%. Harold Justice ********************************************** Date: Sat, 8 Jan 2000 08:02:01 -0700 From: diane_howe@att.net Subject: 401K Limits What are the limits for 401K contributions? There is a flat dollar and a percentage, correct? Does this vary by employer? - - - -Diane Howe ********************************************* - - ------------------------------ Date: Mon, 10 Jan 2000 18:03:28 -0700 From: Jeff Salisbury Subject: Re: Take distributions from IRA or from taxable accounts at retirement? A persfin member wrote: > > >The children's ability to inherit the IRA as an >IRA for them, without it > >coming out and being taxed, is also eliminated. > > Can anything be done about existing IRAs? > As the child I stand to inherit an IRA of about $50,000, probably within the next > 2 years (terminal illness). The IRA is setup at a brokerage and > holds 3 mutual fund accounts. I have power of attorney for the parent > in whose name the IRA was established. The estate will not exceed the > federal threshold, but I'd love to convert the IRA to an IRA for > myself (avoiding taxation at ordinary rates). > Any suggestions? The IRS doesn't allow you to roll it into your IRA. However, they allow your brokerage firm to roll it into a "beneficiary" IRA. When this happens, you are immediately forced to take minimum distributions based on your life expectancy regardless of your age. You are free to take out more each year, but not less than the min distributions. This accomplishes two good things: 1. You are not forced to liquidate the account in a short time and pay income taxes at a higher rate. 2. The bulk of the money can continue to grow tax defered for many years. The problem is that many brokerage houses and IRA custodians don't allow for the continuation of beneficiary IRAs. So, you will want to make sure that yours does. Jeff > > As an aside, I've been managing this parent's affairs for over 3 years now. > For those in my situation I strongly suggest using a revocable living trust. > Designate the child as a co-trustee instead of a successor trustee so they can > begin managing affairs immediately - no need for a declaration of > incompetence as to the grantor/trustee. All non-qualified assets > are held in the trust, with the exception of a joint bank account > for monthly expenses. Distributing assets (if any left) at death is > a simple matter of signing checks. No probatable assets to report > to the court and (most important to us) disposition of the estate > remains private. Should be less than $1000 for the trust and a > pour-over will (some prefer backup wills instead of the pour-over will). > > --== Sent via Deja.com http://www.deja.com/ ==-- > Share what you know. Learn what you don't. - - ------------------------------ Date: Tue, 11 Jan 2000 08:20:15 -0500 From: Rich Carreiro Subject: Re: 401(k) limits >What are the limits for 401K contributions? There is >a flat dollar and a percentage, correct? Does this >vary by employer? For 2000, the absolute hard limit is $10,500 (up from $10,000 in 1999). This is set by law. Only your own 401(k) contributions count toward this limit. Then there is a law that says that no more than 25% of your compensation can be tax-deferred. Tax-deferred compensation here includes your contributions, the employer match, employer contributions to a profit-sharing plan and a few other things. Those things cannot exceed 25% of your gross salary (I may be misremembering the rule slightly, but it gives you the idea). Next, if you are a "highly compensated employee" (which means your employer pays you over $80,000), your can have a (sometimes drastically) lower limit imposed on you because of discrimination tests. Qualified retirement plan laws say that HCEs as a group can only account for a certain percentage of all contributions made to the 401(k). So if non-HCEs don't contribute enough, the contributions of the HCEs are forcibly scaled back so the test can be met. Finally, lots of 401(k) plans for some reason (ask your employer) simply set their own limit lower than any of the ones set by law. Rich Carreiro rlcarr@animato.arlington.ma.us - - ------------------------------ Date: Tue, 11 Jan 2000 18:58:41 EST From: GetFlow28@aol.com Subject: stock transfer and income tax filing My husband was recently contacted by the state social services department regarding a paternity claim being filed against him (I'm not sure what the accurate legal term is). We fully understand that we will have obligations *if* the child turns out to be his (should have DNA results in about 5 weeks). But until that time, we are interested in protecting the well-being of our family. He has about $7000 in stocks that are currently in his name only. He wants to transfer them to my name only. Is there a way to do this and, if so, any opinions on the best way of doing this? I am not presently on the account. Will he need to "gift" them to me or are we able to simply transfer them since we are married? I am sure they will be subjected to a transfer fee but that is acceptable. We realize we may need this money for back support - but don't want it to be used to calculate the monthly payment. Also, any recommendations on filing our 1999 tax return under these circumstances? Should we continue to file jointly or should we consider filing seperately? We will be visiting with an attorney about some of these issues in the near future. But I have received such good insight from this group that I am hoping to hear from some of you. Thanks for you help! Jackie Flowers GetFlow28@aol.com - - ------------------------------ End of persfin-digest V5 #121 ***************************** - To unsubscribe to persfin-digest, send an email to "majordomo@xmission.com" with "unsubscribe persfin-digest" in the body of the message. For information on digests or retrieving files and old messages send "help" to the same address. Do not use quotes in your message.