IRA Rollover Guide

Calculating Your RMD in 5 Easy Steps

Cambridge Wealth Management — Thu, 23 Jun 2011 12:18:40 +0000

An RMD is the minimum amount that must be withdrawn from a retirement account each year.

Calculating the Pro-Rata Rule in 5 Easy Steps

Cambridge Wealth Management — Mon, 20 Jun 2011 12:11:28 +0000

What is the pro-rata rule? The pro-rata rule is the formula that is used to determine how much of a distribution is taxable when the account owner holds both after-tax and pre-tax dollars in their IRA(s).

Avoiding 72(t) Mistakes in 5 Easy Steps

Cambridge Wealth Management — Wed, 15 Jun 2011 12:51:09 +0000

What are 72(t) payments? 72(t) payments are a series of substantially equal periodic payments made from an IRA that can be used to avoid the 10% penalty for early distributions. Payments must last the greater of 5 years or until the IRA owner reaches age 59 ½. When using a 72(t) schedule, a number of [...]

Avoiding Mistakes in a Divorce in 5 Easy Steps

Cambridge Wealth Management — Wed, 08 Jun 2011 11:26:48 +0000

When a divorce occurs, the financial assets of a couple, including their retirement accounts, are often split. If mistakes are made during this process, the stress of a divorce can be compounded when one or both spouses find they are subject to unnecessary taxes or penalties.

Calculating an IRD Deduction in 5 Easy Steps

Cambridge Wealth Management — Mon, 06 Jun 2011 12:27:20 +0000

What is an IRD (Income in Respect of a Decedent) deduction? An IRD deduction is a way of offsetting the impact of double taxation (federal estate tax and income tax) on certain inherited assets. It’s an income tax deduction for the beneficiary (miscellaneous itemized deduction, not subject to limitations). When should you look for an [...]

Planning for a Disclaimer in 5 Easy Steps

Cambridge Wealth Management — Fri, 03 Jun 2011 19:59:30 +0000

A disclaimer is a formal refusal of an inheritance (or part of an inheritance) by a beneficiary. By creating a “path” for disclaimed assets to follow, a skilled planner can provide a beneficiary with the option to pass assets to alternate beneficiaries.

Protecting an IRA from Prohibited Transactions

Cambridge Wealth Management — Tue, 24 May 2011 22:05:04 +0000

What is a prohibited transaction? A prohibited transaction occurs when an IRA owner uses IRA assets in a self-serving or self-dealing manner that improperly benefits the IRA owner. When should you look for a prohibited transaction? It may be a prohibited transaction anytime an IRA owner or beneficiary has a self-directed IRA account invested in [...]

Avoiding Spousal Beneficiary Mistakes

Cambridge Wealth Management — Mon, 16 May 2011 20:52:34 +0000

Who is a spousal beneficiary? A spousal beneficiary must be married to the account owner at the time of the account owner’s death and he or she must be named on the beneficiary form (or inherit directly through the document default provisions). A spousal beneficiary who was the sole beneficiary of an IRA for the [...]

20% Tax Savings on a Rollover? It’s Possible with NUA

Cambridge Wealth Management — Thu, 05 May 2011 13:20:43 +0000

What is NUA? NUA is short for “Net Unrealized Appreciation” of employer securities. It’s the difference between the cost basis and the market value of employer securities held inside a qualified plan such as a 401(k). To take advantage of a special tax break for NUA, there must be a triggering event such as separation [...]

Determining Tax on Roth Distribution

Cambridge Wealth Management — Wed, 04 May 2011 21:52:29 +0000

What are the ordering rules? Roth IRA distributions can be made from contributions, converted funds and earnings – or any combination of the three. To determine what your distribution consists of, you must use “ordering rules,” which dictate the order in which these categories of Roth money must be withdrawn. A Roth distribution will consist [...]