Are tax free muni bond dividends in Rollover IRA withdrawn tax free?

IF I invest in tax free muni bonds in my rollover IRA shouldn’t I be able to get the dividends out of the IRA as they occur and still be declared as tax free on my Fed Income Tax?

Tools for calculating RMD

ING DIRECT USA Survey: Complexity and Confusion Cause Americans to Leave Big Retirement Money at Past Jobs
In today’s economy, changing jobs every few years is as American as apple pie. Â So too is leaving behind a large amount in retirement savings at previous jobs. Â According to a new survey commissioned by ING DIRECT USA’s ShareBuilder and conducted by Harris Interactive, Americans are unsure about the process to roll over a 401 into an Individual Retirement Account or where to transfer their …

Read more on PR Newswire via Yahoo! Finance

Stagnant retirement plan? You have options
Dear Dr. Don, I have a 403(b) from a nonprofit organization I worked for many years ago. It is currently sitting in a money market fund with a balance of $1,580. Their annual custodial fee is $15, so this account never grows.

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Tools for calculating RMD
Congratulations to you if you are now 70 1/2 years old and you own an IRA. You now get to deal with the government wanting their tax money back.

Read more on Coshocton Tribune

Where is the best place to open a Rollover IRA?

I have one with Fidelity right now, but I am a little overwhelmed in the investment options. Through my company it was always so easy. I think they were called Advisor Funds. Anyways, is there an easier place to do investment? Can I invest in the same things that I was doing through my company?

Roth IRA and its Benefits

We thought we would all be in lower tax brackets when we retired; therefore tax deferral was the plan. However, tax rates are likely to be as high when we retire as when we are working; therefore the benefits of a Roth IRA become more attractive.A Roth IRA is a retirement plan that allows individuals to make tax-deductible contributions of $4000, to the extent of their earned income. This means individuals may contribute the lesser of income they have earned during a particular tax year or $4000. Contributions made to a Roth IRA are made after-tax (meaning they are not tax deductible when made). These contributions, and any growth in the value of the Roth IRA, are tax-free forever.Under the tax laws applicable to Roth IRAs, your contributions must be made as an individual taxpayer; however, they are not taken as a tax deduction on your individual income tax return (From 1040).Since its inception in 1997, the Roth IRA has become a hugely popular investment vehicle. Like the traditional individual retirement account, the Roth IRA is a personal savings plan that offers tax advantages to set aside money for retirement.Investments in a Roth IRA compound tax deferred, but what provides a unique advantage for the Roth IRA is that, once an individual has reached the age of 59% and his or her account has existed for more than five years, all withdrawals are tax-free.Roth IRAs for the taxable year can be opened and/ or funded any time prior to the due date for your individual Form 1040 tax return, excluding extensions. This means any time prior to April 15 of the calender year following the tax year in which the deduction is being considered. This due date is applicable to both deductible and non-deductible Roth IRA contributions. Just remember, filing for an extension of time does not extend the time period allowed for contributions.Earned IncomeYou can qualify to participate in a retirement plan if you have earned income (compensation) for the tax year in question under the following conditions:If you earned profit in your businessIf you paid yourself wages as an employee of your businessIf you paid yourself guaranteed payments – even if your business earned no profitsContributionsYou can contribute up to a maximum of $4000 every year ($4500 if you’re age 50 or over), up to hte extent of 100 percent of your earned income every year, unless you are prohibited from contributing that year because you generated too much modified adjusted gross income (MAGI) during that year and are therefore subject to the MAGI.Anyone who has earned income and falls within the MAGI limits can establish a Roth IRA. Unlike the traditional IRA, the Roth IRA has no age limit for contributions, so individuals can continue ot contribute as long as they like. (Note: In a traditional IRA, individuals can contribute only until age 70%)Contribution to a Roth IRA are not tax deductible. Your contribution is made with after – tax dollars. However, the advantage of the Roth IRA is that you will never pay taxes on your earnings or withdrawals (distributions) as long as you have reached the age of 59.5 and your account has been open for at least five years. Annual contributions can be taken out at any time with no tax consequences. All other funds (e.g., earnings, conversion funds) can be taken out penalty-free if the account has been established for five years and the individual is over the age of 59.5. Non contribution funds taken out without meeting these requirements are taxable and subject to a 10 percent penalty. Furthermore, there are no mandatory withdrawal requirements, as there are for traditional IRAs.Modified AGI LimitsYou may contribute to a Roth IRA if you have taxable compensation and your modified adjusted gross income (Magi) is less than $110,000 ($160,000 if you are married and file a joint return, and $10,000 if you are married, lived with your spouse, and file a separate return). The amount you may contribute to a Roth IRA is gradually reduced of your MAGI is between $95,000 and $110,000 (between $150,000 and $160,000 if you are married and file a joint return, and between $0 and $10,000 if you are married, lived with your spouse, and file a separate return).The amount you may contribute to a Roth IRA is reduced by contributions you make to a traditional IRA. The amount you may contribute to a Roth IRA also may not exceed your taxable compensation. You may continue to make contributions to your Roth IRA after reaching age 70.5.

Bill helps retirement savings

Complete Metro Business calendar for week of Oct. 25
MONDAY, OCT. 25Career-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 …

Read more on Richmond Times-Dispatch

Law offers retirement plan changes
DES MOINES, Iowa — Anyone saving for retirement should be paying attention to the small business bill president Obama signed last month.

Read more on Times Leader

Bill helps retirement savings
DES MOINES, Iowa #8212; Anyone saving for retirement should pay attention to the small-business bill President Obama signed last month. In addition to tax changes and other incentives for business owners, it also extends three benefits to workers saving for retirement.

Read more on Fort Wayne News-Sentinel

Employer IRAs and it’s types

You can establish an employer IRA as long as you are in business and earn a profit. You don’t have to have employees working for you, and it doesn’t matter how your business is organized: You can be a sole proprietor, partner in a partnership, member of a limited liability company, or owner of a regular or S corporation.The great advantage of employer IRAs is that you can contribute more than you can with traditional IRAs and Roth IRAs, both of which have lower annual contribution limits. And as long as you meet the requirements for establishing an employer IRA, you can have this type of IRA in addition to one or more individual IRAs.SEP-IRASEP-IRAs are designed for self-employed. Any person who receives self-employment income from providing a service can establish a SEP-IRA. It doesn’t matter whether you work full time or part time. You can even have a SEP-IRA if you are covered by a retirement plan at a full-time employee job.A SEP-IRA is a simplified employee pension. It’s very similar to an IRA, except that you can contribute more money under this plan. Instead of being limited to a $5,000 to $6000  annual contribution (2008), you can invest up to 20% of your net profit from self-employment every year, up to a maximum of $46,000 a year in 2008. You don’t have to make contributions every year, and your contributions can very from year to year. As with other IRAs, you can invest your money in almost anything (stocks, bonds, notes, mutual funds).You can deduct your contributions to SEP-IRAs from your income taxes, and the interest on your SEP-IRA investments accrues tax-free until you withdraw the money. Withdrawals from SEP-IRAs are subject to the same rules that apply to traditional IRAs. This means that if you withdraw your money from SEP-IRA before you reach age 59.5, you’ll have to pay a 10% tax penalty plus regular income taxes on your withdrawal, unless an execption applies. And you must begin to withdraw your money by April 1 of the year after the year you turn 70.Simple IRAsSelf-employed people and companies with fewer than 100 employees can set up SIMPLE IRAs. If you establish a SIMPLE IRA, you are not allow to have any retirement plans for your business (although you may still have an individual IRA). SIMPLE IRAs are easy to set up and administer and will enable you to make larger annual contributions than a SEP or Keogh plan if you earn less than $10,000 per year from your business.SIMPLE IRAs may only be established by an employer on behalf of its employees. If you are a sole proprietor, you are deemed to employ yourself for these purposes and may establish a SIMPLE IRA in your own name as the employer. If you are a partner in a partnership. LLC member, or owner of an incorporated business, the SIMPLE IRA must be established by your business, not you personally.Contributions to SIMPLE IRAs are divided into two parts. You may contribute:up tp 100% of the net income from your business up to an annual limit – the contribution limit is $10,500 for 2008 ($13,000 if you were born before 1955), and a matching contribution which can equal 3% of your net business income.If you’re an employee of your incorporated business, your first contribution (called a salary reduction contribution) comes from your salary, and the matching contribution is paid by your business.The limits on contributions to SIMPLE IRAs might seem very low, but they could work to your advantage if you earn a small income for your business – for example, if you only work at it part time. This is because you can contribute an amount equal to 100% of your earnings, up to the $10,500 or $13,000 limits. Thus, for example, if you net earnings are only $10,000, you could contribute the entire amount (plus a 3% employer contribution). You can’t do this with any of the other plans because their percentage limits are much lower. For example, you may contribute only 20% of your net self-employment income to a SEP-IRA or keogh, so you would be limited to a $2000 contribution if you had a $10,000 profit.The money in a SIMPLE IRA can be invested like any other IRA. Withdrawals from SIMPLE IRAs are subject to the same rules as traditional IRAs, with one big exception: Early withdrawals from SIMPLE IRAs are subject to a 25% tac penalty if the withdrawal is made within two years after the date you first contributed to your account. Other early withdrawals are subject to a 10% penalty, the same as traditional IRAs, unless an exception applies.

Self-Direction — How do I Know This is Legal?

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Saving for retirement with a low-paying job

Before 401(k) rollover, judge plans at old, new jobs
One of the most important decisions you will make when you get a new job is whether to take your 401(k) savings with you.

Read more on The Columbus Dispatch

Print Magazine
With changes coming to Coverdell Education Savings Accounts in 2011, some parents are wondering if they should convert their Coverdells to 529 plans. Coverdell ESAs were popular because they worked like a Roth IRA for college savings.

Read more on Small Business Times

Saving for retirement with a low-paying job
Five people share secrets on how they save for retirement despite their low-paying dream jobs.

Read more on Bankrate.com via Yahoo! Finance

What are the drawbacks of using a discount broker over a full service broker to invest my IRA Rollover funds?

Rolling over a 401(K) or 403(B) to an IRA

Should I rollover my 401(k) or 403(b) into an IRA?If you wonder what to do with the 401(k) or 403(b) you will end up with because you’re leaving your employer, consider all your options so you can make a decision that fits your circumstances. Although 401(k) and 403(b) plans differ in some ways, the information below applies to both.What are your options?

The option you select depends on a number of factors and how they apply to your situation.Investment ChoicesIt takes a variety of investments that perform well and have reasonable expenses to grow your money over time. Any plan should include mutual funds split among equities (stocks) that present value and growth; small, medium, and large capitalization; and domestic and international companies. Bond funds also should be part of the mix, split among corporate and government; short-term, medium-term, and long-term; and corporate bonds of investment grade and high yields.Check on performance and expenses in your plan’s documents. Then compare that data with the rest of the market via Morningstar. If you’re not satisfied, consider transferring your money into an IRA account with a low-cost brokerage firm like Ameritrade, Schwab, T.D. Waterhouse, or Vanguard. All offer a variety of investment choices.Need the Money Now?Your 401(k) and IRA accounts are meant for retirement, but what if you’re in a temporary financial bind or are starting a business and need some cash? Loans from IRAs are not allowed, but loans from 401(k) plans are, provided the plan has a provision for it. If it’s allowed, generally you can borrow up to $50,000 or half of your account balance, whichever i lower; repayment is by equal monthly payments over five years. If you terminate employment, the loan is due immediately. Check your plan documents or with your plan administrator for the specifies, including fees.  If you default on the loan, income taxes are due, as is a 10 percent penalty for an early distribution. The loan interest you pay goes into your account because you are borrowing from yourself. But remember that you will be repaying the loan with after-tax dollars, and those same dollars will be taxed again when you start receiving retirement distributions.Really Need the Money Now?401(k) plans may have a hardship feature that allows withdrawal if you have a qualified hardship and you have exhausted other reasonable options. Withdrawals are taxable, and your ability to contribute to the 401 (k) is suspended for six months. Check out your plan documents for the details. IRAs do not have hardship withdrawal features, but you can take an IRA distribution and pay income taxes on that distribution. For both the 401(k) hardship withdrawal and the IRA distribution, if you are under 59.5% you will pay a 10 percent penalty, unless the money is for disability or certain medical expenses. In addition, a distribution from an IRA avoids the 10 percent penalty if it’s used to buy a first home ($10,000 distribution limit), to pay qualified higher-education expenses, or to pay health insurance premiums if you are collecting unemployment insurance.Periodic DistributionsWhat if you’re not yet 59.5% and want to start taking distributions? If you terminate employment after reaching 55, your 401(k) may offer the opportunity to take distributions before 59.5%. These distributions are taxable, but the 10 percent penalty does not apply. Check your plan documents.With an IRA, you generally have to wait until age 59.5% to take distributions without an early withdrawal tax penalty. However, distributions are taxable, but the 10 percent penalty does not apply. Check your plan documents.With an IRA, you generally have to wait until age 59.5 to take distributions without an early withdrawal tax panalty. However, distributions can start earlier of they are part of a series of substantially equal periodic payments. These payments must continue for at least five years or until you reach 59.5, whichever happens later. Distributions are also penalty-free if they occur after death or disability.Distribution to BeneficiariesWhat happens to your 401(k) or IRA when you die?After death, if your spouse is your 401 (k) beneficiary, they have several options, including continuing the 401(k) plan or rolling it over into their IRA. A nonspouse 401(k) beneficiary generally has to take a distribution for the entire balance (usually taxable) within a fixed time, usually five years. Again, details vary by plan, so check your 401 (k) plan documents.With an IRA, your spousal beneficiary has similar options to continue the tax-deferred status. A nonspouse IRA beneficiary can stretch distributions over their lifetime. This benefit can be significant if your beneficiary is a child, as it teduces the immediate tax consequences and gives te money more time to grow.Process Your assetsFederal law protects 401(k) plans from creditiors. IRA are governed by state law and may not be protected the same way.Rollovers and transfersIf you rollover the 401 (k)  to an IRA, don’t have the check made out in your name – 20 percent will be taken out for federal income taxes. A direct transfer can help avoid this. Open your IRA first, then have the money transferred directly from your current 401 (k) to your new IRA. If your current 401 (k) cannot do this, then accept a check made out to the IRA, which avoids the 20 percent withholding, and then make sure it gets deposited into your IRA so it can begin working for you as soon as possible.

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