Roth IRA – Page 2 – Hitt and Company

2011 Q1 | More Flexibility in Retirement Planning

Some provisions of the Small Business Jobs Act of 2010 are not restricted to small companies or to job creation. Instead, they provide more choices for retirees and preretirees. An annuity alternative The new law gives individuals the option of annuitizing a portion of an annuity, an endowment, or a life insurance policy. That is, you can partially convert one of these financial instruments to a stream of income while the remainder is left alone. The annuity period must last for 10 years or more, or for the lives of one or more individuals. Example 1: Carol Thomas, age 70, has invested $100,000 in a deferred annuity. This is a type of investment contract that permits investment income to grow

2010 Q4 | Year-End Tax Planning for IRAs

Through 2009, you could convert a traditional IRA to a Roth IRA only if your modified adjusted gross income (for the year was no greater than $100,000 on a single or joint tax return. The $100,000 cap came off in January 2010. Under current law, this change is permanent. Therefore, high-income taxpayers can convert traditional IRAs to Roth IRAs in 2010, 2011, 2012, and so on. For taxpayers who would like to convert their traditional IRA to a Roth IRA, year-end 2010 presents multiple opportunities. Example 1: Wendy Ames has $200,000 in her traditional IRA that contains only pretax dollars. Wendy would like to invest in a Roth IRA because these accounts may permit tax-free withdrawals in the future, and

2010 Q4 | Year-End Tax Planning for Itemized Deductions

When you fill out your tax return for 2010, you’ll have to choose whether to itemize deductions or claim a standard deduction. If you itemize, you’ll deduct certain amounts you spent this year on charitable donations, mortgage interest, and so on. You may, instead, claim a standard deduction. For 2010, the standard deduction is $11,400 for married couples filing a joint return; 5,700 for singles and married individuals filing separately; and $8,400 for heads of household. Taxpayers who are over age 65 receive an additional standard deduction: $1,400 for single taxpayers and $1,100 apiece for married taxpayers in 2010. Similar deductions are available to the blind. If you qualify on both counts, you’ll get two deductions. Possible tax break For