Advanta IRA Trust – Real Estate IRAs

The Pension Protection Act of 2006 permits individuals to distribute up to $100,000 directly from an IRA to a qualifying charity without having to recognize the taxable implications of the distribution.

-          Who is eligible for a QCD?

A qualified charitable distribution is eligible from any traditional IRA as long as the individual account owner is over the age of 70.5. This provision is time-limited, but has been extended through 2011 through the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010.

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IRA Contribution FAQs

Contribution limits change from year to year and it’s important to keep track of the rules whether you have an IRA or are looking to open one. We’ve provided a simple FAQ to help you understand and manage annual contributions to your IRA.

• What is an IRA contribution?
  An IRA contribution is the deposit of personal funds into your IRA. You can make contributions in the form of a check, wire, or ACH (direct deposit). The IRS limits the dollar amount that you can contribute to your IRA each year, and this amount varies based on the type of plan you have. Click Here for 2010 and 2011 Contribution Limits
• When are my contributions due?
  Contributions must be postmarked on or before April 15 to count towards the previous year’s taxes. However, this year contributions must be postmarked on or before April 18, 2011 due to Washington D.C.’s observance of Emancipation Day.
• Can I file for an extension?
  Tax-filing extensions do not apply to your IRA, which means that your contributions must be deposited on or before April 18th, 2011.

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     Over the years, there have been several times when a client has been in a perplexing dilemma regarding liquidity of their IRA owned asset and their IRA Required Minimum Distribution (RMD).   At age 70.5 (unless it is a Roth IRA), people are supposed to start pulling money out of their IRA and pay taxes on the distribution.   If they fail to take this RMD, which is based on the value of the account and the age of the IRA holder, there is a 50% penalty (of the RMD amount).  While RMD’s are based on the aggregate of all your IRA’s, regardless of how many custodians you have, the RMD can be taken from any (or all) of the custodians.  It does not need to come out proportionally from each custodian.  

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In our changing economic times, it is more important than ever to focus on our retirement planning and financial futures.  For most of us, we have never seen the wild ride that the financial markets have shown us the last few years.  Just as we check our calories, blood pressure and weight on a regular basis, how are we doing with our finances?   It may be time for a routine check-up.

Studies have shown us the average American spends more time annually on vacation planning than on financial planning.  There was also a survey by Aetna claiming 31 percent of pre-retirees would rather clean their bathroom or pay bills than plan for retirement.  Allstate used to have an ad that claimed last year Americans spent 19 hours planning for their retirement. That’s about the same amount of time they spent planning their Thanksgiving dinner. 

So how do we get started and what are our choices today?  Unfortunately, retirement planning is not something the faint of heart can jump right into, but it can be done and with a little practice, it does get easier.  Here are some tips:

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In late 2010 I wrote an article regarding the expiring Federal Estate tax laws.  Several weeks later Congress finally passed into law an Act changing the Federal Estate tax laws once again. We had to wait almost to the very end of 2010 for Congress to make decision on the expiring Estate tax laws.  On December 17, 2010 Congress passed The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act.  This Act set new and unified estate tax, gift tax and generation skipping tax exemptions and rates.  Read the rest of this entry »

Press Release – February 15, 2011.  Dave Owens, CPA, CES is proud to announce his newest publication, TFS Briefs.  TFS Briefs focuses on current news and technical topics that will help investors save money by thinking outside the box in their investment approach, particularly in terms of retirement planning.  These Briefs will be used by individual investors as well as professionals, including accountants, attorneys, financial planners and realtors.  The first four Briefs have been posted online and cover the topics of Prohibited Transaction, Required Minimum Distributions, IRA Contributions 2011 and 1031 Exchanges.  To read the current TFS Briefs, please visit www.tfsBriefs.com. 

TFS Briefs is written to examine topics used by individuals interested in understanding and taking control of their financial situation, covering topics ranging from investing in real estate, retirement planning, and changes in tax law.  Going forward, TFS Briefs will be written monthly and disseminated to subscribers.   To subscribe to TFS Briefs, please visit www.tfsBriefs.com. 

Dave Owens, CPA, CES is Managing Member of Entrust Freedom, LLC and  can be reached at 239-333-1031 or owens11@entrustfreedom.com.

If you are a real estate investor, understanding depreciation rules is critical to making good decisions. The most common misconception is that the tax rate on a sale never exceeds 15%.  This is rarely true for investment real estate.  Please read the entire article because there are some sneaky nuances that every seller should know.

Technically, depreciation is a noncash expense that reduces the value of an asset as a result of wear and tear, age, or obsolescence. In layman’s terms, it is the process of expensing tangible assets over their expected lives (as determined by the IRS). I will focus on real estate in this article. The depreciation rules for equipment are completely different.  For most businesses, working assets like computers are expensed via a technique called Section 179, which allows a business to expense the entire asset cost in one year. Real estate assets do not share this benefit. Read the rest of this entry »

Big News for 401k Participants.  You may have heard about the special conversion rules that allow traditional IRAs to be converted to Roth IRAs in 2010 with a 3 year payout for the taxes.  If you are not aware, a Roth account is a tax deferred account that is funded with after tax dollars.  A Roth continues to grow tax free, but the homerun is that all distributions are tax free after age 59 ½.

Most participants don’t realize that a 401k can also have a Roth Account.  But with a Roth 401k you could not do any type of conversion from the tax deductible account to the Roth 401k.  Read the rest of this entry »

We’ve got less than two months before the current Federal Estate Tax and Generation Skipping Transfer tax rules expire.  That means that as of today we do not know what the estate tax rates will be after 2010 and with Congress on (another) break it looks less and less likely that the current Estate tax laws will be extended beyond 2010.  Unfortunately we do not know if the Estate tax laws are going to return to pre-2001 numbers or if an entirely new set of Estate tax laws will be implemented in including the possibility of retro-actively collecting estate taxes for 2010.  This fact is what is causing the current state of confusion and uncertainty amongst many individuals, attorneys, and CPA’s.  Read the rest of this entry »

Our lives are so busy anymore.  The current economy is making it harder to get ahead.  The good news is that it will get better.  I don’t know when.   Two years ago, I thought it would have happened by now.  Where I live South Florida, there will be no dramatic improvement in the near future.  These worries affect people’s decisions.

So what are you doing now with regards to your Financial Life Plan?  As Americans, we are terrible planners.   Let me give you some statistics.  Twenty percent of pre-retirees have spent no time actively planning for retirement.  Sixty percent of pre-retirees have spent the same amount of time or more time on home improvement vs. financial planning.  Thirty one percent said they would rather clean their bathroom or pay bills than plan for retirement.  These statistics are from the Financial Planning Association. Read the rest of this entry »