Amount What?
How much is the maximum that is allowed to be contributed to a Traditional or ROTH IRA? What is the RULE?
100% of Earned income or $6,500.00 whichever is less.
What is a Carry Back Contribution?
This is a contribution made for the previous year during the current year between January and April 15th (or tax filing date)
When is the 1099R tax form sent out to members and IRS?
By January 31st.
What is GBFCU penalties for withdrawing from a Traditional or ROTH IRA CD if the member is under 73?
They will lose: 6 month - 90 days of dividends, 1 year - 2 years - 180 days of dividends, and 3 years - 5 years - 365 days of dividends. If the certificate has not earned this in dividends then they will lose part of their principal.
What is RMD?
It is Required Minimum Distribution. The government requires on a Traditional IRA, when a person turns 73 that they must take out a portion every year until the IRA is zero.
How much is the Catch-Up Rule and What is it?
A member can contribute an additional $1,000.00 if they are 50 or older (if they have enough earned income).
What does IRA stand for? What is an IRA?
Individual Retirement Arrangement. It is a way for members to put money away for when they retire that is tax deferred.
What tax form reports Contributions?
5498
What is GBFCU penalties for withdrawing from a Traditional IRA CD if the member is over 73?
$0.00 We cannot fee a member that is over 73 because the government requires them to remove a portion of their money every year. Unless they are moving their funds to a different financial institution.
Can the member revoke their IRA?
Yes, they have 7 calendar days when they first open their IRA to change their mind without any penalties from GBFCU or the government.
How much is the Annual Fee for an IRA if they do not meet the qualifications to waive it?
$25.00
Tell me about a Traditional IRA.
Pre Tax, may be tax deductible, may be taxed upon withdrawal, must have earned income, and no age limit, 73 starts RMD.
What tax form reports Distributions and Federal Withholding?
1099R
What is the government's Early Distribution penalty?
10%
What is a Conversion?
When a member wants to change their Traditional IRA to a ROTH IRA. This cannot be done the other way (ROTH to Traditional).
How much is the fee to close or transfer an IRA? Can it be waived?
0.00 because we are not charging are members due to the fact, we are getting rid of the IRAs.
Tell me about a ROTH IRA.
Post Tax, not tax deductible, withdrawals maybe tax free, must have earned income, and no age limit.
What tax form reports the Fair Market Value and their RMD for the following year?
5498
What is the government's Excess Contribution penalty?
6%
What is a Recharacterization?
This is when a member wants to change a contribution to a different IRA type or year (Ex. a member comes in an make a contribution to a Traditional IRA then talks with is tax advisor and they tell them to change it to a ROTH because it might be better for them. So, they come in to recharacterize that contribution from a Traditional to a ROTH IRA).
How much is the amount that needs to be deposited into an IRA Passbook? What about an IRA Certificate?
1. 0.00 because we are not taking deposits any more.
Rollover vs Transfer
Rollover: Movement of money from qualified plan (ex. 401K) to an IRA, check could be made payable to custodian FBO member or to the member (member might have access to funds), reported to IRS, maximum of 1 distribution per 12 months from any if their IRAs (Traditional, ROTH, or SIMPLE), has to be re-deposited into an IRA within 60 days. Transfer: Movement of money from IRA to IRA (one institution to another), check is made payable to custodian FBO of the member (member has no access to funds), not reported to IRS, and no limit of transfers per year.
When is tax form 5498 sent to the member and IRS? Why do we wait to send this tax form?
By May 31st. Because members have a chance to make contributions for the following year during Jan. - April 15th (or tax filing date).
What is the governments' Excess Accumulation penalty?
50%
I can give tax advice to a member or tell them which IRA will work best for them.
NO NEVER! They need to seek a Qualified Tax Advisor.