Contributions
The 2018 contribution limit for those under 50.
What is $5,500
True or False: We can accept DocuSign signatures on IRA distribution forms?
True!
We can send both contribution and distribution forms to an IRA owner through DocuSign; the important thing is that we always obtain a signature in some fashion for an IRA contribution or distribution.
The location of the document where you can find member's RMD election information.
What is the Everyone Drive. Specifically, Everyone Drive>IRA folder>RMD spreadsheet
The name of the tax form a member receives containing their reportable IRA contribution information.
What is a 5498.
The age limit for making contributions to a Traditional IRA.
What is 70 1/2.
In order to make contributions to a Traditional IRA, you must be under 70 1/2 for the entire year.
The deadline for members to make a current year contribution to an IRA.
What is April 15th (or the tax filing deadline for that year). If the 15th falls on a weekend or holiday, then the deadline is extended to the next business day.
True or False: When we receive IRA direct transfer instructions from another FI, we do NOT need to obtain our member's signature on our withdrawal instruction form.
TRUE!
If the member has signed ppwk with another FI and we have verified that their signature matches what we have on file, we do not need to obtain their signature on our withdrawal form, we can write "per attached request" on the signature line.
True or False All IRA owners, regardless of the type of IRA they have, must start taking a RMD when they reach age 70 1/2.
FALSE!
The Required Minimum Distribution (RMD) is only required for Traditional IRA funds.
The date by which we have to mail the IRS form 5498 to IRA owners.
What is May 31.
If a Roth IRA owner is under 59 1/2, list three qualified exceptions that may apply, in order for them to avoid paying a 10% early distribution penalty.
Disability, unreimbursed medical expenses, health insurance premium following unemployment, qualified higher education expenses, first-time home buyer expenses, federal tax levy, Conversion funds (funds properly converted to Roth from Traditional).
If a member is over 50 and has both a Traditional IRA & a Roth IRA, what is their total contribution limit for 2018?
$6,500
Contributions to Traditional & Roth IRAs are aggregate, which means they can only contribute a total of $6,500 into any of the IRAs they have, including IRAs that may be outside of Maps. We cannot know what accounts someone may have outside of Maps, it is the member's responsibility to adhere to the imposed limits if they maintain accounts at multiple FIs, we can monitor limits for them based upon the accounts they have with us.
True or False: Direct Transfers are NOT reported to the IRS.
Direct Transfers are not reported to the IRS since the money is being moved from one IRA to another, the member never has access to it and taxes are not withheld.
True or False: If a member forgets to take their RMD by December 31, they still have until the tax filing deadline of the next year to request a prior-year RMD.
FALSE!
We cannot withdraw the RMD for a member after December 31st. The one exception to this is for the first year the owner is required to take their distribution. The RMD for the year in which an individual turns 70 1/2 can be taken anytime before April 1st of the following year.
If a member receives an extension for filing their taxes, is their contribution deadline extended?
NO. The deadline for making a contribution to an IRA is never extended past the tax filing deadline.
True or False: If you have a Roth IRA, you can withdraw regular contributions at any time without paying taxes or penalties to the IRS.
True!
Roth IRAs offer the flexibility to the owner of allowing regular contributions to be withdrawn tax and penalty free anytime. If the funds are in a Roth certificate, Maps can still assess an early withdrawal penalty if a member wants to withdraw funds outside of their grace period.
Does Maps allow members to make prior-year contributions to their IRAs?
Yes!
A member can designate a contribution as prior-year (only for the year that just ended); these types of contributions are irrevocable and cannot be modified after processed.
The date by which we must mail a member's 1099-R or 1099-Q, if they made a reportable distribution for the tax year.
What is January 31.
Direct Transfers are not tax-reportable events, so if that is the only type of distribution the member had, they will not receive a 1099.
The IRS penalty assessed to a member who fails to withdraw their RMD by the required deadline.
What is 50%!
If a member fails to withdraw their RMD, they will be assessed a penalty tax of 50% (of the total amount they were required to withdraw) by the IRS.
List two of the three scenarios in which we always waive our penalty for withdrawing funds from a certificate outside of the grace period.
When a member is taking their RMD, when performing death benefit payouts to beneficiaries or when Maps Investment Services requests a transfer of funds.
True or False: Contributions to a Roth IRA are never tax deductible.
True!
Roth contributions are never tax deductible because the money contributed to a Roth is already taxed.
The new catch-up contribution limit for IRA owners over 50 for 2019.
What is $7,000!
In 2019, the regular contribution limit is increasing from $5,500 to $6,000 for those IRA owners under 50 and is increasing from $6,500 to $7,000 for IRA owners over 50.
The age at which a Traditional IRA owner can withdraw funds freely, without having to pay the early distribution penalty tax.
What is 59 1/2.
In the calendar year that an IRA owner turns 70 1/2, how does Maps inform the member about their RMD?
We send out packets to members in the year they turn 70 1/2; if we have an email address on file the packet is sent via email, if we don't it's sent snail mail. The packet contains the post 70 1/2 payment election form they need to fil out and return.
*If the member receives the form via email, they are able to fill it out electronically and submit it back to us that way (this form is different than the paper version we mail to members who don't have email on file with us). Just another reason to get email addresses for members! ;-)
What are the standard amounts of Federal and State Tax withholding we offer to member?
10% Federal and 8% for State.
Members can choose to have those percentages, higher percentages or waive the withholding. Also, we can only withhold state taxes for the state of Oregon, we cannot withhold taxes for any other states.
True or False: Traditional IRA owners will always be taxed on their earnings when they take the funds out.
True!
When a Traditional IRA owner takes a distribution from their IRA, they must pay taxes on the money. It's up to the IRA owner if they want us to withhold taxes at the time of the distribution or if they want to take care of that when they file their taxes.