Take-Away: Irrevocable trusts are heavily taxed when they accumulate income. A mistaken belief is when an IRA is paid to the Trust that taxable income can be distributed to the income beneficiary of the Trust and avoid the high income tax brackets at the Trust’s level. That is not the case when the Trust is […]

Take-Away: A non-US person can gift an unlimited amount free of any federal gift tax. What and how that gift is made, however, controls whether a federal gift tax is actually owed. Background: A gift that a US person receives from a non-US person might be completely free from both the federal gift tax and […]

Take-Away: As we approach the final one-third of 2020 and brace ourselves for the nonstop distractions and the rhetoric of a Presidential election, there are some planning steps we need to bring to the attention of our clients, especially if 2021 also brings a new Congress, a new Chief Executive, and the increasing likelihood of […]

Take-Away: With more qualified plans now accepting Roth 401(k) contributions in order to minimize income taxes in retirement years, it is important to become familiar with the distribution rules associated with a Roth 401(k) account. Background: Like Roth IRAs, distributions from a Roth 401(k) accounts can either be qualified or non-qualified. Qualified Distributions: If a […]

Take-Away: Most retirement accounts are protected from creditors or in a bankruptcy proceeding. Note the use of the word most. As with almost all of the retirement planning, there are multiple rules that apply to different types of retirement plans, including federal rules (ERISA), federal bankruptcy rules, and state-specific creditor protection exemption rules. As a […]

Take-Away: There is pending a federal court case that addresses how much ‘control’ a donor can exercise over the donor’s contribution to a donor advised fund, and by inference, if the donor advised fund is reclassified as a private foundation. This case may shed light on just how many conditions a donor can impose on […]

Take-Away: Despite many technical rules with regard to inherited IRAs and IRA rollovers, the IRS has a long accommodative history that enables a spousal rollover even when the surviving spouse is not named as the beneficiary of the decedent spouse’s IRA. That cooperative spirit was again on display in a recent Private Letter Ruling. Private […]

Take-Away: The IRS published Notice 2020-65 on August 28 that describe the employee’s payroll employment tax deferral for the balance of 2020. This provides a short ‘holiday’ from that withholding payroll tax. Perhaps equally important is that the employee’s share of the payroll tax that is deferred through the balance of 2020 will have to […]

Take-Away: The IRS recently provided some model questions and answers to some of the new SECURE Act provisions. Most of the Q&A examples were pretty straightforward, with no surprises. Of some interest is how IRA contributions made by an individual who also makes a qualified charitable distribution in the same calendar year are affected. Background: […]

Take-Away: The IRS just published yet another Notice, this time extending the 60-day rollover period in 2020 to August 31, 2020. This change is intended to help those individuals who took a required minimum distribution from their retirement account early in 2020, prior to the suspension of required minimum distributions for 2020 as part of […]