About: Jeffrey A. Quinn

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House Espouses “ABLE” Accounts

Last week, the House passed the “Achieving a Better Life Experience (ABLE) Act of 2014,” which provides for a new type of tax-advantaged savings program which would allow folks with disabilities to work and save without losing access to Medicaid and Supplemental Security Income (SSI).

The ABLE Act would be effective for tax years beginning after December 31, 2014.  Contributions into an account could be made by any person and would not be tax deductible, though distributions used to pay qualified expenses, including distribution amounts attributable to investment earnings generated within the account, would not be taxable.

Eligible individuals must be blind or severely disabled, and must have become so before age 26.  Each disabled person would be limited to one ABLE account, and total annual contributions by all individuals to any one ABLE account could be made up to the gift tax exclusion of $14,000, as adjusted annually for inflation.

IRS Reminders on Last-Minute Charitable Contributions

Check out IRS News Release 2014-110 for recent IRS words of wisdom regarding those charitable contributions which you may plan to make between now and year end, counting on a nice tax deduction.  Among other things:

  • Keep a “bank record” (related to your monetary donations) showing the name of the charity and the date and amount of the contribution. Bank records include cancelled checks, bank and credit card statements.
  • Get an acknowledgement letter from each charity for each deductible donation (either money or property) of $250 or more.

Also, it goes without saying that the recipient of your largesse must be a “qualified” charity, and not just anybody whom you want to help out.  Check out the IRS website (www.irs.gov) for a list of such qualified organizations, aside from churches, synagogues, temples, mosques and government agencies.

IRS Clarifies When IRA Can Invest in Gold

IRS has ruled that the acquisition of shares of a trust invested in gold by an IRA or an individually directed account under a qualified retirement plan won’t be considered the acquisition of a “collectible.”

IRC Section 408(m) says that acquisition by an IRA of any collectible is treated as a distribution, and therefore gives rise to taxable income.  A collectible is any work of art, metal or gem, stamp or coin, among other things.

See PLR 201446030 for the details on this potential investment opportunity for IRA holders.

IRS Mercy for Small Retirement Plan Late Filers

In June, IRS began a one year pilot program to help small businesses with retirement plans which haven’t been filing the retirement plan reports timely.

Plan administrators who don’t file the requisite Form 5500 can face significant penalties.  Those who have already been assessed late filing penalties are not eligible for this program, which is generally available to plans maintained by certain small businesses, such as those in an owner-spouse arrangement or eligible partnership.

If a retirement plan has not filed relevant returns for more than one plan year, penalty relief may be available for all of these returns.

Check out Revenue Procedure 2014-32 for the details.

IRA Once-Per-Year Rollover Rule Clarified

IRS announced a change, this week, in the application of the one-per-year rule applicable to IRA rollovers, occasioned by a recent decision of the Tax Court.

Starting January 1, 2015, an individual will be allowed one rollover per year, regardless of how many different IRAs he owns – the limitation will apply by forcing the taxpayer to aggregate all of his IRAs, effectively treating them as if they were one IRA for purposes of applying the limit.  See IR-2014-107 for the details.

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