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Articles Tagged with retirement

tax booksEach year, the Treasury Department examines the cost of living in the U.S. and adjusts limitations for retirement plans and many other similar items that affect taxpayers throughout the U.S. As has happened previously, the Treasury raised the limits for contributions to pensions and other retirement plans such as 401(k)s, 403(b)s and most 457 plans.  All of this helps today’s workers save for retirement with pre-tax dollars, which is a tremendous benefit.

Our tax code requires the Secretary of the Treasury to make this adjustment.

The biggest news is that the contribution limit to employer-sponsored retirement plans, such as the above-mentioned 401(k)s, etc., has gone from $18,000 for calendar 2017 to $18,500 for calendar 2018. If you were bumping up against this limit in 2017, you can now adjust and put in just a little bit more, which is always good news.

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By Nathan Vinson

IRA, taxesThe IRS recently enacted a new IRA rollover rule that’s actually good for consumers, and something that can really help you – but it is a lot more complicated than it appears on the surface. Essentially, the IRS is now giving you a year to roll your old retirement account into a new account or IRA, but only if you’ve faced difficult circumstances that delayed you from making the transaction.

In the past, once you leave a job, you may have received a check for the balance of the funds in your 401(k) (or 403(b) or 457 plan, which are used by non-profits and government agencies, respectively). Once the check is in the mail, you’ve traditionally had 60 days to roll that money into an IRA or other qualifying retirement account.

The administrator of the retirement plan is required to withhold taxes plus a penalty from your check, and will report that to the IRS. You won’t see the withheld money again, unless you roll over the funds within that 60-day time period.

The basic concept is that Uncle Sam wants you saving for retirement, and penalizes you if you don’t keep up with it. Plus, 401(k) money goes into the account pre-tax, so it’s their chance to tax the money – and as we all know, the government never misses a chance to grab some dollars.

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By Nathan Vinson
Attorney, English, Lucas, Priest and Owsley, LLP

tax movesWe’re about five weeks out from January 1, 2016. Yes, really.

That means if there are financial moves you intended to make this year to save on your 2015 tax bill, you need to get going. I’ve outlined here a brief checklist to get you started.

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2012-09-19 14.35.30

By Nathan Vinson, Attorney
English, Lucas, Priest and Owsley

Ah, Florida. It calls to retirees like the mythical siren calls to sailors. Warm weather, year-round golf, palm trees on every corner, not a flake of snow and the promise of lower taxes bring the 60-plus set to our Southern-most state at record rates. In fact, Florida is now the nation’s third most populous state.

The Journal of Accountancy notes that 19 states impose an inheritance tax on top of other federal taxes. Both Kentucky and Tennessee have an inheritance tax, although Tennessee will eliminate its inheritance tax in 2016. This means if you inherit property from an estate of someone who moved to Kentucky or Tennessee and passed away in either state, you might be giving a portion of those proceeds from the estate to the respective state government – if the proceeds are above certain thresholds and, at least in Kentucky, depending on your relationship to the deceased.

What complicates matters is that governments in some states seem highly suspicious of those who move away. Some put families who have inherited an estate through rigorous paperwork to try to get out of paying estate taxes in that state.

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Nathan Vinson

Nathan Vinson

By Nathan Vinson, Attorney
English, Lucas, Priest & Owsley, LLP

An Individual Retirement Arrangement (IRA) may be a vehicle available to Kentucky residents to avoid Kentucky’s inheritance tax.  The Kentucky inheritance tax is payable by the beneficiaries of a person’s estate, depending on what the beneficiary received and the relationship of the decedent to the beneficiary.

“Class A” beneficiaries are exempt from the inheritance tax and include parents, surviving spouses, siblings (whether full or half), children (including adopted children and stepchildren), and grandchildren.

“Class B” beneficiaries enjoy a partial exemption from the tax and include aunts, uncles, nephews and nieces (including by the half), daughter-in-laws, son-in-laws, and great-grandchildren (including those who are the grandchildren of adopted children and stepchildren).

All other beneficiaries are considered “Class C” beneficiaries and are afforded a nominal exemption from the inheritance tax.  With the highest rate of Kentucky’s inheritance tax being 16%, Class B and Class C beneficiaries may take a big hit if they inherit any sizable amount from the decedent’s estate.

Here is where planning opportunities arise using IRAs.

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