Order more Information
A listing of
retirement plan rules, limits
and links for additional information
|
|
|
My Retirement Plan Options | |
| Home Order more Information |
A listing of
retirement plan rules, limits |
||
Planning, Review & Preparation Electing Mark-to-Market Trading through an entity Trader definitions Tax rules & latest news Discussion Board, F.A.Q., Futures, Benefit Plans & other info Search this site add text to search window |
Copyright© 2002 to 2015 Colin M. Cody, CPA and TraderStatus.com, LLC, All Rights Reserved. | ||
|
This is an old archived webpage. To access the mobile-friendly website, click here. Normally traders are prohibited from having a retirement plan based on their income (IRS Code §475(f)(1)(D)). But traders may be able to contribute annually to IRA, 401(k), Keogh, SEP, SIMPLE, Roth and Profit Sharing Plans with a little foresight and planning. Usually this means forming a separate trading entity, such as a partnership, LLC or corporation to be established first in order to transition the trading income into "earned income" (all retirement plan require earned income which normally requires the payment of Social Security/Medicare taxes). Once the retirement plan is established you can make annual contributions of some portion of your income. The retirement plan can be:
Quick look-ups: Self-employed 401(k) generally must be established either prior to December 1st of the current year or by the business tax year-end and funded either by January 15th (per DOL) or funded by the extended due date of that year's business tax return (generally, per IRS). 2015 §401(k) limits: $18,000 under age 50 and $24,000 over age 49 2014 §401(k) limits: $17,500 under age 50 and $23,000 over age 49 2013 §401(k) limits: $17,500 under age 50 and $23,000 over age 49 2012 §401(k) limits: $17,000 under age 50 and $22,500 over age 49 2011 §401(k) limits: $16,500 under age 50 and $22,000 over age 49 2010 §401(k) limits: $16,500 under age 50 and $22,000 over age 49 2009 §401(k) limits: $16,500 under age 50 and $22,000 over age 49 2008 §401(k) limits: $15,500 under age 50 and $20,500 over age 49 2007 §401(k) limits: $15,500 under age 50 and $20,500 over age 49 2006 §401(k) limits: $15,000 under age 50 and $20,000 over age 49 2005 §401(k) limits: $14,000 under age 50 and $18,000 over age 49 2004 §401(k) limits: $13,000 under age 50 and $16,000 over age 49 https://www.fidelity.com/retirement-ira/small-business/self-employed-401k/overview SEP-IRA & PROFIT SHARING (including most other qualified retirement plans / defined contribution plans) SEP plans generally must be established and funded by the extended due date of the business tax return in the following year. Profit Sharing plans generally must be established by the business tax year-end and funded by the extended due date of the business tax return. Total maximum combined limits including any SE401(k) contribution: 2015 §415(c)(1)(A) limits: $53,000 and if coupled with a SE401(k) then up to $59,000 over age 49 2014 §415(c)(1)(A) limits: $52,000 and if coupled with a SE401(k) then up to $57,500 over age 49 2013 §415(c)(1)(A) limits: $51,000 and if coupled with a SE401(k) then up to $56,500 over age 49 2012 §415(c)(1)(A) limits: $50,000 and if coupled with a SE401(k) then up to $55,500 over age 49 2011 §415(c)(1)(A) limits: $49,000 and if coupled with a SE401(k) then up to $54,500 over age 49 2010 §415(c)(1)(A) limits: $49,000 and if coupled with a SE401(k) then up to $54,500 over age 49 2009 §415(c)(1)(A) limits: $49,000 and if coupled with a SE401(k) then up to $54,500 over age 49 2008 §415(c)(1)(A) limits: $46,000 and if coupled with a SE401(k) then up to $51,000 over age 49 2007 §415(c)(1)(A) limits: $45,000 and if coupled with a SE401(k) then up to $50,000 over age 49 2006 §415(c)(1)(A) limits: $44,000 and if coupled with a SE401(k) then up to $49,000 over age 49 2005 §415(c)(1)(A) limits: $42,000 and if coupled with a SE401(k) then up to $46,000 over age 49 2004 §415(c)(1)(A) limits: $41,000 and if coupled with a SE401(k) then up to $44,000 over age 49 2003 §415(c)(1)(A) limits: $40,000 and if coupled with a SE401(k) then up to $42,000 over age 49 http://www.irs.gov/uac/2013-Pension-Plan-Limitations http://www.dol.gov/ebsa/publications/SEPPlans.html Self-Employed Contribution Calculator SIMPLE IRA generally must be established prior to October 1st of the current year, and funded by the extended due date of that year's business tax return. 2015 SIMPLE limits: $12,500 under age 50 and $15,500 over age 49 (plus 1% to 3% employer match) 2014 SIMPLE limits: $12,000 under age 50 and $14,500 over age 49 (plus 1% to 3% employer match) 2013 SIMPLE limits: $12,000 under age 50 and $14,500 over age 49 (plus 1% to 3% employer match) 2012 SIMPLE limits: $11,500 under age 50 and $14,000 over age 49 (plus 1% to 3% employer match) 2011 SIMPLE limits: $11,500 under age 50 and $14,000 over age 49 (plus 1% to 3% employer match) 2010 SIMPLE limits: $11,500 under age 50 and $14,000 over age 49 (plus 1% to 3% employer match) 2009 SIMPLE limits: $11,500 under age 50 and $14,000 over age 49 (plus 1% to 3% employer match) 2008 SIMPLE limits: $10,500 under age 50 and $13,000 over age 49 (plus 1% to 3% employer match) 2007 SIMPLE limits: $10,500 under age 50 and $13,000 over age 49 (plus 1% to 3% employer match) 2006 SIMPLE limits: $10,000 under age 50 and $12,500 over age 49 (plus 1% to 3% employer match) 2005 SIMPLE limits: $10,000 under age 50 and $12,000 over age 49 (plus 1% to 3% employer match) 2004 SIMPLE limits: $9,000 under age 50 and $10,500 over age 49 (plus 1% to 3% employer match) http://www.irs.gov/Retirement-Plans/Plan-Participant,-Employee http://www.irs.gov/Retirement-Plans/Plan-Participant,-Employee/Retirement-Topics-SIMPLE-IRA-Contribution-Limits IRA (Roth or Traditional) generally must be established and funded by April 15th of the following year. 2015 IRA limits: $5,500 under age 50 and $6,500 over age 49 2014 IRA limits: $5,500 under age 50 and $6,500 over age 49 2013 IRA limits: $5,500 under age 50 and $6,500 over age 49 2012 IRA limits: $5,000 under age 50 and $6,000 over age 49 2011 IRA limits: $5,000 under age 50 and $6,000 over age 49 2010 IRA limits: $5,000 under age 50 and $6,000 over age 49 2009 IRA limits: $5,000 under age 50 and $6,000 over age 49 2008 IRA limits: $5,000 under age 50 and $6,000 over age 49 2007 IRA limits: $4,000 under age 50 and $5,000 over age 49 2006 IRA limits: $4,000 under age 50 and $5,000 over age 49 2005 IRA limits: $4,000 under age 50 and $4,500 over age 49 2004 IRA limits: $3,000 under age 50 and $3,500 over age 49 2015 IRA Phase-out range: Single $61,000 to $71,000 MFJ $98,000 to $118,000 MFS $0 to $10,000 Spousal $183,000 to $193,000 2014 IRA Phase-out range: Single $60,000 to $70,000 MFJ $96,000 to $116,000 MFS $0 to $10,000 Spousal $181,000 to $191,000 2013 IRA Phase-out range: Single $59,000 to $69,000 MFJ $95,000 to $115,000 MFS $0 to $10,000 Spousal $178,000 to $188,000 2012 IRA Phase-out range: Single $58,000 to $68,000 MFJ $92,000 to $112,000 MFS $0 to $10,000 Spousal $173,000 to $183,000 2011 IRA Phase-out range: Single $56,000 to $66,000 MFJ $90,000 to $110,000 MFS $0 to $10,000 Spousal $169,000 to $179,000 2010 IRA Phase-out range: Single $56,000 to $66,000 MFJ $89,000 to $109,000 MFS $0 to $10,000 Spousal $167,000 to $177,000 2009 IRA Phase-out range: Single $55,000 to $65,000 MFJ $89,000 to $109,000 MFS $0 to $10,000 Spousal $166,000 to $176,000 2008 IRA Phase-out range: Single $53,000 to $63,000 MFJ $85,000 to $105,000 MFS $0 to $10,000 Spousal $159,000 to $169,000 2007 IRA Phase-out range: Single $52,000 to $62,000 MFJ $83,000 to $103,000 MFS $0 to $10,000 Spousal $156,000 to $166,000 2006 IRA Phase-out range: Single $50,000 to $60,000 MFJ $75,000 to $85,000 MFS $0 to $10,000 Spousal $150,000 to $160,000 2005 IRA Phase-out range: Single $50,000 to $60,000 MFJ $70,000 to $80,000 MFS $0 to $10,000 Spousal $150,000 to $160,000 2015 Roth IRA Phase-out range: Single $116,000 to $131,000 MFJ $183,000 to $193,000 MFS $0 to $10,000 2014 Roth IRA Phase-out range: Single $114,000 to $129,000 MFJ $181,000 to $191,000 MFS $0 to $10,000 2013 Roth IRA Phase-out range: Single $112,000 to $127,000 MFJ $178,000 to $188,000 MFS $0 to $10,000 2012 Roth IRA Phase-out range: Single $110,000 to $125,000 MFJ $173,000 to $183,000 MFS $0 to $10,000 2012 Roth IRA Phase-out range: Single $110,000 to $125,000 MFJ $173,000 to $183,000 MFS $0 to $10,000 2011 Roth IRA Phase-out range: Single $107,000 to $122,000 MFJ $169,000 to $179,000 MFS $0 to $10,000 2010 Roth IRA Phase-out range: Single $105,000 to $120,000 MFJ $167,000 to $177,000 MFS $0 to $10,000 2009 Roth IRA Phase-out range: Single $105,000 to $120,000 MFJ $166,000 to $176,000 MFS $0 to $10,000 2008 Roth IRA Phase-out range: Single $101,000 to $116,000 MFJ $159,000 to $169,000 MFS $0 to $10,000 2007 Roth IRA Phase-out range: Single $99,000 to $114,000 MFJ $156,000 to $166,000 MFS $0 to $10,000 2006 Roth IRA Phase-out range: Single $95,000 to $110,000 MFJ $150,000 to $160,000 MFS $0 to $10,000 2005 Roth IRA Phase-out range: Single $95,000 to $110,000 MFJ $150,000 to $160,000 MFS $0 to $10,000 Starting 2010 Roth Conversion - allowed - there is no income limitation. Special one-time election - the tax can be elected to be paid in 2011 & 2012 rather than in 2010 2005 to 2009 No Roth conversion allowed if AGI exceeds $100,000 HSA (very) generally must be established by December 1st and funded by April 15th of the following year. 2014 §223 HSA limits: Self $3,300 under age 55 and $4,300 over age 54 Family $6,550 under age 55 and $7,550 over age 54* 2013 §223 HSA limits: Self $3,250 under age 55 and $4,250 over age 54 Family $6,450 under age 55 and $7,450 over age 54* 2012 §223 HSA limits: Self $3,100 under age 55 and $4,100 over age 54 Family $6,250 under age 55 and $7,250 over age 54* 2011 §223 HSA limits: Self $3,050 under age 55 and $4,050 over age 54 Family $6,150 under age 55 and $7,150 over age 54* 2010 §223 HSA limits: Self $3,050 under age 55 and $4,050 over age 54 Family $6,150 under age 55 and $7,150 over age 54* 2009 §223 HSA limits: Self $3,000 under age 55 and $4,000 over age 54 Family $5,950 under age 55 and $6,950 over age 54* 2008 §223 HSA limits: Self $2,900 under age 55 and $3,800 over age 54 Family $5,800 under age 55 and $6,700 over age 54* * assumes that only one spouse has the HSA http://www.irs.gov/publications/p969/ar01.html Other limits and information - listed here: Calhoun Law Group, P.C. QB alance.com University of Minnesota IRS COLA Increases DOL Consumer Publications SEP vs. SIMPLE vs. Self-employed 401(k)
New Tax Free Roth 401(k) coming January
1, 2006: (but as of 2008, they are still scarce!!) - as of
2011, they are becoming available with more retail brokers, including
thinkorswim / TD
Ameritrade (done properly, in our opinion, using a two-account Ascensus prototype)
and several other firms (done totally 1/2 a$$ed, in our opinion, using
a tax-deferred/tax-free comingled approach). Traders, Investors and other taxpayers who are looking for a self-employed §401(k) or other plan so
that they can to set aside some tax-deductible money for their
retirement can do so by forming a separate trading entity such as a Corporation, Limited Liability Company (LLC)
or Partnership. The entity (or a spouse) will pay out
a "salary" to themselves so that they will have the required
amount of "earned income" from which they can maximize their
tax-deductible contributions. Credit for Pension Plan Start-up Costs. This new §45E tax credit helps traders offset the costs of setting up and administering a new qualified employer plan and educating employees about it. The credit is 50% of these costs, with a maximum amount of $500 per year. You must have one employee besides yourself in the plan. In other words, let the Gov't pay half while you get a full tax write-off for the other half paid! Credit for elective deferrals and IRA contributions for taxpayer with income under $50,000. This §25B tax credit helps traders fund their Roth IRA (for example) with a tax credit up to $2,000. In addition many taxpayers still have immediate access to their Roth IRA cash, because withdrawals from a Roth IRA for many taxpayers are not subject to the penalty or tax - yet they get to keep the $2,000 tax credit!! Imagine that. Deposit money into a Roth to get the $2,000 tax credit and then immediately withdraw the money with no penalty, no tax and no need to return the $2,000 tax credit!
IRA, self-employed §401(k) or other Retirement
Plan deductions:
Profit Sharing & §401(k) contribution limits (and catch-up §401(k)
contributions for those over 49 years of age): The Pension Protection Act of 2006 brings the most comprehensive reform of traditional private pension plans since 1974
Pension Protection Act of 2006 - White House
Pension Protection Act of 2006 - IRS
Pension Protection Act of 2006 - DOL
Pension Protection Act of 2006 - U.S. House of Representatives
Pension Protection Act of 2006 - Library of Congress Pension Protection Act of 2006 - Council on Foundations, Washington, DC Pension Protection Act of 2006 - AON publication Pension Protection Act of 2006 - CCH Wolters Kluwer publication Pension Protection Act of 2006 - Principal Financial Services summary Pension Protection Act of 2006 - TIAA CREF booklet on sunset provisions
Beginning January 1, 2002
the new self-employed 401(k) option is available Beginning January 1, 2006
the new self-employed Roth 401(k) option is available
Beginning January 1, 2011
Roth in-plan conversion option
is available
Beginning March 9, 2011
a Tax Court approved "unlimited" annual Roth IRA / Roth 401(k) funding mechanism
is available Links for more information
from various service providers and brokerage houses:
401kBrokers.com - Solo Roth 401k
Links for more information
on non-standard asset service providers:
Administrators:
(party responsible for the day-to-day activity, this may be performed by
the employer himself, provides record keeping services for the
retirement plan)
Custodians: (party
responsible to hold custody of the plan assets, keeping them separate
from and protected from employer and employer's creditors)
Plan Document Provider:
(in theory, a self-employed 401(k) may be done using your own docs) IRA LLC Facilitators: (party responsible for
advising, planning and establishing the LLC plan)
Rules, rules
and more rules...
Retirement Savings and
Planning Calculators available...
IRS - Rollovers as Business Start-Ups (ROBS) project Self-directed IRA plans One wealth management strategy
that has gained popularity in past years with many individual retirement
account customers involves creating a limited liability company wherein
the IRA accountholder is named the manager of the LLC. The accountholder retains control
of all the assets held by the LLC. This includes having signature
control over all accounts under the LLC on a day-to-day basis. Here's a
quick run-down of some important facts. History Many attorneys who assist clients
in setting up such arrangements may also refer to various advisory
opinions issued by the Department of Labor that have addressed similar
issues, such as DOL Advisory Opinion 97-23A and 2000-10A. These opinions
tend to focus on a specific set of facts and circumstances relating to
an individual transaction and are normally quoted by attorneys as a
general guide as to how the government views such activity. Authorizing initial investments Next, accountholders should
contact the IRS and obtain a separate tax identification number for the
LLC. Accountholders will then need to establish a bank or brokerage
account under the name of the LLC. Finally, the accountholder instructs
the IRA custodian to deposit IRA assets into the newly formed LLC. This
is accomplished by completing the applicable investment authorization
form provided by the custodian. The accountholder will also need
to provide the IRA custodian with the operating agreement for the LLC,
properly executed subscription documents, and an opinion letter from an
attorney indicating that the initial structure does not constitute a
prohibited transaction. Upon receipt of these items, the IRA custodian
releases funds to the LLC. This arrangement does not remove
the IRA custodian from the account. Assets are consolidated under the
LLC, which now becomes the sole asset of the accountholder's
self-directed IRA. When all is said and done, the IRA statement from the
custodian will simply reflect one asset, i.e., the LLC. Accountholders will need to
provide an annual market value for the LLC to the IRA custodian once a
year for tax reporting purposes (some custodians may require a valuation
from a third party). The custodian will use this information to file
Form 5498 with the IRS at the end of each year. Daily operations The most notable concern is
focused on operating the LLC in such a way as to not cause a prohibited
transaction. For example, many attorneys recommend that the IRA
accountholder not take any management fee from the LLC, as this may
result in a violation of the prohibited transaction rules. Note that merely acting as the
manager of a limited liability company does not, in and of itself,
create a prohibited transaction. It is the actions of the manager on a
day-to-day basis that will determine if a prohibited transaction has
occurred. IRA accountholders wishing to utilize an LLC strategy need to
exercise great care in the management of the LLC and need to have a deep
understanding of the prohibited transaction rules in order to ensure
compliance. Generating taxable income The definition of UBI is pretty
broad. Basically, if a tax-exempt entity is involved in a business that
is unrelated to its primary purpose, any income derived from such
business will be subject to UBIT. For example, if an IRA forms an
LLC to buy and operate a fast food franchise or a car wash, businesses
unrelated to the primary purpose of an IRA, the net income will be taxed
as UBIT at the trust tax rate. In addition, whenever debt is used by an
IRA or LLC, tax is applied to that portion of the gain that is
debt-financed. Taxes on both are calculated and reported on IRS Form
990-T. As a result, IRA accountholders
should review each transaction inside the LLC closely before investing.
Transactions under an LLC that create UBIT would also apply if the
investments were made directly inside the IRA. Distributions Accountholders should not use the
LLC's checkbook to write themselves a distribution check, inasmuch as it
might result in a prohibited transaction. Prohibited transactions Activities that would be
considered prohibited would include borrowing money from the IRA, the
selling of property between the individual IRA accountholder and the
IRA, receiving unreasonable compensation for managing the account,
having access to or use of any asset of the IRA, or using the assets of
the IRA as collateral for a personal loan. These rules also apply to the
LLC, since it is an asset of the IRA. For more information regarding
prohibited transactions, go to the IRS Web site at www.irs.gov and
download Publication 590. If the IRA accountholder engages
in a prohibited transaction in connection with their retirement account
at any time during the year, the account stops being an IRA as of the
first day of that year. In such cases, the IRA custodian would issue a
1099-R and report the activity to the IRS. The IRA accountholder would
lose the ability to shelter the assets inside the IRA and would be
subject to taxes and penalties.
Investments You Can't Hold In An IRA/Qualified Plan You cannot invest in Collectibles or Life Insurance
Contracts. There are also certain transactions in which
you cannot participate when using IRA funds. These
transactions are referred to as "prohibited
transactions". Prohibited Transactions are defined in
IRC § 4975(c)(1) and IRS Publication 590. These
transactions were established to maintain that
everything the IRA engages in is for the exclusive
benefit of the retirement plan. Sometimes professionals
refer to these as "self-dealing" transactions.
Self-dealing happens when an IRA owner uses their
individual retirement funds for their personal benefit
instead of benefiting the IRA. If you violate these
rules, your entire IRA could loose its tax-deferred or
tax-free status. It is important that you work with a
competent Retirement Account Facilitator to avoid
violating these rules.
IRC § 4975(c) (1), identifies prohibited transactions to
include any direct or indirect:
Asset protection However, the accountholder could
continue to manage the assets of the LLC and could not be forced to make
any distributions to the plaintiff. Simply stated, the plaintiff would
have to pay tax on assets that they never receive. Conclusion Paul E. Maxwell, CEBS, CEPP, is
with Trust Administration Services Corp. (www.trustlynk.com), a
Carlsbad, Calif.-based specialist in the administration of self-directed
retirement accounts, custodial accounts and a variety of personal trust
services.
Lil Miller-Fox's individual retirement account has
three bedrooms, two baths and a two-car garage. Better yet, the rental house in a gated community in
Sebastian, Fla., not far from the Atlantic, isn't run by
an advisor that charges exorbitant monthly fees. Rather,
Miller-Fox makes all the decisions, and she doesn't have
to pay anyone to execute them. Her IRA is called a "checkbook IRA," an investment
vehicle created nearly 20 years ago in a landmark court
ruling that essentially said: It's your money, so you
can run the show as long as you follow the rules. Let's step back a moment: Not many people even know
you can invest your retirement savings in real estate.
But under Section 408 of the Internal Revenue Code, as
long as you don't benefit directly, you are allowed to
put some or even all the funds you set aside in a
tax-sheltered IRA into real estate. They're called self-directed IRAs because you can
move your funds around. But until a 1996 court case,
every step you wanted to make had to be carried out
through a costly custodian. You could not take direct
control. Every time you wanted to mow the grass or pay
the bills, you had to pay a trustee to do it. In the 1996 case of Swanson vs. Commissioner, the tax
court gave its blessing to a new type of self-directed
IRA structure the checkbook IRA that is much simpler
than investing through a regular custodial account. Under the checkbook format, the IRA is set up as a
self-directed account that's capitalized by funds rolled
over from your current retirement account. Then, a
limited liability company is created in which your new
IRA purchases all the membership units. Now, your money
is held in an LLC and you are ready to invest at your
discretion. That's what appealed to Miller-Fox. She's a
self-proclaimed "real estate nut" who operates
PrivateCommunities.com, a website that compiles
information about many of the country's master-planned
properties. "I love real estate," she said. "I feel much more
comfortable investing in tangible real estate than stock
and bonds and that sort of thing. And this puts me
absolutely in full control." Under the rules, savvy real estate investors like
Miller-Fox can buy, sell and manage domestic, foreign,
commercial, residential and rental properties using
money invested in their tax-deferred retirement account.
The funds are held in a normal business account, and as
the account's manager, you can sign contracts and write
checks on the account, just as with any other business. The speed at which you can move opens up a slew of
investment opportunities, such as snapping up
foreclosures or tax liens or even a house that has
just come on the market in a prime spot near the ocean
or in the mountains. And, said Miller-Fox, "it's a great
way for people to finance their retirement homes long
before they are ready to use them." There still are restrictions, of course. You can't
use the property as your own residence or vacation home,
and that applies not only to you but also to anyone in
your family. And you can't take money out of your IRA
until you are 59 1/2 without incurring a big tax bite,
just as with a regular IRA. Otherwise, rental income is tax-deferred because it
is held in a tax-deferred IRA. And there is no capital
gains tax when you sell an IRA-owned property. A few other ground rules: There are fees too. There's a charge to set up the
LLC, and you still must have a custodian. But you don't
have to pay the custodian to execute each and every move
you want to make, or to collect the rent and pay the
bills. Consequently, the fees are far less than
investing in real estate via a typical self-directed
IRA. How much less? Charges vary, but according to
Guidant Financial, a self-directed IRA custodial
firm in Bellevue, Wash., you can save thousands of
dollars in traditional transaction and asset-based fees
by acting as your own IRA broker/custodian.
http://www.latimes.com/business/realestate/la-fi-lew-20130818,0,972689.story Avoid the 10% early withdrawal penalty:
California Board of Accountancy Practice
Privilege
New York Board of Accountancy Practice Privilege
Online verifications:
|
|||
Last updated:
October 27, 2022 TraderStatus, TradersTaxPlan, TradersAdvantage, TraderStatus.com, TradersTaxPlan.com, TradersAdvantage.com, DoYourOwnDaytraderTaxes, DoYourOwnTaxes, DoingYourOwnTaxes, DoYourOwnDaytraderTaxes.com, DoYourOwnTaxes.com, DoingYourOwnTaxes.com, DoYourTaxesOnline, DoYourOwnTaxesOnline, DoYourTaxesOnline.com, and DoYourOwnTaxesOnline.com are trademarks and service marks of Colin M. Cody, CPA and TraderStatus.com, LLC, Trumbull Connecticut Copyright© 2002 to 2015 Colin M. Cody, CPA and TraderStatus.com, LLC, All Rights Reserved |
