Louisville, CO (PRWEB) December 17, 2012
The end of the calendar year often spurs a flurry of activity around financial matters, particularly with retirement investments. New Direction IRA today released tips to help IRA holders meet important end-of-year deadlines and get their investments in order for the New Year.
Among the most valuable tips, those with retirement investments need to think about important contribution deadlines, fair market valuations, tax filing requirements, 1099-R forms, updating beneficiaries and required minimum distributions. The tips and deadlines below are relevant to investors who hold IRAs or Health Savings Accounts (HSAs) – especially if those accounts are self-directed.
“The end of the year is a great time to ensure you have all of your ducks in a row with your IRAs,” said Catherine Wynne, co-founder and president of New Direction IRA. “It is easy to overlook important deadlines and processes, but if investors make a habit of going through this checklist at the end of each year, they can avoid many headaches later on.”
Important Contribution Deadlines
Traditional IRA and Roth IRA Dates to Remember:
SEP IRA Dates to Remember:
SIMPLE IRA Dates to Remember:
Individual 401(k) Plan Dates to Remember:
HSA Dates to Remember:
Fair Market Valuations
An IRA must have a substantiated value each year. A fair market valuation is used to assign the value of each asset. IRA custodians are required to provide a year-end value for all IRA accounts. For most assets in self-directed IRAs, the IRA owner will prepare a fair market valuation form and have an independent professional provide the actual value. The value itself may not be determined by the IRA owner or a disqualified person.
Tax Filing Requirements
Remember that IRAs that hold some specific assets may have tax filing requirements. Profits from leveraged real estate or investment in an entity can result in taxable income for the IRA. There are three common sources of unrelated business taxable income (UBTI) for your IRA. Your self-directed IRA (or IRA-owned LLC) will likely need a tax filing if the plan or entity has received any of these in the past year:
The appropriate tax form is called a 990-T for taxable income in a nonprofit entity and is due on April 15. The IRA must pay the tax.
You may have occasion to ask yourself, “Why did I get this 1099-R?” See below for a list of reasons why people receive 1099-Rs. Depending on the reason you receive a 1099-R, you may or may not have personal tax consequences, so it is a good idea to understand the form and why you received it.
You will receive a 1099-R if you:
If you performed one of the first two items on the above list, your reported income will increase by the amount reported on the 1099-R form. If your asset was devalued to zero and you distributed that asset, you are technically paying tax on a distribution that has zero value and therefore no tax. If you received the 1099-R form for one of the last two reasons listed above, and the rollover was completed within the proscribed limits, you will not have a personal tax consequence for this tax year but will still have to report the amounts on your personal return.
The year’s end is a good time to ensure your beneficiaries are current. Because an IRA is a long-term investment instrument, it is not uncommon for circumstances around your designated beneficiaries to change. In order for your IRA assets to be inherited by your beneficiaries, your IRA paperwork must have them properly named. Check your account beneficiaries and make any needed changes to your designations.
Required Minimum Distributions
For Traditional, SEP and SIMPLE IRA owners who are 70 1/2 or over, remember that the IRS requires you to take a minimum distribution – called a Required Minimum Distribution (RMD) – each year from your Traditional, SEP or SIMPLE IRA. The deadline to request your RMD is Dec.31, 2012. The IRS allows you to take the total amount of your RMD from any or all of the Traditional, SEP or SIMPLE IRAs you hold, but if you don’t take the total amount required, you can be assessed a 50 percent penalty for each year that amount remains in the IRA.
About New Direction IRA
New Direction IRA is a trusted provider of investor education and recordkeeping services for self-directed IRA and precious metals IRA holders. Since its inception in 2003, New Direction IRA has been at the forefront of the self-directed retirement investment market. The company enables individual investors to take control of and diversify their tax-advantaged retirement funds using alternative asset opportunities such as real estate, precious metals, LLCs, notes and lending, and more. Headquartered in Louisville, Colo., New Direction IRA administers more than $570M in assets on behalf of over 7,000 account holders. Visit the website at http://www.newdirectionira.com.
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