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Resurrecting the Qualified Charitable Distribution?

This past week the US House of Representatives passed a bill (HR 4719, known as the America Gives More Act) which would re-instate the Qualified Charitable Distribution from IRAs and make the provision permanent.  This provision expired at the end of 2013, as it has multiple times in the past, only to be re-instated temporarily time and again. A Qualified Charitable Distribution (QCD) is when a person who is at least age 70½ years of age and subject to Required Minimum Distributions from an IRA is allowed to make a distribution from the IRA and direct the distribution to a qualified charitable organization without having to recognize the income for taxable purposes.  This has been a popular option for many taxpayers, especially since the QCD can also be recognized as the Required Minimum Distribution for the year from the IRA. 

The Dog Ate My Tax Receipts Bill

Now here’s some legislation that I could get behind! Recently, House Representative Steve Stockman (R-TX) introduced a bill in response to the IRS’ lame excuse of a “computer glitch” that purportedly erased all of the incriminating evidence from the agency’s computers.  This was part of the testimony offered by former IRS Exempt Organizations Division director Lois Lerner in response to the accusation that her division targeted organizations critical of the current administration. Stockman’s bill provides that if the IRS can use lame, flimsy excuses to avoid prosecution, taxpayers should be allowed to use similar excuses.  The actual text of the bill follows below: 

Lifetime Income Disclosure

There is a piece of legislation hanging around in the Senate that makes a good deal of sense, and really shouldn’t cause too much grief to implement in the long run. This particular bill, introduced by Senators Bingaman (D-New Mexico), Isakson (R-Georgia), and Kohl (D-Wisconsin), is called the Lifetime Income Disclosure Act, and it proposes that the administrators of ERISA-approved retirement plans provide for their participants a disclosure of the “annuity equivalent” of the total benefits that each participant or beneficiary has accrued within the retirement plan. What this means is that, for likely the first time for most folks, an estimate would be provided to them with their statement that outlines what that lump sum means in terms of real, annualized income replacement in retirement. Specifically, the government would establish certain assumptions about the annuity value of a lump sum, given the participant’s age, and from those assumptions a […]

Tax Act 2010 Provisions

As you are likely aware, two major bills enacting tax cuts for individuals will expire at the end of 2010: the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA); and the Jobs and Growth Tax Relief Reconciliation Act of 2003 (JGTRRA).  The Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 (Tax Act 2010) extends quite a few provisions from EGTRRA and JGTRRA for an additional two years, most through 2012.  It also extends a number of provisions enacted as part of EGTRRA that were modified in the American Recovery and Reinvestment Act of 2009 (ARRA). fyi – you can find the technical explanation at – in the document JCX-55-10. Below is a summary of some of the more important provisions that will be extended: Reduction in Employee Payroll Tax The 2010 Tax Act provides for a temporary reduction, for 2011 only, of the employee-paid Social […]

The Legislation Page

If you haven’t done so recently, you should check out the Legislation page on this blog.  I’ve recently updated the summaries listed here, plus this is where you’ll find the coming tax law changes that you should be aware of. You can check back here regularly to find out about major legislation affecting your financial future, including healthcare, retirement plans, jobs, and taxes. As always, if you have questions about any of the information listed, just let me know!

New Opportunities to “Roth”

Recently one of the tenets of the Small Business Jobs Act of 2010 came into effect, providing you with additional opportunities to set aside funds in a Roth account – not a Roth IRA, but rather a “designated Roth account”, often referred to as a Roth 401(k) or Roth 403(b).  Designated Roth accounts are also often referred to as DRACs – just to keep the acronym train rolling. The way the new law works is that, if you have a 401(k) or 403(b) (the traditional kind), you can roll over or convert some of your funds to a DRAC while the account is still active – as long as your plan is set up to allow in-plan distributions of this variety. The eligible rollover distribution (ERD) must be made: after September 27, 2010; from a non-designated Roth account in the same plan, meaning your traditional 401(k) or 403(b); because of […]

Guidance from the IRS on Flex Spending Plans

Here’s one of the opening salvos, brought to you by the Affordable Care Act of 2010: the IRS has now issued guidance regarding changes to Flex-Spending plans (or Flex Spending Arrangements, FSAs), which has changed things for folks who use these plans – specifically the medical expense reimbursements. In the past, these plans have been eligible to reimburse the owner of the account for a myriad of medical expenses, not only physician expenses, prescription drugs, and other health care expenditures, but also over-the-counter medicines or drugs (not controlled by prescription). Beginning in 2011, due to the Affordable Care Act, over-the-counter drugs and medicines that are not ordered by prescription will no longer be eligible for reimbursement from a medical Flex-Spending plan.  The change does not affect insulin, even if purchased without a prescription, or other health care expenses such as medical devices, eye glasses and contact lenses, co-pays and deductibles. […]

Hiring Incentives to Restore Employment Act (HIRE Act) of 2010

I’ve just released, in the Legislation section of this site, a review of the HIRE Act 2010’s primary provisions. The primary benefits of this Act are 1) the exemption from OASDI (Social Security) withholding tax for the remainder of 2010 for employers who hire folks who have been unemployed for 60 days prior to their hiring; plus 2) a tax credit for retaining those same employees for at least 52 consecutive weeks at the same level of pay or more. The Act also extended one of the expired provisions from last year – known as a Section 179 expense limit, which is a special method of accounting for otherwise depreciable items via direct expense in the first year.  This provision simply extended the more liberal limit from the previous year. As always, consult your tax advisor for more information. Photo by jay

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