Assignment 2 Flashcards

1
Q

Allowable Deductible IRA Contribution

A
  • $5,000 in 2008 (indexed in future years )
  • Increases by $500 increments
  • $5,500 in 2009 and 2010
  • Catch‐up Contribution $1,000 (in 2008)
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2
Q

IRA Contribution Deductibility Limit

A
  • Single ‐‐taxpayers $52,000 ‐$62,000 in 2007

* Married taxpayers – $83,000 ‐ $103,000 in 2007

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3
Q

Excess Contribution Excise Tax

A
  • 6% excise tax in addition to current income taxation.

* Applied each year until the excess contribution is withdrawn from the IRA

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4
Q

Roth IRA

A

• Same contribution limits as regular IRA
• Contributions are taxed in year of contribution
• Distribution (earnings and contributions) are
not taxed if “qualified”

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5
Q

Conversion to Roth IRA

A

• Individual IRA owner can opt to transfer regular IRA to Roth IRA – converted amounts are taxed in year of conversion, no early
distribution penalty

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6
Q

Deemed IRA

A

• Created by EGTRRA
• Employer‐sponsored plan can have IRA
accounts that accept voluntary contributions

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7
Q

Tax Credit

A

• Encouragement for lower and middle
income employees to contribute to
retirement plan
• Tax credit claimed on individual’s tax return

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