Retirement Plans and IRAs

Form 8606 is a Must for Non-Deductible IRA Contributions

File IRS Form 8606 if You Make Non-Deductible IRA Contributions – and Keep Copies in your Tax Records in Case You’re Audited: Form 8606 is a simple record keeping device that keeps track of your annual and historic non-deductible contributions to your traditional IRA. You’ll need to know the total amount of your non-deductible IRA […]

Investment Management Fees for Retirement Plans Should be Paid Out of the Corporation Rather Than Out of the Retirement Plan

If you pay an advisor to manage your retirement plan investments, ask them to bill your practice for their fee rather than take the money out of the retirement plan (which is the common practice). If investment fees are paid out of the plan, they will be allocated pro-rata among the participants. Generally, the doctor […]

The Practice Should Pay Current and Future Investment Fees, NOT Reimburse the Plan for Past Fees

Under the retirement plan laws, the practice can put money into the plan as an annual contribution, a rollover contribution from another plan, a corrective contribution (to fix a prior mistake) and related earnings on that corrective contribution. A reimbursement to cover past fees will be treated as an additional contribution which would be required […]

Articles on Retirement Plans That Are Written by Insurance Salespeople Should be Read with a Jaundiced Eye

A doctor friend emailed us an article he’d read on the benefits of cash balance plans. The writer’s bio stated that, among other things, he is a licensed life insurance salesman. The article itself did a reasonable job describing cash balance plans, but it inevitably transitioned into a pitch for funding the plan with permanent […]

Do You Have “a Friend” Who Missed His or Her First IRA or Qualified Plan RMD?

We know that this is something you would never do, because you would owe a draconian 50% penalty on the un-distributed amount. But, if your friend had a legitimate reason for not taking the distribution, like a serious illness or bad advice from a bank, he or she can file IRS Form 5329, provide their […]

Planning for Retirement

Advice to Older Doctors – How Much Does It Cost To Live In Retirement Compared To Pre-Retirement Costs? Over the years, I’ve read articles stating that the cost of living in retirement is about 70% of pre-retirement costs.  The explanation is that eliminating employment-related expenses (extra transportation, meals, clothes, etc.) will lower our costs without […]

$12,000 Standard Deduction Helps Children on the Payroll

The New $12,000 Standard Deduction Will Help “Older” Children or Grandchildren Who Are Earning An Income Through Your Practice:  Many Newsletter readers employ young children in their practices so that these children become eligible to fund Roth IRAs.  The decades-long growth potential is massive even with the relatively modest contributions made each year.  If these […]

Life Insurance in Retirement Plans

I would not own life insurance in a retirement plan (it cannot be owned in an IRA) unless I was uninsurable, needed more life insurance, and could get it as a plan participant.  Many doctors who do not fit that profile are sold expensive, “investment”-type life insurance (whole life, variable life, universal life, etc.) in […]

IRS Issues Approval Letter for Collier & Associates Pre-Approved Defined Benefit Plan

Until now, every defined benefit pension plan (including the newer “cash balance” type) has had to have been individually designed. This means that each new plan was drafted from scratch and submitted to the IRS for approval of that particular plan. The IRS charged a large user fee of $2,500 to review and approve an […]

2017 IRA Contributions Are Due April 17, 2018

This is a firm deadline and cannot be extended to October 15.  If you send the deposit by mail, the rule is that the day mailed is considered the day deposited.   But we need proof of the date mailed should the deposit not arrive on time.  We have the ability to avoid this proof-of-mailing problem, […]

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