My Virtual Log Book

There were recent changes in the legislation which everyone needs to be aware of. Even though this year the retirement security plans were the centre of discussions, there are a few other reforms pertaining to your IRA which can make a significant difference in your financial plans for 2008.

There have been massive changes in the pension legislation. Retirement Plans can now be rollover to non spouses. Earlier only spouses had the ability to roll 401k, 403b etc. over into their own IRA. Surviving children or domestic partners were left out of the tax deferral deal. However, the new law allows for a child or non spouse to directly roll funds from the company retirement plan to an Inherited IRA. Even though this change isn’t the most optimal for domestic partners, it definitely is a step up over the outdated versions. Also, it was made clear of Jan18,2008 that this policy will remain voluntary (and not mandatory as was suggested during the drafting).

Last year, the IRS started allowing taxpayers directly deposit their federal tax refunds into their financial accounts. The annual contribution limit of $4000 ($5000 if age is above 50) was maintained. Also, charity donations of up to $100,000 a year were treated as non-taxable income. This provision applied to outright IRA gifts to charities, but it did not include gifts made to foundations, donor advised funds or charitable annuities. Also, these donations needed to be made directly from the IRA account. This provision was welcomed; however, it only lasted till 2007.

Hence, in summary, all these changes seem to be a step towards preparing people for retirement and influence greater savings. However minor these changes may be, they have been welcomed by majority of people.

Filed under: Business & Economics, Finance, Financial Planning, Insurance, Personal Finance, Taxes