Tuesday, August 5, 2008

Permanent IRA Changes

There are a number of changes to pensions and IRA's such as higher limits on contributions and Roth 401 (k) plan, they were scheduled to expire after 2010 but a new law makes these provisions permanent.

Under the current law, you can't roll over money from an employer retirement plan (except a ROTH 401 (k) directly into a ROTH IRA, if you qualified. However, after 2007, you'll be able to roll employer retirement plan directly into a ROTH IRA. Though you'll only be able to do this if your modified adjusted gross income is below $100,000 and you'll have to include the distribution in your taxable income.

Distributions from IRA's or 401 (k) plans to people called up to active reserve duty after September 11, 2001 and before before 2008 are not subject to the 10% early distributions penalty. A person in reserves has two years from the end of active duty to roll over such a distribution into an IRA and avoid tax.

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