1. Are you searching for one more tax deduction? It's not too late to contribute to your IRA and claim a deduction for 2015. Under current tax rules, you can establish and contribute to your IRA up until April 18, 2016 (April 19 if you live in Maine or Massachusetts). If the IRA is the traditional, tax-deductible kind, you can deduct that contribution on your 2015 federal income tax return. If you're under age 50, the maximum contribution is $5,500. If you were 50 or older by December 31, 2015, you can contribute up to $6,500.
2. You can make a contribution
to a traditional IRA and convert it to a Roth later. Although a conversion now will
generate taxable income that's reportable on next year's federal tax return,
qualifying withdrawals from the Roth will be tax-free when you retire. If your
circumstances change, you can choose to "recharacterize" your new
Roth as a traditional IRA by moving the funds back within a specified period.
You also have the opportunity to "reconvert" the funds to a Roth
again after a recharacterization.
3. If you turned 70½ in 2015,
you're now required to take an annual minimum distribution from your IRA (and,
unless you're still working, from other retirement plans also). If you chose to
delay taking your first distribution last year, April 1, 2016, is an important
deadline. That's the last day you have to take your initial distribution or you'll
be subject to a 50% penalty on the amount you should have taken.
4. The age of 70½ also lets you
benefit from the now-permanent tax break for making charitable contributions
from your IRAs. While it's too late to make a contribution for 2015, you can
exclude direct transfers of up to $100,000 from your gross income this year.
The donation counts as part of your required minimum distribution.
For more tax breaks related to IRAs
and other retirement plans, contact our office at (518) 798-3330.
