IRA's
1/2 percent above the 90 day T-bill rate
Here are some questions and answers concerning IRA's:
Q. An IRA owner completed a Beneficiary Designation/Change Form and listed "per my will" as his primary beneficiary. Who is entitle to the money following the owner's death, and what are their payment options?
A. We interpret "per my will" as a designation of the owner's estate. If an estate is not established for the owner, then distribution is made to the beneficiaries named in the owner's last will and testament (which is the same as the result if the owner had named his estate). The IRS has ruled that even if the IRA is distributed to an individual named in the will, the beneficiary only has the payment options that would be available to the owner's estate.
Q. An IRA owner made a direct rollover from her traditional Qualified Retirement Plan (QRP) to her traditional IRA last year. Can she now recharacterize this contribution as a QRP conversion to her Roth IRA?
A. A rollover or direct rollover from a traditional QRP to a traditional IRA cannot be recharacterized to a Roth IRA because the tax-free movement of funds between two accounts cannot be recharacterized. This is the same reason that a direct transfer or rollover between two IRAs of the same type cannot be recharacterized.
Q. An HSA owner ceased being an eligible individual last month when he lost his HDHP coverage due to a layoff. Can he still make an HSA contribution based on his eligibility during 2008?
A. Yes, a person who is not currently an eligible individual can still make an HSA contribution based on prior eligibility.
Q. Can a member who attains age 70 1/2 this month still make a traditional IRA contribution?
A. A calendar-year taxpayer who attains age 70 1/2 in 2009 can make a regular traditional IRA contribution for 2008 prior to April 15, 2009 but cannot make a regular traditonal IRA contribution for 2009.
Q. What contributions can be made for a Coverdell ESA beneficiary who will attain age 18 later this month?
A. With one exception, regular Coverdell ESA contributions can be made for 2008 and for 2009 until the beneficiary's 18th birthday. No contributions can be made on or after the 18th birthday. The contributions for 2009 are subject to the normal $2,000 contribution limit. The exception is that regular contributions can be made for a special needs beneficiary after his or her 18th birthday.