On June 12, the Court decided the Clark case, holding that inherited IRAs are not protected "retirement funds" under federal law. The Court reached this conclusion by noting that the holder of an inherited IRA cannot invest new money in the account, can withdraw the entire balance at any time and use the funds for any reason without penalty, and must take required distributions from the account no matter how far the holder is from retirement.
A stock plan is a form of employee compensation that provides you with either stock or an amount of cash that is based on the performance of your employer's stock. There are numerous types of stock plans that your employer can offer, including employee stock ownership plans (ESOPs), restricted stock plans, stock appreciation rights plans, nonqualified stock option plans, and employee stock purchase plans.
A profit-sharing plan is a type of qualified defined contribution plan in which you, the employer, contribute to the accounts of participating employees. As the name implies, your employer contributions are generally (but not necessarily) tied to your business's profits, allowing employees to "share" in those profits. Annual contributions to the plan may be discretionary (you need not contribute anything at all), or may be based on a specific formula relating to your annual profits.
If you'd like a retirement plan that guarantees a specified benefit level at retirement regardless of investment results, you may want to consider a defined benefit pension plan. A defined benefit plan is a qualified employer-sponsored retirement plan that is funded solely by the employer (in most cases); it's the traditional type of pension plan. A defined benefit pension plan allows the highest potential contribution amount of any plan. These contributions are excluded from income and grow tax deferred. In addition, contributions can be deducted from business income.
An incentive stock option is a right or option granted by the sponsoring corporation to its employees to purchase shares of the corporation's stock at a certain price for a specified period of time, notwithstanding an increase in the value of the stock after the option is granted. It is sometimes referred to as a qualified or statutory stock option.
The IRS has indicated that it will follow the recent Tax Court decision in Bobrow v. Commissioner, which held that a taxpayer may make only one tax-free, 60-day rollover between IRAs within each 12-month period, regardless of how many IRAs he or she maintains. However, the IRS will not apply this new interpretation to any rollover that involves an IRA distribution occurring before January 1, 2015.
A Financial Planner can help you:
- assess your current financial situation.
- create a realistic plan to meet your financial goals.
- understand how to meet your financial and retirement goals.
- put your financial plan into action and monitor your progress.
- update your financial plan to grow with your changing needs and goals.