Video 59: Retirement (6/10/19)
Weekly Questions: Video 41-60 • 13m
Talking with TaxSpeaker: Video 59
1. I love your articles about retirements. I just became 66 years old. I was debating with myself whether I should apply for SS benefit. I calculated the difference between my benefit now and of age 70 if I delay it and it was about $400 a month. This means if I don't collect now ( about $2,500 a month) for the next four years I will not have $120,000 (2,500x12=30,000x4=120,000) and if I wait until age 70 to collect $400 more a month I have to live 25 years to compensate for what I didn't get that is $120,000 /$4,800=25 ( $4800= 400x12). I know I will pay tax on 85% my benefit. Which I believe if I invest that probably will pay for the additional tax that I would pay. Question. Do you see anything wrong with my calculation? And if I am right, it means I have to live until age 95 to come out even. Am I correct?
2. I have a taxpayer that married a Canadian two years ago and that person applied and received US citizenship in 2018. She has a retirement and social security from Canada as well as interest. I have the Canadian form comparable to the US form 1099 for Canada Pension Plan and Old Age Security. There is also an NR4 for distribution from a retirement account with withholdings for taxes. I cannot find in the IRS correspondence or your 1040 Tax Update how to treat this reporting. Since she is now a citizen do I use the form 1116, report on the social security line and the retirement with the withholdings on the form 1116? Obviously, the interest income would go to the form 1116. Then do I adjust the amounts for the dollar conversion? I am sorry to bother you but I am really confused. Can you direct me to where I can research this or let me know if you have been faced with it and how you treated the reporting?
3. What if you have an employer who set up an SEP even though he had another business - both of which he owns 100% and the one that did not have the SEP he has many employees in. Therefore he is in violation of the common ownership rules, correct? If he already funded this plan in previous years - how do you fix this issue?
4. I have a client with a solo 401K. She is the 100% owner and only employee. Turns out she hired her daughter one year as an employee. I told her we had a problem with the solo now that she hired another employee. Client decided to make the daughter an independent contractor and pay her corp instead. 100% of daughters income is from this client (with the solo). Would there be a concern about the control group rules still in this scenario?
5. How does an employer elect the safe harbor for the 401K plan? Do they just write it in to the plan document?
6. If an employer is on a fiscal year and contributes when the return is filed, is the employer contribution calculated on the W-2 calendar year wages or employee fiscal year wages?
7. Since we have so many people turning 65 each day for the next few years. What do you think is the best overall piece of advice we should be giving our clients?
8. Can I roll over only the nondeductible contribution portion of my traditional IRA to a Roth IRA and thereby avoid the taxes that would be due on a rollover of my IRA earnings?
9. If I convert from a traditional IRA to a Roth, is the gain considered ordinary income or a long-term capital gain?
10. Can a nonworking wife make a deductible contribution to her spousal IRA for 2019, assuming that the husband’s earned income is $150,000, he is an active participant in an employer’s retirement plan, and the couple file a joint return?
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Video 58 (6/3/19)
Talking with TaxSpeaker: Video 58
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Video 57 (5/21/19)
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