Six Things You Should Know About Pension Income Splitting
Six Things You Should Know About Pension Income Splitting
If you’re currently retired or nearing retirement, pension income splitting may be a smart way for you to significantly save on taxes. Amendments made to the Income Tax Act in 2007 have given Canadians an effective way to lower their household’s overall tax bill, but you need to read the fine print before you can collect.
“With tax season looming, pension income splitting could be an option for you and your spouse to consider,” said Investors Group tax and financial planning expert Christine Van Cauwenberghe. “But to ensure an optimal split, you need to look at the fine points carefully.”
Van Cauwenberghe provides these five pension income splitting facts to help you make the most of this opportunity:
1. Income that qualifies for splitting is different if you are under 65 or over 65 years of age. For example, income from a registered pension plan can be split irrespective of the age of the person who receives the pension income. However, RRIF income can be split only if the person receiving the income has attained age 65.
2. Pension income splitting could have an impact on several other tax calculations and credits including OAS benefits, medical expense credits, spousal credit, age credit clawbacks, and quarterly tax installments.
3. You don’t have to split pension income 50 – 50, and split amounts can change each year based on your personal tax situation.
4. Pension income splitting does not require the physical transfer of funds.
5. Pension income splitting is not new. CPP/QPP income splitting (or income sharing) has been allowed for several years.
“Pension income splittingcan be a good option for many households to reduce their annual taxes – but other tax-saving opportunities need to be factored as well,” adds Van Cauwenberghe. “A financial advisor can work with you to ensure that your overall financial plan is on track with your plans for retirement.”
This column, written and published by Investors Group Financial Services Inc. (in Quebec – a Financial Services Firm), presents general information only and is not a solicitation to buy or sell any investments. Contacta financial advisor for specific advice about your circumstances. For more information on this topic please contact your Investors Group Consultant.
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Turning Science into Things People Need
Ten respected scientists who have built successful careers in industry reveal new insights into how they made the transition from research scientist to industrial scientist or successful entrepreneur, serving as a guide to other scientists. Paperback.
Turning Science into Things People Need
How to do things that you thought you could not do !
Learn how to Work with Adobe Photoshop, how to Blog…How to sell on eBay®…How to do things you always wanted to be able to do…make money, save money…Learn how to…
How to do things that you thought you could not do !
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10 Things Every Taxpayer Needs to Know About the Pension Law
10 Things Every Taxpayer Needs to Know About the Pension Law
The Pension Protection Act, signed into law on August 17, 2006, is designed to address the nation-wide problem of under-funded pension plans. The law penalizes noncompliant companies and encourages employee contributions, but many of the changes directly impact taxpayers of all ages, regardless of retirement status.
“Taxpayers will benefit from many of the act’s provisions, some of which come in the form of tax breaks, but individuals cannot take full advantage of the tax breaks until the new laws are fully understood,” said Michael Smith, Managing Authorized Taxpayer Representative at tax services firm FSI Tax Corp. (www.fsitax.com).
The following is a rundown of the most important tax code changes and how they will likely affect taxpayers, as well as retirees.
1. Direct IRA Tax Return Deposits
Taxpayers can now have their tax returns deposited directly into their IRA accounts. The IRS already offers taxpayers the option to automatically deposit returns into checking and saving accounts. By adding IRA accounts, legislators hope taxpayers will contribute more funds toward their retirement accounts.
2. 529 College Savings Plans
Many temporary tax laws enacted by the 2001 tax cuts were made permanent by the Pension Protection Act. This includes the ability to make withdrawals from 529 college savings plans without suffering tax penalties.
“Tax-free college savings withdrawals may seem inappropriate in a pension law, but this provision is welcomed by parents who would otherwise resort to tapping their IRAs to fund their children’s education,” said Smith.
3. Saver’s Credit
Another 2001 tax break that was set to expire this year is the Saver’s Credit, a tax credit matching up to ,000 for lower-income workers who put money into their retirement accounts. This tax break benefits workers who earn less than ,000 because pre-tax contributions lower the taxpayer’s reportable income and the Saver’s Credit provides additional tax relief with its matching funds.
4. Increased Contribution Levels
In 2001, the IRS temporarily raised employee-sponsored retirement plan contribution levels from ,000 to ,000 this year, ,000 in 2008 and then adjusted by inflation. The higher limits were set to expire in 2010, but the act made them a permanent increase.
This change, also intended to encourage increased contribution amounts, applies to 401(k)s, IRAs, 403(b)s, 457s and catch-up contributions for workers aged 50 and older.
5. Direct Rollovers from a 401(k) to a Roth IRA
Employees who move from one workplace to another were previously permitted to transfer their 401(k)s to traditional IRAs, both of which require taxes to be paid once money is withdrawn. Only then was the individual allowed to transfer the account into a Roth IRA.
The law now permits former employees to transfer their employer-funded retirement accounts directly into a Roth IRA, a popular option due to the fact that contributions are made after taxes are taken from earnings, which means that there are no taxes due upon withdrawing funds.
“The tax code changes enacted by the Pension law benefit taxpayers and steer them toward contributing to their own retirements,” explained Smith. “While companies should be held accountable for funding employee pensions, each taxpayer should take advantage of changes that make it easier to ensure a secure retirement.”
Tax Deductions for Charitable Giving
Non-pension-related tax code changes include several provisions that significantly increase charitable giving regulations, some of which are unlikely to please donors.
5. Documenting Items
To discourage taxpayers from inflating the value of non-monetary charitable donations for inflated tax deductions, the IRS now requires taxpayers to fill out a form detailing the gifts. Additionally, any significant household item, valued at more than 0, must be appraised before the taxpayer can take a deduction.
Many charitable organizations, including Goodwill Industries International, say the new provisions will guard against worthless donations more suitable for the trash bins, but critics argue that increased regulation will discourage would-be donors and cause a decrease in charitable giving.
6. Documenting Monetary Gifts
Monetary donations will also require documentation. Regardless of the amount, a taxpayer should retain proof of any donation. Appropriate documentation can be a bank record, canceled check, credit card statement or receipt from the charity.
“These records are not required to be included in the tax return but they should be kept on hand should the IRS request proof,” advised Smith.
7. Direct Donations from IRAs for Seniors
Another tax law that many charities support affects only seniors. For the next two years, donors 70 ½ or older will be able to donate to charities directly from their IRAs, an accommodation that keeps the donated amount tax-free and avoids tax penalties for early withdrawals.
This provision benefits eligible taxpayers who take the standard deduction, which many older filers do because they receive larger standard deductions. This can also benefit individuals facing donation limits. Generally, people cannot donate more that 50 percent of their incomes, but the money does not count as income when it comes directly from the IRA.
Officials at charities such as United Way claim that despite being temporary, this provision will likely bring in tens of millions of dollars.
Other Pension Provisions
8. Automatic 401(k) Sign Up
Employers are allowed to automatically sign up employees for a 401(k). This change encourages participation from people who may not otherwise bother to sign up for the plan in the first place, though they will have the option to opt out.
9. Investment Advice
Because employees often choose safer investments for their 401(k)s, which generally result in modest returns, the act allows them to receive investment planning advice to encourage riskier investments with the potential for higher returns. The act also provides protection against dishonest advisers who steer employees toward decisions that could increase their own profit.
10. Non-Spousal Benefits
Two provisions that expand allowable withdrawals are pleasing gay rights activists. The non-spousal rollover lets retirement account assets be transferred to a designated beneficiary upon the retiree’s death and the hardship distribution allows retirement account assets be used for a medical or financial emergency of a beneficiary other than a spouse or a dependent.
The majority of the Pension Protection Act aims to ensure that companies fully fund traditional pension plans over a seven-year period, starting in 2008. But many provisions promote increased individual employee participation in retirement planning.
Smith said that while the new law expands allowances and makes it easier for individuals to increase retirement savings, it may be a step toward employee-funded retirement plans – a move that has many critics concerned.
Maggie Beetz is a writer for FSI Financial Literacy, Corp. based in Columbia, MD. FSI Financial Literacy aims to spread financial awareness to clients of FSI Tax Corp., Debt Shield, Inc. (http://www.debtshield.com/) and the general public. For more information, visit http://www.fsitax.com/ or please call 800-806-9106 or email mbeetz@fsiholding.com.
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Super Immunity: 15 Things You Can Do to Supercharge Your Immune System
Learning to improve the function of your immune system is the most powerful thing you can do to improve your health and energy level. In this report you’ll learn 15 proven strategies to improve your immunity fast…and to take control of your health now.
Super Immunity: 15 Things You Can Do to Supercharge Your Immune System
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The things you should know about home care
Home care is a type of health care that is provided in the home of the patient. While it may sometimes be provided by doctors and nurses, it may also be provided by family members as well. While home care will often refer to people who are not medically trained, the term home health care will often refer to treatment that is given to the patient in their homes by licensed doctors or nurses. In the Unite States, both terms are used to refer to care that is given by both non-licensed caregivers and doctors or nurses.
The purpose of home care is to allow a patient to receive care at home instead of being admitted to an institution such as a hospital. The health care professionals will visit the patient, and will help them with a number of different tasks. Some of these tasks include dressing, hygiene, shopping, cooking, or assistance with taking medication. The type of home care that is offered will vary in different nations. For example, there are substantial differences in home care between the United States and The United Kingdom. In the US, health care professionals will visit the patient based on a schedule that is determined by a doctor who is licensed.
The insurance the patient has will also play a role in this as well. In the UK, the care will be provided two times a day. The US is one of the most informal places to receive home care. The vast majority of care that is given to a patient will be provided by their friends or family. Some of the professionals that may work with these families are social workers, mental health specialists, and respiratory therapists. In some cases, the primary doctor may visit patients. In most situations, home care will be paid by either employer insurance or public organizations such as Medicaid or Medicare. The patient or their families may also pay as well.
To determine the amount of care a patient needs, there are six factors that must be taken into consideration, and these are called activities of daily living. These activities are eating, restroom usage, dressing, bathing, walking, and transferring. In addition to these factors, a patient may also need help shopping, cooking, or handling their own money. To be a home care worker, there are a number of qualifications that a person must have. They must have a high school diploma or GED, and some organizations will require workers to have a year of experience, and they will need to take examinations.
Home care workers must understand safety procedures, and they must also know how to properly give personal care. They should be skilled with using equipment such as walkers, wheelchairs, crutches, or lifts. They should understand the importance of being sanitary, and they should be proficient in preparing or handling food. In addition to this, health workers must be able to monitor and record any changes in the condition of the patient they’re caring for. A lot of the necessary requirements involve common sense. Many people who become home care workers will have experience working in Nursing homes, and may become Certified Nursing Assitants as well.
Information on clematis alpina can be found at the Clematis Care site.
10 things to think when thinking about a Russian wife
Real live stories of real people who had real experience in a Russian-Western marriage.
10 things to think when thinking about a Russian wife
Six Things We Wish You Knew About Hospice?
At Heavenly Helpers Senior Home Care, we have seen firsthand what great things hospice does for the individual and the family facing an end of life situation. We are not a hospice organization, but if a hospice agency has a client who needs someone to stay with him or her (perhaps the family can’t or the hospice team doesn’t have someone available), that is where we can come in. In the last several months, we have had a number of in-services for our caregivers that pertain to hospice care.
Our speaker, a nurse at a local hospital, which deals specifically with Hospice and End-of-life care, provided our caregivers with an educational training session on end-of-life care. She gave us a quite detailed summary of guidelines to use when caring for hospice patients. Our speaker also demonstrated some very useful techniques to help us keep our patients more comfortable. There are several things I find myself wishing everyone knew about hospice. Here are six that I want to highlight:
People are not taking advantage of hospice early enough to really reap all the benefits it has to offer. I was shocked to hear that only 33% of all hospice patients live 7 days or less.
Some people mistakenly believe hospice care is only for cancer patients. Not true! Qualification is based on certification that the patient probably has 6 months or less to live if their disease or affliction runs its natural course.
Everyone can utilize hospice regardless of financial situation. Medicare, Medicaid and private insurance will cover hospice so that no one will be turned away.
Hospice isn’t about lessening care by any means! In fact, there is something called the “hospice effect” whereby a certain percentage of patients so greatly benefit from the care and attention, they actually get better! These patients are then able to come off hospice! Just remember that hospice care is not curative.
Hospice provides one year of bereavement services for the family after the patient dies. This is something that probably too few families either know about or take advantage of.
A person may stay on hospice more than 6 months. As long as the hospice medical director and the patient’s doctor continue to certify that the patient probably has 6 months or less to live, hospice will continue for another 6 months. There have been patients that have been on hospice for several years.
Please feel free to call Heavenly Helpers at 314-963-9913 if you have any questions about hospice.
Medicare Basics: Things You Need To Know
Signed into law to provide health and economic security for seniors in 1965, Medicare is an important source of health insurance coverage for 45 million people. Today, about 97% of older American have health insurance through Medicare.
Being covered by health insurance is vital for people of all ages, but it is especially critical for those with disabilities and those with illnesses and chronic conditions associated with aging. This article is designed to provide you with basic information on Medicare – how it works, how it differs from Medicare advantage plans, and who is eligible.
What is Medicare
The Medicare program is a federal health care insurance program for people over the age of 65 and the disabled. Medicare has two parts. Medicare Part A is a Hospital Insurance program, while Medicare Part B is a Supplementary Medical insurance (most people pay monthly for Medicare Supplement).
Deference between Original Medicare and Medicare Advantage Plans
You can get your health-care coverage from Medicare in one of two ways: enroll in regular fee-for-service program through Original Medicare (Parts A and B) or in a Medicare Advantage plan (also known as Medicare Part C) through a health plan sponsored by a private company. To join a Medicare Advantage Plan, you must have Medicare Part A and Part B.
If you are enrolled in one of Medicare Advantage plans (HMO, PPO, PFFS, and SNP), you still have Medicare Parts A and B, but you get your health-care services through a private plan that has a contract with Medicare. Medicare Advantage Plans coverage can include prescription drug coverage. You pay your usual Part B premium, plus any additional premium that the plan may charge.
Medicare Advantage Plans may have lower deductibles and co-payments than Original Medicare and cover costs & services not covered by original Medicare. That’s why many people choose Medicare Advantage plans which offer affordable health insurance coverage.
Medicare Eligibility Requirements
Eligibility is not based on financial need. Generally, if you are a citizen or permanent resident of the United States and one or more of these describes you, you are eligible for Medicare Parts A and B:
You are 65 years or older and eligible to receive Social Security; You are under 65, permanently disabled, and have received Social Security disability insurance payments for at least 2 years; You are under 65 years of age with end-stage renal disease (ESRD) and you or your spouse has met the Medicare work requirement.
If you already get benefits from Social Security or the Railroad Retirement Board, you are automatically entitled to Medicare Part A and Part B starting the first day of the month you turn age 65. You will not need to do anything to enroll.
Get expert advice on health insurance from Sandra Cohen, a knowledgeable “insider” who helps individuals and families understand the complexity of health insurance and guides them to make the best-informed decisions when shopping for health insurance or requesting Oklahoma City Health Insurance Quote online.
Special Needs Trust: Things to Consider
A special needs trust is a good option for someone that may have too much income to qualify for Medicaid. It can also be used by an injury survivor, who is receiving proceeds from a fundraiser, in order to maintain eligibility for Medicaid. Financial planner, Jason Lazarus, explains what a special needs trust is and how it can be used.