Transcript Liberty Tax Service Online Basic Income Tax Course. Lesson

Liberty Tax Service
Online Basic Income Tax
Course.
Lesson 9
1
HOMEWORK CHAPTER 8
HOMEWORK 1: Circle the following items that can be deducted
on Schedule A.
Vaccinations
Maternity clothes
Country club donation
Splints
Vasectomy
Speeding fine
Diaper service
Psychiatrist
Athletic club membership
Orthopedic shoes
Prenatal car
Acupuncture
Organ donor expenses
Colombian relief donation
Braces
Bottled water
Republican party donation
Cremation
Slim Fast
Passport fee
Hearing aid
Life insurance premiums
Prescription vitamins
Special mattress needed for back injury
Purely cosmetic surgery
Chiropractor
Labor union donation
YMCA donation
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HOMEWORK CHAPTER 8
Homework 1 – Answer
The following items are deductible on
Schedule A:
Vaccinations, Splints, Vasectomy,
Psychiatrist, Orthopedic Shoes, Prenatal
Care, Acupuncture, Organ Donor Expenses,
Braces, Hearing Aid, Prescription Vitamins,
Special Mattress for back injury,
Chiropractor, and YMCA Donation.
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HOMEWORK CHAPTER 8
HOMEWORK 2:
Dominic D. (SSN 074-66-2343, born
11/4/1971) and Lucille L. D’Andrio (SSN
021-90-8723, born 10/11/1976) are
married and live at 42 County Line Rd.,
Branson, MO 65616. Dominic is a computer
technician and Lucille is a department clerk.
They have one child, Bryan (SSN 432-449857, born 4/28/1995). They provide all of
the support for Bryan. They will file jointly
and plan to itemize their deductions. Their
itemized deductions in 2007 were $11,996
and they filed a joint return. Their 2007
state income tax deduction was $1,798 and
the sales tax deduction they could have
taken was $844. Their W-2 forms and other
tax information are attached.
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HOMEWORK CHAPTER 8
Family health insurance
Contact lens (Lucille)
Car loan interest
Salvation Army donation (cash)
Tolls for medical visits
Real estate tax
Stop-smoking program
(doctor recommended for Dominic)
Nonprescription drugs
Braces for Bryan (total bill $4,000)
$1,800
220
550
275
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1,800
320
440
800
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HOMEWORK CHAPTER 8
Tuition (private school)
$3,000
Gas and oil for medical purposes
110
Mileage for medical purposes 1,000 miles
(all from 7/1/08 to 12/31/08
Prescription drugs
310
Goodwill clothing donation
330 FMV
(original cost $3,200)
Political campaign contribution
50
Prepare a return for the D’Andrios.
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HOMEWORK CHAPTER 8
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HOMEWORK CHAPTER 8
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HOMEWORK CHAPTER 8
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HOMEWORK CHAPTER 8
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HOMEWORK CHAPTER 8
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HOMEWORK CHAPTER 8
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HOMEWORK CHAPTER 8
Homework 2 – Answer
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HOMEWORK CHAPTER 8
Homework 2 – Answer
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HOMEWORK CHAPTER 8
Homework 2 – Answer
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HOMEWORK CHAPTER 8
Homework 2 – Answer
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HOMEWORK CHAPTER 8
Homework 2 – Answer
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HOMEWORK CHAPTER 8
Homework 2 – Answer
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HOMEWORK CHAPTER 8
Homework 2 – Answer
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HOMEWORK CHAPTER 8
Homework 2 – Answer
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HOMEWORK CHAPTER 8
Homework 2 – Answer
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HOMEWORK CHAPTER 8
Homework 2 – Answer
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HOMEWORK CHAPTER 8
Homework 2 – Answer
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HOMEWORK CHAPTER 8
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Chapter 9: Retirement Benefits
Chapter Content
 Types of Retirement Plans
 Pensions, Annuities and Designated Roth Accounts
 Simplified Method
 Lump-Sum Distributions
 Minimum Distributions
 Rollovers
 Early Distributions
 Disability and Retirement
 Commercial Annuities
 IRAs
Traditional IRAs
Roth IRAs
SIMPLE and SEP IRAs
 Retirement Savings Contribution Credit
 Key Ideas
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Chapter 9: Retirement Benefits
Objectives
 Learn About the Different Types of Retirement
Plans
 Determine the Taxable and Nontaxable Parts of
Pensions and Annuities
 Use the Simplified Method
 Learn About Lump-Sum Distributions and
Rollovers
 Learn How Disability Affects Your Retirement Plan
 Distinguish Between the Different Types of IRAs
and Understand Their Benefits
 Learn about the Retirement Savings
Contributions Credit
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Chapter 9: Retirement Benefits
 The tax law encourages employers to
contribute to the RETIREMENT PLANS of
their employees.
 Employers claim a current deduction for
their contributions into these retirement
funds.
 Employees benefit by having the money
added to the retirement account taxdeferred.
 Interest, dividends, and appreciation added
to the value of the account is not taxed you
start withdrawing the money.
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Retirement Benefits
Common types of retirement plans include
pensions, annuities, and IRAs.
Reporting retirement benefits.
1. Most are reported to on Form 1099-R.
2. Appendix B defines the boxes used on
Form 1099-R
3. You report total pension and annuity
income on line 16a of Form 1040.
4. Taxable portion is entered on line 16b of
Form 1040 (if fully taxable report only on
line 16b).
5. If more than one plan, figure taxable part
of each separately; only enter totals on
Form 1040.
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Retirement Benefits
6. Report IRA distributions on lines 15a and
15b of Form 1040 (if fully taxable report
only on line). Among other items, box 7 of
Form 1099-R gives the distribution code.
7. Report IRA distributions on lines 15a and
15b of Form 1040 (if fully taxable report
only on line 15b).
8. Additional tax on IRAs and other
retirement plans is reported on line 59 of
Form 1040.
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Retirement Benefits
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Retirement Benefits
Form 1040, Page 1
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Retirement Benefits
 Generally, pensions and annuities provide
cash payments to you after retirement.
 The term of the payments may be for life or
for a fixed time period.
 A withdrawal (distribution) generally cannot
be taken before the normal retirement age
as specified in your plan without a penalty
being charged.
 Some plans allow for early retirement.
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Retirement Benefits
 A pension provides specific payments to an
employee or survivor (the beneficiary) after
retirement from work. The payments are
made regularly and are for past services
with an employer.
 An annuity provides payments under a
contract from an employer or an insurance
company, trust company, or an individual.
Payments are made at regular intervals over
a period of more than one full year.
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Retirement Benefits
 Your cost in a retirement plan is everything
that you paid into the plan that was not
deducted or excluded from income. For
example, your 401(k) contributions which
reduced your wages for income tax are not
considered part of your cost in the plan.
 Cost also includes amounts your employer
paid that were taxable to you when paid.
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EMPLOYEE PENSIONS AND
ANNUITIES
Pension is fully taxable if you did NOT pay
any part of the cost of your employee
pension or annuity and or you deferred part
of your pay while you worked.
Pension is partially taxable if you did
contribute to the cost of the plan.
Generally figure tax-free and taxable parts of
annuity payments using the Simplified
Method. You MUST use the Simplified Method
if your annuity starting date is after
November 18, 1996 and payments are from a39
qualified plan.
THE SIMPLIFIED METHOD
Using the Simplified Method, you figure the
tax-free part of each monthly annuity
payment by dividing your cost by the total
number of expected monthly payments.
This is either defined in the contract or figured
on the annuitants’ ages on the starting date
and determined from a table.
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THE SIMPLIFIED METHOD
Simplified Method must be used if:
1. Annuity starting date is after
November 18, 1996 and,
2. Payments are from qualified
employment plan or tax-sheltered
annuity and,
3. At time pension or annuity payments
began, you were under age 75 or were
entitled to fewer than 5 years of
guaranteed payments.
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THE SIMPLIFIED METHOD
If pension starts after December 31, 1986,
exclude nontaxable pension amount until
pension cost is recovered; when recovered,
entire pension income is taxable.
Use Simplified Method Worksheet to figure
tax-free portion of payments from qualified
plan.
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THE SIMPLIFIED METHOD
For annuity starting dates beginning in 1998,
you use Table 9-2 of the Simplified Method
Worksheet to figure the tax-free portion of
joint and survivor annuity payments from a
qualified plan.
Under this recovery method, the total number
of monthly annuity payments is based on
the combined ages of the annuitants at the
birthdays preceding the annuity starting
date.
If your annuity starting date began before
1998, the total number of payments is
based on your age at that date.
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THE SIMPLIFIED METHOD
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THE SIMPLIFIED METHOD
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THE SIMPLIFIED METHOD
Civil Service and Railroad Retirement Board use
forms different from Form 1099-R.
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THE SIMPLIFIED METHOD
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ELECTIVE DEFERRALS TO A QUALIFIED
RETIREMENT PLAN
1. You can choose to have part of your
compensation contributed by your
employer to a retirement fund.
2. Contribution not included in wages subject
to income tax.
3. Annual limits apply depending on plan.
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ELECTIVE DEFERRALS TO A QUALIFIED
RETIREMENT PLAN
Elective deferrals include elective
contributions to retirement plans such as:
1. Cash or deferred arrangements (section
401(k) plans).
2. The Thrift Savings Plan for federal
employees.
3. Salary reduction simplified employee
pension plans (SARSEP).
4. Savings incentive match plans for
employees (SIMPLE plans).
5. Tax-sheltered annuity plans (403(b) plans).
6. Section 457 plans.
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ELECTIVE DEFERRALS TO A QUALIFIED
RETIREMENT PLAN
A tax law for years after 2005 allows your
401(k) and 403(b) accounts to include a
separate designated Roth account.
Designated Roth contributions are treated as
elective deferrals (subject to the same
limits) except that the contributions are still
included in income for the year earned and
are considered your cost, as discussed
earlier.
A qualified distribution from a Roth account
(five years after year of contribution) is not
includable in income, neither the cost nor
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the earnings.
LUMP-SUM DISTRIBUTIONS
A. Taxable in year received.
B. Reported on Form 1099-R.
C. Some qualify for special tax treatment
under Form 4972.
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LUMP-SUM DISTRIBUTIONS
Special tax treatments:
 Code A in box 7 of Form 1099-R indicates
that it is a lump-sum distribution and it
qualifies for special tax treatments such as
the 10-year tax option.
 Code G indicates a direct tax-free rollover
into a traditional IRA.
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MINIMUM DISTRIBUTIONS
 If required to receive a minimum
distribution, must begin by April 1 of
calendar year that follows calendar year in
which you reach age 70 1/2 or retire.
 If you do not receive the minimum
distribution, an excise tax may be imposed
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ROLLOVERS
1. Transfer of assets from one qualified
retirement plan to another.
2. You must complete rollover by 60th day
following day you receive it.
3. A direct rollover is more advantageous
because plan administrator will not
withhold tax from your distribution.
4. If you have the distribution paid to you,
plan administrator must withhold income
tax of 20% from taxable distribution.
5. You do not pay tax on the amount you
rollover.
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EARLY DISTRIBUTIONS
If receiving distribution prior to reaching age
59 ½ it is usually subject to additional tax of
10%.
1. Applies to taxable part of distribution.
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EARLY DISTRIBUTIONS
If distribution code 1 is shown in box 7 of
Form 1099-R:
1. Multiply taxable part by 10%
2. Enter result on line 60 of Form 1040
3. Write “no” on dotted line if no Form 5329
is required
If distribution code 2, 3, or 4 is shown in box
7 of Form 1099-R, and you qualify for an
exception to the 10% tax, you do not have
to file Form 5329.
File Form 5329 if you owe the tax and also
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owe any other additional tax on distribution.
EARLY DISTRIBUTIONS
Exceptions in which 10% tax does not apply include
distributions:
a. After date on which you reach age 59 1/2
b. To beneficiary or to estate on or after death of
plan participant
c. Made because you are totally and permanently
disabled
d. Made as part of series of substantially equal
periodic payments over life expectancy or joint
life expectancy of you and beneficiary
e. Paid to the extent of deductible medical expenses
over 7.5% of AGI
f. Made to you after you separated from service
after reaching 55 years of age (employer plans
only)
g. Made from an IRA to pay qualified higher
education expenses
h. Made from an IRA for first-time home buyer
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DISABILITY INCOME
 Taxed as wages until you reach minimum
retirement age.
 Employer reports it on Form W-2 or Form
1099-R.
1. If on Form 1099-R, box 2a shows
taxable amount.
2. Box 7 shows code number 3.
 Report all taxable disability income on line
7 of Form 1040 until reaching minimum
retirement age. After reaching minimum
retirement age, report as taxable pension .
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INDIVIDUAL RETIREMENT
ARRANGEMENTS (IRAs)
An Individual Retirement Arrangement (IRA)
is a personal savings plan that offers you
tax advantages to set aside money for your
retirement.
You may be able to deduct your IRA
contribution in part or fully and amounts in
IRA are not taxed until distributed, or, in
some cases, not taxed at all if distributed by
the rules.
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INDIVIDUAL RETIREMENT
ARRANGEMENTS (IRAs)
Traditional IRAs
1. Earnings on contributions not taxed until
withdrawn.
In 2006 Rick contributed $2,000 to his traditional IRA at his
bank. His IRA statement showed $45 interest earned in
2008 and added to his traditional IRA. He does not pay
tax on the interest until he withdraws it.
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INDIVIDUAL RETIREMENT
ARRANGEMENTS (IRAs)
2. Reported on Form 1099-R, with distribution
code shown in box 7, IRA box checked.
3. Report IRA distributions on lines 15a and 15b of
Form 1040 (fully taxable only on line 15b).
4. Deductions are reported on line 32 of Form
1040.
5. Can deduct contributions on 2008 return if
made April 15, 2009.
6. To contribute to traditional IRA, you must be
under age 70 1/2 and have taxable
compensation.
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INDIVIDUAL RETIREMENT
ARRANGEMENTS (IRAs)
7.
8.
9.
Contributions to traditional IRA cannot exceed the
smaller of your total taxable compensation or
$5,000 ($6,000 if 50 or older) in 2008.
If you have earned income, you may establish
traditional IRA for spouse but must file MFJ.
When two separate IRAs, no more than $5,000
($6,000 if 50 or older) contributed to either one.
a. Total combined contribution to both IRAs cannot
exceed smaller of your and your spouse’s total
taxable compensation or $10,000 ($11,000 if one
50 or older, $12,000 if both 50 or older)
b. Contribute to spousal IRA until reaching age
70 1/2
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INDIVIDUAL RETIREMENT
ARRANGEMENTS (IRAs) – Problem 1
David and Robyn are filing a joint return.
David is 52 and Robyn is 48. David earned
$56,000 during the year. Robyn does not
work outside the home. David can
contribute $6,000 to a traditional IRA for
himself. How much can he contribute to an
IRA for Robyn?
a. $6,000
b. $5,000
c. $4,000
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INDIVIDUAL RETIREMENT
ARRANGEMENTS (IRAs) – Problem 1
David and Robyn are filing a joint return.
David is 52 and Robyn is 48. David earned
$56,000 during the year. Robyn does not
work outside the home. David can
contribute $6,000 to a traditional IRA for
himself. How much can he contribute to an
IRA for Robyn?
b. $5,000
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INDIVIDUAL RETIREMENT
ARRANGEMENTS (IRAs) – Problem 2
Richard is 73 and earned $12,000 during the
year. His wife, Geraldine, is 68. Can Richard
make an IRA contribution for himself?
Yes or No?
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INDIVIDUAL RETIREMENT
ARRANGEMENTS (IRAs) – Problem 2
Richard is 73 and earned $12,000 during the
year. His wife, Geraldine, is 68. Can Richard
make an IRA contribution for himself?
No
Because he is over age 70 ½.
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INDIVIDUAL RETIREMENT
ARRANGEMENTS (IRAs) – Problem 3
Richard is 73 and earned $12,000 during the
year. His wife, Geraldine, is 68. Richard
cannot make an IRA contribution for himself
because he is over age 70 ½ but he can
make an IRA contribution for his wife. How
much of a contribution can be made for
Geraldine?
a. $5,000
b. $6,000
c. $9,000
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INDIVIDUAL RETIREMENT
ARRANGEMENTS (IRAs) – Problem 3
Richard is 73 and earned $12,000 during the
year. His wife, Geraldine, is 68. Richard
cannot make an IRA contribution for himself
because he is over age 70 ½ but he can
make an IRA contribution for his wife. How
much of a contribution can be made for
Geraldine?
b. $6,000
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INDIVIDUAL RETIREMENT
ARRANGEMENTS (IRAs)
If you are covered by a pension plan at work, your
traditional IRA contributions may or may not be
deductible depending on filing status and AGI. See
Table 9-3.
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INDIVIDUAL RETIREMENT
ARRANGEMENTS (IRAs)
If you are not covered by a retirement plan at work, your
deductible traditional IRA contributions may still be limited if
your spouse is covered by a retirement plan. See Table 9-4.
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INDIVIDUAL RETIREMENT
ARRANGEMENTS (IRAs)

Deductibility of IRA contributions is
covered in Chapter 16.

Excess contributions, early withdrawals,
and excess accumulations may be subject
to additional taxes and penalties (see
Chapter 17).

Distributions must begin by April 1 of year
following calendar year in which you reach
age 70 1/2.
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INDIVIDUAL RETIREMENT
ARRANGEMENTS (IRAs)
Roth IRAs
A Roth IRA is an individual retirement plan that
generally is subject to the rules that apply to a
traditional IRA.
1.
2.
3.
Distributions reported on Form 1099-R with “J”,
“Q” or “T” in box 7.
Differences between Roth IRA and traditional IRA
are:
a. Can contribute to Roth IRA regardless of age .
b. Can leave amounts in Roth IRA as long as you
live.
c. Cannot deduct contributions to Roth IRA.
Qualified distributions are tax-free if meet
requirements.
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INDIVIDUAL RETIREMENT
ARRANGEMENTS (IRAs)
4. Use Table 9-5 to determine if you can
contribute to a Roth IRA.
5. If contributing only to Roth IRA, maximum
limit is lesser of $5,000 ($6,000 if age 50 or
over) or taxable compensation.
6. Use Table 9-5 and Publication 590 to
determine if contribution limit is reduced.
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INDIVIDUAL RETIREMENT
ARRANGEMENTS (IRAs)
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INDIVIDUAL RETIREMENT
ARRANGEMENTS (IRAs)
7.
If contributing to both Roth IRA and
traditional IRA, your contribution limit for
Roth IRAs must be reduced by all
contributions for year to all IRAs other
than Roth IRAs.
8. If exceed allowable limit of contributions
to Roth IRA, subject to 6% excise tax.
9. Can convert traditional IRA to Roth IRA;
will be taxed as if distributed and not
subject to 10% additional tax (typically
code 2 is shown in box 2 of Form 1099-R).
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INDIVIDUAL RETIREMENT
ARRANGEMENTS (IRAs)
10. Can convert traditional IRA to Roth IRA
when both of following are met:
a. Modified AGI is not more than $100,000
b. You do not file MFS
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INDIVIDUAL RETIREMENT
ARRANGEMENTS (IRAs)
Qualified distributions from a Roth IRA are not taxable
and, therefore, you will not include them in the gross
income on your return.
A qualified distribution is any payment or distribution
that meets the following requirements:
 It is made after the 5-year period beginning with the
first taxable year for which a contribution was made
to a Roth IRA set up for your benefit, and
 The payment or distribution is made:
- On or after the date you reach age 59 ½,
- Because you are disabled,
- To a beneficiary or to your estate after your
death, or
- To pay up to $10,000 of certain qualified firsttime homebuyer amounts.
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INDIVIDUAL RETIREMENT
ARRANGEMENTS (IRAs)
A distribution is not a qualified one if you receive it
within the 5-taxable-year period or you withdraw
excess contributions or earnings on it before the due
date of your return.
A 10% additional tax is imposed on premature taxable
distributions.
Each conversion will have a separate 5-taxable-year
period before it is qualified.
It is important to remember that, with Roth IRAs, you
can always have your original contributions
distributed tax-free even if the distribution is not
qualified.
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INDIVIDUAL RETIREMENT
ARRANGEMENTS (IRAs)
Example:
Fred contributed $3,000 to his Roth IRA in
both 2006 and 2007. In 2008, he took a
distribution of $6,200. The amount taxable
(and potentially subject to the 10%
additional tax) is $200 ($6,200 - $6,000).
Had he withdrawn only $6,000, then none of
the distribution would have been taxable
nor subject to the 10% additional tax.
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RETIREMENT SAVINGS
CONTRIBUTION CREDIT
1.
Tax credit of up to $1,000 ($2,000 if married filing
jointly).
2.
For making contributions to an employer-sponsored
plan or an IRA.
3.
Cannot claim if AGI more than $26,500 ($39,750 if
H of H, $53,000 if MFJ).
4.
Cannot claim if under age 18 at the end of 2008,
dependent on another return or full-time student.
5.
Complete Form 8880 and enter credit on Form
1040, line 51.
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Retirement Benefits
KEY IDEAS
 Pensions or annuities may have a tax-free portion if
you make after-tax contributions to the plan.
 To determine the taxable portion of the annuity
payments, use the Simplified Method if your annuity
starting date is after November 18, 1996 and your
annuity payments are from a qualified plan. For
annuity starting dates beginning in 1998, there are
special table amounts for joint and survivor
annuities.
 Taxable pension or annuity income is entered on line
16b of Form 1040.
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Retirement Benefits
Key Ideas
 Federal income tax on pension or annuity income can
be withheld, or you may choose to pay estimated tax.
 If you are age 70 ½ years or older by the end of the
tax year, you cannot make traditional IRA
contributions for that year
 Traditional IRA contributions generally cannot be
more than your taxable compensation or $5,000
($6,000 if age 50 or older), whichever amount is
smaller.
 Elective deferrals to a qualified employer retirement
plan are not included in wages subject to income tax.
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Retirement Benefits
Key Ideas
 If you have earned income, you can contribute to a
traditional IRA for a spouse who has little or no
earned income, but the total amount contributed to
both traditional IRAs cannot exceed your taxable
compensation or $10,000 ($11,000 if one of you is
age 50 or older, $12,000 if both of you are age 50 or
older) whichever amount is smaller.
 You may be subject to additional tax for contributing
more to a traditional IRA than allowed, making
traditional IRA withdrawals before age 59 ½, or for
not withdrawing enough traditional IRA funds after
age 70 ½.
 Taxable IRA distributions are entered on line 15b of
Form 1040.
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Retirement Benefits
CLASSWORK 1: True or False.
(1) The taxable portion of pension income is entered
on line 15b of Form 1040.
(2) You report IRA distributions on line 32 of Form
1040.
(3) A pension is fully taxable if you did not contribute
to the plan.
(4) If you retire on disability and have reached the
minimum retirement age, you report your pension
distributions on line 16b of Form 1040 if they are
fully taxable.
(5) You cannot contribute to a Roth IRA if you are over
age 70 ½.
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Retirement Benefits
CLASSWORK 1: True or False.
(6) An early distribution is generally one taken prior to
reaching age 59 ½.
(7) The Simplified Method is used to figure the tax-free
portion of each monthly annuity payment by
dividing the cost by the total number of expected
monthly payments.
(8) The maximum retirement savings contribution
credit that can be claimed for a single taxpayer is
$1,000.
(9) Qualified distributions from a Roth IRA are not
taxable.
(10) You must begin taking minimum distributions from
a Roth IRA when you turn age 59 ½ .
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Retirement Benefits
CLASSWORK 1: True or False.
(11) A lump-sum distribution is a payment you are
required to receive after you reach age 70 ½.
(12) To avoid a required 20% federal withholding, you
must make a rollover of a retirement plan within
60 days after you receive the distribution.
(13) Contributions you make to a traditional IRA are
always deductible.
(14) A contribution to an IRA for a taxpayer age 43
cannot exceed $5,000.
(15) Taxable compensation for a traditional IRA
includes alimony payments received.
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Retirement Benefits
CLASSWORK 1: True or False.
(1) The taxable portion of pension income is entered
on line 15b of Form 1040. F
(2) You report IRA distributions on line 32 of Form
1040. F
(3) A pension is fully taxable if you did not contribute
to the plan. T
(4) If you retire on disability and have reached the
minimum retirement age, you report your pension
distributions on line 16b of Form 1040 if they are
fully taxable. T
(5) You cannot contribute to a Roth IRA if you are over
age 70 ½. F
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Retirement Benefits
CLASSWORK 1: True or False.
(6) An early distribution is generally one taken prior to
reaching age 59 ½. T
(7) The Simplified Method is used to figure the tax-free
portion of each monthly annuity payment by
dividing the cost by the total number of expected
monthly payments. T
(8) The maximum retirement savings contribution
credit that can be claimed for a single taxpayer is
$1,000. T
(9) Qualified distributions from a Roth IRA are not
taxable. T
(10) You must begin taking minimum distributions from
a Roth IRA when you turn age 59 ½ . F
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Retirement Benefits
CLASSWORK 1: True or False.
(11) A lump-sum distribution is a payment you are
required to receive after you reach age 70 ½. F
(12) To avoid a required 20% federal withholding, you
must make a rollover of a retirement plan within
60 days after you receive the distribution. F
(13) Contributions you make to a traditional IRA are
always deductible. F
(14) A contribution to an IRA for a taxpayer age 43
cannot exceed $5,000. T
(15) Taxable compensation for a traditional IRA
includes alimony payments received. T
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Retirement Benefits
CLASSWORK 2: In which box of Form 1099-R
would you find the following? Also give the
code number or letter, if applicable.
1. federal income tax withheld
2. taxable amount of the distribution
3. early distribution to which a 10% penalty
tax applies
4. direct rollover to traditional IRA
91
Retirement Benefits
CLASSWORK 2: In which box of Form 1099-R would you
find the following? Also give the code number or
letter, if applicable.
5. distribution from Roth IRA in first 5 years
6. disability distribution
7. amount of your contributions to the retirement plan
8. total amount of distribution
NOTE: For questions 2, 3, 4, 5, and 6, the amount would
appear in box 1.
92
Retirement Benefits
CLASSWORK 2: In which box of Form 1099-R would you
find the following? Also give the code number or
letter, if applicable.
1.
federal income tax withheld Box 4
2.
taxable amount of the distribution Box 2a
3.
early distribution to which a 10% penalty tax
applies Box 7, Code 1
4.
direct rollover to traditional IRA
Box 7, Code G
93
Retirement Benefits
CLASSWORK 2: In which box of Form 1099-R would you
find the following? Also give the code number or
letter, if applicable.
5. distribution from Roth IRA in first 5 years Box 7,
Code J
6. disability distribution
Box 7, Code 3
7. amount of your contributions to the retirement plan
Box 5
8. total amount of distribution Box 1
NOTE: For questions 2, 3, 4, 5, and 6, the amount would
94
appear in box 1.
Questions & Answers
95