Educational presentation from Ascensus covering both Traditional and Roth IRA issues, including contribution deadlines, contribution limits, possible tax credits, traditional IRA deductibility rules, and more. Free recorded webinar available at http://www.nafcu.org/ascensus.

1. IRA Contributions
February 2011 (030111-v29)
©2011 Ascensus, Inc.

2. Course Objectives
• List eligibility rules for regular, spousal, and catch-up
contributions to Traditional and Roth IRAs
• Explain the contribution limit for an individual
• State the contribution deadline
• Determine if an IRA contribution is deductible
©2011 Ascensus, Inc.
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3. Course Objectives (continued)
• Understand when certain individuals may receive a
tax credit for IRA contributions
• Accurately report regular, spousal, and catch-up
contributions to Traditional and Roth IRAs
• Explain the IRA contribution deadline for certain
military personnel
©2011 Ascensus, Inc.
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4. Traditional IRA Contributions
Regular Catch-Up Spousal
SEP Traditional IRA
Transfer Recharacterization Rollover
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5. Traditional IRA Contribution
Eligibility
Regular Contribution Spousal Contribution
• Under 70½ year • Under 70½ year
• Has earned income • Couple has earned
income
• Married, filing joint
federal tax return
©2011 Ascensus, Inc.
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6. Traditional IRA Contribution Eligibility
(continued)
Catch-Up Contribution
• Eligible for regular or spousal Traditional IRA
contribution
• Has earned income (or couple has earned income if
joint filer) to support additional contribution
• Attain age 50 before end of tax year
©2011 Ascensus, Inc.
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7. Traditional IRA Contribution Limits
Maximum individual Maximum catch-up
Year contribution (regular/spousal) contribution
2010 $5,000* $1,000*
2011 $5,000* $1,000*
*Reduced by any Roth IRA contributions made for the same year
©2011 Ascensus, Inc.
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8. Polling Question
Do you use an IRA eligibility form?
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9. Traditional IRA Contribution
Deductibility
Is the IRA owner an
Is the IRA owner an
active participant?
active participant?
No Yes
Is the IRA owner
Is the IRA owner The deductibility of
The deductibility of
married to an active
married to an active the contribution
the contribution
participant?
participant? depends on MAGI
depends on MAGI
No Yes
The deductibility of the
The deductibility of the
The contribution
The contribution
contribution depends
contribution depends
is deductible
is deductible
on MAGI
on MAGI
©2011 Ascensus, Inc.
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10. Traditional IRA Active Participant
MAGI Limits
Married filing a Married filing a
Tax Year Single filer
joint return separate return
2010 $89,000 – $109,000 $0 – $10,000 $56,000 – $66,000
2011 $90,000 – $110,000 $0 – $10,000 $56,000 – $66,000
©2011 Ascensus, Inc.
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11. Traditional IRA Nonactive Participant
MAGI Limits
2010 2011
Active Participant: $89,000 – $109,000 $90,000 – $110,000
Nonactive Participant: $167,000 – $177,000 $169,000 – $179,000
©2011 Ascensus, Inc.
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12. Deductibility Formula
maximum contribution
including catch-up
contributions
X
(
maximum deductibility threshold – MAGI
maximum deductibility threshold –
minimum deductibility threshold
) = deduction limit
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13. Roth IRA Contributions
Regular Catch-Up Spousal
Recharacterization Roth IRA
Rollover Conversion Transfer
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14. Roth IRA Contribution Eligibility
Regular Contribution Spousal Contribution
• No age restriction • No age restriction
• Has earned income • Couple has earned
• MAGI within limits income
• Married, filing joint
federal tax return
• MAGI below or
within limits
©2011 Ascensus, Inc.
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15. Roth IRA Contribution Eligibility
Catch-Up Contribution
• Eligible for regular or spousal Roth IRA contribution
• Has earned income (or couple has earned income if
joint filer) to support additional contribution
• Attain age 50 before end of tax year
©2011 Ascensus, Inc.
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16. Roth IRA Contribution Limits
Maximum individual Maximum catch-up
Year contribution (regular/spousal) contribution
2010 $5,000* $1,000*
2011 $5,000* $1,000*
*Reduced by any Traditional IRA contributions made for the same year
©2011 Ascensus, Inc.
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17. Roth IRA Contribution Eligibility
MAGI Limits
Married filing a Married filing a
Tax Year Single filer
joint return separate return
2010 $167,000 – $177,000 $0 – $10,000 $105,000 – $120,000
2011 $169,000 – $179,000 $0 – $10,000 $107,000 – $122,000
©2011 Ascensus, Inc.
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18. Tax Credit
• Nonrefundable
• Offsets cost of first $2,000 contributed to an IRA
• Not to exceed $1,000 annually
• PPA makes it permanent
• Possible COLAs in future years
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19. Tax Credit Eligibility
• Attain age 18 by end of taxable year
• Have AGI within limits
• Not a dependent
• Not a full-time student
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20. Contribution Deadline
January 1 April 15
2010 2011
NOTE: April 15, 2011, is a legal holiday; therefore, IRA owners
have until April 18, 2011, to make 2010 contributions. IRA
owners who file with the Andover, MA, IRS Service Center have
until April 19, 2011, to make 2010 contributions.
©2011 Ascensus, Inc.
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21. Contribution Reporting
• Contribution information reported to IRA owner and
IRS on Form 5498
• Due by May 31
• File with IRS on paper or electronically
• Submit paper Forms 5498 to IRS with Form 1096
• Make corrections as soon as possible
©2011 Ascensus, Inc.
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22. Contribution Reporting – IRS Form 5498
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23. Fair Market Value Statement
• Use Dec. 31 value
• Due to IRA owner or beneficiary by Jan. 31
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24. Annual Account Statement
• Contribution information
• Use own format or Form 5498
• Due to IRA owner or beneficiary by May 31
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25. Polling Question
Do you use Form 5498 to satisfy the annual account
statement requirement?
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26. Contribution Reporting
IRS
Form 1040
Form 8606 Form 5498
Annual Account Statement
IRA Owner and FMV Statement Financial
Organization
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27. Military Personnel IRA Contributions
• HERO Act allows individuals to use nontaxable
combat pay to fund IRAs
• File separate From 5498 using special reporting
requirements for military personnel in designated
combat zones
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28. Military Personnel Postponed
Contribution Deadline
• Armed forces personnel in combat zones, hazardous
duty areas, and contingency operations
• Certain Red Cross personnel, correspondents, and
civilians serving qualified areas
• Merchant Mariners (Iraqi Freedom)
• Spouses and dependents of all of the above
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29. Military Personnel Postponed
Contribution Deadline (continued)
Date left combat zone or hospitalization
+ 180 days
+ days left to contribute from date IRA owner
entered qualifying area
____________________________________
= Deadline
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30. Military Personnel Postponed
Contribution Deadline Example
Entered Left combat 2010 contribution
combat zone zone deadline
12/15 4/15 9/2 7/1
2010 2011 2012
122 days left to 302 days
deposit 2010 (180 + 122) to make
contribution 2010 contribution
©2011 Ascensus, Inc.
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31. Combat Zone Contribution Reporting
Two Methods
1. Use applicable prior-year Form 5498 for year
contribution is for
or
2. Use current-year Form 5498 for prior-year
contribution
– Contribution amount in Box 13a
– Contribution tax year in Box 13b
– Applicable military operation indicator code in
Box 13c ©2011 Ascensus, Inc.
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32. Combat Zone Contribution Reporting
Method 2 Example – Current-Year Form 5498
4,000 2008 IF
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33. Qualified Reservist Repayments
• Created by PPA
• May recontribute distributions to an IRA within two
years following the end of the active duty period
• Repayments are recontributed as after-tax dollars
©2011 Ascensus, Inc.
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34. Qualified Reservist Repayment
Reporting
• Enter contribution amount in Box 14a and enter
indicator code “QR” in Box 14b of 2010 Form 5498
• IRA owner may need to amend tax return and file
Form 8606
©2011 Ascensus, Inc.
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35. HEART Act
• Individuals may roll over military death gratuity and
Servicemembers’ Group Life Insurance payments to Roth
IRAs and Coverdell ESAs
• Report the rollover contribution amount in Box 2 of
Form 5498 if death occurred after June 17, 2008, and
amounts deposited within one year
• Employer-provided differential pay treated as wages for
retirement plan purposes
• Allows employers to treat former employees killed or
disabled on active duty as having returned to employment
©2011 Ascensus, Inc.
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36. Contact...
Tammy Schultz, CISP, QKA
Ascensus
800-346-3860
tammy.schultz@ascensus.com
www.nafcu.org/ascensus
Ascensus® and the Ascensus logo are registered
trademarks of Ascensus, Inc. All rights reserved.
©2011 Ascensus, Inc.
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