Roll over of IRA

[Ken]

For some reason I had it in my head that after a person reaches the age of 70 1/2 that you could no longer roll over an IRA into another account.
I just had a tax client that has a 1099R with a gross distribution of 45,000 dollars.
He said he only kept $5000 and rolled the rest of it into another IRA.
I checked the tax book and I cant find any place where it says he cant roll it over at that age.
Was I perhaps dreaming this?

Also he did not take out the minimum distribution for 2006. I guess I have to file form 5329 and give him a penalty for not taking the minimum distribution. Is this correct?

[sea-tax]

For some reason I had it in my head that after a person reaches the age of 70 1/2 that you could no longer roll over an IRA into another account.
I just had a tax client that has a 1099R with a gross distribution of 45,000 dollars.
He said he only kept $5000 and rolled the rest of it into another IRA.
I checked the tax book and I cant find any place where it says he cant roll it over at that age.
Was I perhaps dreaming this?

Also he did not take out the minimum distribution for 2006. I guess I have to file form 5329 and give him a penalty for not taking the minimum distribution. Is this correct?

Yes you were dreaming there is no age requirement that disallows rollovers. As a side note I would get copies of statements from the client showing the money coming out and the money going back in.
As to the Rmd issue check on page 13-25 of TTB under "Waiver of Penalty" . you might be able to come up with a reasonable excuse. Good Luck!

[S T]

Maybe

Maybe I am not reading your post right, but if in 2006 he took a distribution of $45,000, $40,000 of which was rolled over (permissable if within time limits) and he kept $5,000, why wouldn't the $5,000 count toward his RMD. ??

I do not believe there is any age restriction on rollovers, otherwise we would all be "stuck" with one financial instituion.

Sandy

[veritas]

Yes you were dreaming there is no age requirement that disallows rollovers. As a side note I would get copies of statements from the client showing the money coming out and the money going back in.
As to the Rmd issue check on page 13-25 of TTB under "Waiver of Penalty" . you might be able to come up with a reasonable excuse. Good Luck!

Hey where you been? Been oiling the wheel on that wheelbarrow to take the money to the bank?

[Ken]

Thanks

Thanks for your replys.
S T the $5000 he took out is to go toward the minimum distribution but he is suppose to be taking out at least $10350, so there is still a pretty hefty penalty.
I guess my problem is that I sometimes try to (think) too much. Us monkeys have problems when we do that.

[sea-tax]

Hey where you been? Been oiling the wheel on that wheelbarrow to take the money to the bank?

Been Around , Looking at the board once in a while. I have just been slamed with work like most of you. 14-15 hour days and still have to many extensions for my taste.

I have come to a realization that if I start to do more financial work and less tax work I can make a lot more money with half as much headache. I think next year my income tax fees might double and and then I will have to deal with the back lash. I am sure some clients will be pissed but oh well. It will free more time up for financial work which takes a lot less time and has more residual income.

[erchess]

If you don't do so already

you might want to think about a fee schedule under which people who pay you to their financial work pay you a lot less for tax work than do people who pay you only to do tax work. I assume that when you do financial work you do it on a program that integrates well into your tax software and therefore the same return takes you less time. (Of course if you bill by the hour you are already doing this.)

I don't do financial work but I do help interested clients set up Peachtree, Quickbooks, or Shoebox and I visit as often as they wish to help with any issues they may be having. I do charge for these visits but I charge them less for tax prep than I do those who do not use my book keeping assistance.

[sea-tax]

Erchess interesting idea , however I do not think that the NASD will allow me to discount my tax fee based on whether a client has me do thier financial planning or not. I am not sure where I read this but I know it is somewhere in the rules.
I do have a standing policy that if I manage your money I prepare your return. You don't want me to do your taxes I don't manage your money. It is just to intertwined that not doing both is really providing the client a dis-service. Anytime you talking about financial planning- taxes are a main component of the situation.

[erchess]

I misunderstood "Financials"

I thought you were an accountant and were referring to the service of keeping books, writing financial statements and so on. Perhaps at some point, if not now, you should stop doing tax returns for people who are not clients of your financial advice. You might even sell off the tax portion of your business or bring in someone to do those returns.

[sea-tax]

I thought you were an accountant and were referring to the service of keeping books, writing financial statements and so on. Perhaps at some point, if not now, you should stop doing tax returns for people who are not clients of your financial advice. You might even sell off the tax portion of your business or bring in someone to do those returns.

Thought about that once but I have come to realize that the tax side of biz generates leads for the finance side of biz. In essence the go hand in hand. One is not more important than the other. That is why I only do financial planning for those that I do income tax returns for. They compliment eachother very nicely.

As a side not I also have a very larger bookkeeping and payroll check wirting side of biz as well. Like the other they compliment the tax biz quite nicely. It has been fun chatting but I think I need to go over this tax season wall and continuing working. Good luck!