New IRS 403(b) Regulations On July 26, 2007, new 403(b) regulations were issued after much debate and delay. The major regulations are generally effective January 1, 2009; however, certain rules regarding 90-24 403(b) transfers became effective September 24, 2007. As of September 24, 2007, exchanges from one 403(b) plan into another have not been permitted unless certain conditions are met. The primary requirement is that the receiving company must have an Information Sharing Agreement in place with the employer. Please be informed that employees over the age of 59 1/2 or who have separated from service can transact a rollover of a 403(b) plan into an IRA without any restrictions, as IRA's have not been affected by the new regulations. Under the new 403(b) rules, employers must implement a written plan document and adhere to additional compliance requirements. School districts must authorize and sign off on almost all transactions, such as 403(b) loans and withdrawals, and most 403(b) loans will only be allowed from approved vendors. For further information and clarification, please contact our office.

2010 CONTRIBUTION LIMITS FOR TRADITIONAL AND ROTH IRA'S The total combined contribution limit for both traditional and Roth IRA's in 2010 is $5,000, plus an additional $1,000 for those who reach the age of 50 by year end 2010. A married couple can fund a separate IRA for each spouse, even if only one spouse has earned income. Depending upon the type of IRA you choose, there are income limitations that determine your eligibility and the amount that you can contribute. If you are covered by an employer-sponsored retirement plan, the tax deduction for an individual taxpayer contributing to a traditional IRA is phased out for modified adjusted gross income over $56,000. For marrieds filing jointly, the phase-out begins at MAGI of $89,000. Eligibility for a Roth IRA begins to phase out for singles with a MAGI of over $105,000 and for marrieds filing jointly with MAGI's over $167,000. Please contact us for further details. We will be happy to discuss with you various investment options for your IRA contributions, including fixed-rate guaranteed term annuities, short-term or long-term bond funds, stock funds, convertible bond funds, and more.

2010 CONTRIBUTION LIMITS ON 403(B) TSA PLANS Effective January, 2010, 403(b) participants can contribute up to $16,500 per year into their tax-deferred 403(b) plans, the same as in 2009. An additional $5,500 per year is allowed for those who reach the age of 50 prior to year end 2010. Finally, there is a $3,000 annual service "catch-up" contribution available for many participants who have at least 15 years of service with their current employer and who meet certain contribution requirements. We will be happy to help you determine if you qualify for the service "catch-up" contribution. Please be informed that Los Angeles Unified School District requires a signed Certification Form for those employees wishing to take advantage of the service catch-up allowance. Let us know if you receive a Certification of Eligibility Form from LAUSD, and we will assist you in completing this form.

Required Minimum Distributions from Qualified Retirement Plans for 2010 Please be advised that required minimum distributions from qualified retirement plans have been resumed for 2010 after having been temporarily suspended for 2009.  Retirement plan participants must begin withdrawals of the IRS required minimum distribution from their retirement plans in the year in which they attain age 70 1/2. The first distribution can be postponed until April 1st of the year following the year in which age 70 1/2 is attained, but two distributions would then be required in that year. There is an exception to the RMD rule for employees who continue to work beyond the age of 70 1/2 with 403(b) plans. These employees must begin taking required minimum distributions by the age of 75 or in the year of retirement, whichever comes earlier. 

ING USA Annuity and Life and Nationwide Life cease accepting 403(b) payroll contributions ING USA and Nationwide Life stopped accepting contributions to 403(b) plans effective January 1, 2009, as the companies withdrew from the 403(b) market. This was due to the new IRS 403(b) Regulations discussed above.  Additionally, most employers and school districts have significantly reduced the number of approved 403(b) vendors offering these plans to employees.  Please contact us to discuss your options and available 403(b) plans. Accounts already in affect with companies that have withdrawn from the 403(b) market are not affected and will continue to be serviced by the companies.

Roth IRA Conversions  Beginning in 2010, the $100,000 income limit on converting traditional IRA and employer-sponsored retirement accounts into Roth IRAs disappears.  In making such a conversion, taxes must be paid on the amount moved into the Roth IRA.  These taxes can either be paid in the year of the conversion; or for transfers made in 2010, one half of the conversion amount can be reported in 2011 and one half reported in 2012.  There are many considerations to be made in evaluating the merits of converting to a Roth IRA.  We will be happy to help you determine whether making a conversion to a Roth IRA makes sense for you, in light of your individual circumstances.