IN THE PAST MONTHS, we have discussed tips for year-end planning for your individual taxes and your business. As 2014 comes to a close, it is also important to evaluate the steps you are taking with your financial planning.
Chances are, you are currently contributing to a retirement plan. If you are contributing to a traditional IRA, you may want to consider converting to a Roth IRA. Though contributions to a traditional IRA are tax-deductible, future distributions are taxed at ordinary income rates. Alternatively, Roth IRA contributions are not tax-deductible; however, qualified distributions are tax free if a Roth IRA is at least five years old. Converting from a traditional IRA to a Roth IRA will be especially beneficial to you if you are anticipating being in a higher tax bracket in 2015. There are tax consequences for converting a traditional IRA to a Roth IRA, so this decision should be made only after consulting with your tax adviser.
If you are over the age of 70, keep in mind that you must receive “required minimum distributions” (RMDs) from qualified retirement plans and IRAs. If you fail to do so, you may be subject to a fee equal to 50 percent of the required amount. There is an exception that may allow you to defer receiving these distributions. If you are currently employed and do not own five percent or more of the business that you work for, you can postpone RMDs from an employer’s plan until you retire. However, keep in mind that this exception does not apply to distributions for IRAs. For more tips on year-end financial planning, consult your trusted CPA.
CREDIT
column by Steven Crisman
BIO: Steven Crisman is the managing partner of Cross, Fernandez & Riley, LLP’s (C/F/R) Winter Haven office and leads their Agriculture Practice Group. He primarily serves the agriculture, manufacturing, warehousing, and distribution industries. He has specific experience with citrus growers, cattle ranchers, citrus and other horticultural nurseries, citrus harvesters and other support industries as well as watermelon, blueberry and other growers. In addition, Steve provides comprehensive tax and estate planning, attestation and business succession planning services.
