– OPTIONS FOR TAKING MONEY OUT OF A ROTH

Explaining some of the intricacies of withdrawals.

Sometimes people want to access Roth IRA funds for early retirement or other purposes. Maybe you’re one of them. If you have ever thought about taking money out of a Roth IRA, be sure to consult your financial advisor first before you make a move … and keep the factors mentioned below in mind.  

You can withdraw regular contributions tax-free, but not your earnings. This is a critical distinction, and many Roth IRA owners don’t seem to know about it.

When you withdraw assets from a Roth, there is a set order in which contributions and earnings must be distributed – the IRS ordering rules for distributions.1

*   The IRS regards the first layer of withdrawals from a Roth as regular contributions instead of earnings. So this layer is treated as coming from your annual after-tax contributions. Therefore, if you just withdraw this layer of money, there are no taxes or penalties involved. (You can do this at any time, whether you have held your Roth for 5 years or not.) Basically, the IRS is permitting you to remove a percentage of your account before the alarm sounds on the five-year clock (see below).2,3

*   The next assets to be removed from the account, according to IRS rules, are the conversion and rollover contributions to your Roth. These are removed on a so-called “first in, first out” basis. For example, the amount of a contribution to your Roth resulting from a conversion made in 2002 would come out before the amount of a contribution to your Roth resulting from a conversion made in 2008. The taxable portion of the conversion/rollover contribution comes out first (the amount claimed as income), and then the non-taxable portion.(By the way, the IRS disregards Roth-to-Roth rollover contributions in these rules.1)

*   Finally, earnings accrued by the Roth IRA are distributed.

So in other words, merely withdrawing your regular contribution will not trigger tax. But if your Roth has realized earnings from contributions, the earnings will be subject to income tax if they are withdrawn.

Is your withdrawal a qualified distribution? Here’s another important consideration. If you have owned your Roth IRA for less than 5 years and/or are younger than age 591/2, you risk taking a nonqualified distribution if you withdraw money from it. You know what that means a 10% penalty for early withdrawal in addition to taxes. (There are some exceptions to this outlined in IRS Publication 590, which is certainly worth reading.)1

If you have owned your Roth IRA for more than 5 years …

*   You can make a qualified withdrawal of earnings.

*   You can make a qualified withdrawal of taxable conversions (conversions made in separate tax years will have to meet separate 5-year tests).

You can withdraw nontaxable conversions to your Roth IRA at any time.3

Watch the 5-year clock. Yes, how is the 5-year period preceding a qualified distribution measured? The clock starts on January 1st of the tax year of your initial contribution, conversion or rollover to a Roth IRA. For example, let’s say you opened up a Roth IRA account on January 1, 2007. On January 1, 2012, your Roth IRA will meet the five-year test.1

What if you have multiple Roths? Well, when it comes to distributions, the IRS has some aggregation rules for you. You will have to figure out the taxable amounts withdrawn, distributions and contributions using a little addition. You must …

*   Add up all distributions made from all your Roth IRAs during the tax year.

*   Add up all regular Roth IRA contributions made during the relevant tax year (including ones made after the close of the tax year, but before April 15 of the following year). Now add that total amount to the total undistributed regular contributions made in previous years.

*   Add all conversion and rollover contributions made during the year together. To quote Publication 590: “For purposes of the ordering rules, in the case of any conversion or rollover in which the conversion or rollover distribution is made in 2008 and the conversion or rollover contribution is made in 2009, treat the conversion or rollover contribution as contributed before any other conversion or rollover contributions made in 2009.”1

There are additional rules for recharacterized contributions that end up in a Roth IRA.

If all this makes you want to talk to a financial advisor or accountant, before you take money out of your Roth IRA … well, that is a wise step to take. Confer with the financial or tax advisor you know and trust.

John Jastremski is a Representative with QA3 Financial and may be reached at The Retirement Group 800-900-5867

This does not constitute an endorsement by John Jastremski, The Retirement Group or the author of the book. The opinions expressed are solely those of the author and may or may not be a representative opinion of The Retirement Group or John Jastremski.

These are the views of Peter Montoya Inc., not the named Representative nor Broker/Dealer, and should not be construed as investment advice. Neither the named Representative nor Broker/Dealer gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. The publisher is not engaged in rendering legal, accounting or other professional services. If other expert assistance is needed, the reader is advised to engage the services of a competent professional. Please consult your Financial Advisor for further information.

John Jastremski, Jeremy Keating, Erik J Larsen, Frank Esposito, Patrick Ray, Robert Welsch, Michael Reese Philip Catalan, Brent Wolf, Andy Starostecki, The Retirement Group, AT&T, Verizon

Visit us on the web:

http://www.theretirementgroup.com

– Power3 Medical Products, Inc. (OTC.BB:PWRM), a leading proteomics company focused on the development of innovative diagnostic tests in the fields of cancer and neurodegenerative diseases, announced just recently that it delivered four poster presentations at the 2010 International Conference on Alzheimer’s Disease (ICAD) in Honolulu, Hawaii. These presentations discussed NuroPro®, Power3′s diagnostic test, and focused on Power3′s Alzheimer’s disease blood serum biomarkers, test and clinical validation trials.

“In preparation for commercialization, our objective at this meeting was to show how Power3′s protein biomarkers and blood tests provide superior solutions for diagnosis and drug response to improve the treatment of Alzheimer’s disease,” said Dr. Ira L. Goldknopf, Power3′s President and Chief Scientific Officer. “It was gratifying to receive substantial attention to our posters from representatives of major pharma and clinical research institutions from around the world. They expressed surprise and enthusiasm for our findings, especially those relating to the methods by which Power3′s protein biomarkers indicate how patients respond to treatment with the three major anti-dementia drugs.

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HEADWATER INCORPORATED (NYSE: HW)

HEADWATERS INCORPORATED recently announced that a jury reached a verdict after a trial for a second group of the plaintiffs which began earlier this month in the Boynton v. Headwaters case pending in the Federal District Court for the Western District of Tennessee. Boynton has been an ongoing litigation since 2000 with both trial court and appellate court proceedings. In the recently concluded second trial, the verdict was in the amount of $7,266,771 for 46 plaintiffs representing the remaining portion of the class of former Adtech, Inc. stockholders. In June 2009, a jury in the first trial reached a verdict in the amount of $8,745,000 for eight other members of the class and an advisory verdict on damages of

$12,680,000 on behalf of the class members that did not participate in the June 2009 trial. The recent verdict in the second trial supersedes the advisory portion of the 2009 verdict. It is expected that there will be further trial court proceedings to resolve an equitable claim as to all

members of the class and Headwaters’ equitable defenses. It is not expected that a final judgment will be entered by the trial court on the verdicts until all issues are concluded in the coming months. Once entered, the parties may seek relief from the judgment by motion to the

trial court and by appeal from the final judgment.

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Health Care REIT, Inc. (NYSE:HCN) just recently announced it has substantially completed its $817 million partnership with Merrill Gardens, LLC, which was previously announced on August 4, 2010. A total of 32 communities with $628.3 million investment balance closed effective September 1st, with the remaining 6 communities valued at $188.7 million expected to close by September 30th, pending lender consents.

More information regarding the Health Care REIT/Merrill Gardens partnership and transaction details can be found at www.hcreit.com/merrillgardens.

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HEALTH GRADES INC. (NASDAQGS: HGRD)

Hospital-acquired infections are the leading cause of potentially preventable mortality among pediatric patients, according to a study of pediatric patient-safety incidents issued today by HealthGrades, the leading independent health care ratings organization.

The study utilized eight patient-safety indicators developed by the Agency for Healthcare Research and Quality, part of the U.S. Department of Health and Human Services, to analyze the prevalence of patient-safety events at hospitals as well as to identify hospitals that performed above average.

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THIS IS NOT A RECOMMENDATION TO BUY OR SELL ANY SECURITY!

Disclaimer: Never invest in any stock featured on our site or emails unless you can afford to lose your entire investment. PennyGovernance.com publisher and its affiliates and contractors are not registered investment advisers or broker/dealers. Our disclaimer is to be read and fully understood before using our site, reading our newsletter or joining our email list. Release of Liability: Through use of this website viewing or using, you agree to hold PennyGovernance.com report and Crown Equity Holdings Inc. CRWE, its operators, shareholders, employees and/or contractors harmless and to completely release them from any and all liability due to any and all loss (monetary or otherwise), damages (monetary or otherwise) that you may occur. (read more @ http://pennygovernance.com/disclaimer) Rule 17B requires disclosure of payment for investor relations. Crown Equity Holdings Inc. (CRWE.OB) is a newswire as well as an IR and PR firm. Crown Equity Holdings Inc. (CRWE.OB), in some cases, provides media advertising and public awareness for both public and private companies, as well as disseminating news. As such, in some cases, when Crown Equity Holdings Inc. (CRWE.OB) advertises for a particular client, Crown Equity Holdings Inc. (CRWE.OB) charges an advertising fee which it must disclose under 17B. The fee may be in cash, in free trading stock or in restricted stock. Crown Equity Holdings Inc. (CRWE.OB), if paid in stock, can and may sell those securities during the advertising period.Crown Equity Holdings Inc. (CRWE.OB) has previously received five hundred thousand shares as compensation for 30 days of advertisement services and received an additional 1,000,000 shares 144 restricted stocks for a continuation of 6 months of advertisement and disseminating news, as well as $15,000 dollars for IR services for Power 3 Medical Products Inc. (PWRM.OB). Recently, Crown Equity Holdings Inc. had received an additional amount of 2,000,000 shares of free trading stock for 60 days of media advertisement, web design and maintenance for Power 3 Medical Products Inc. (PWRM.OB). Each advertising commitment has now expired.

– Life Insurance Check-Up Time

September is National Life Insurance Awareness Month.

Provided by The Retirement Group: Your Partners In Retirement

Is your Life Insurance up-to-date? Life insurance is like the Swiss Army knife of estate planning: there are so many ways you can use it as you plan to pursue your goals. Whether you simply need to insure yourself or need to protect your estate through sophisticated planning, September is the month to think about life insurance and all the ways it can potentially help you financially.

30% of Americans have no life insurance whatsoever. So says a 2010 study from LIMRA (a worldwide association of insurance and financial services company), which also revealed this troubling fact … right now, fewer Americans own individual life insurance policies than at any time in the last 50 years.1 If you’re not insured, you’re not alone.

Did you cut your coverage due to financial hardship? Are you waiting for sturdier financial times? The non-profit Life and Health Insurance Foundation for Education (LIFE) found, via poll in 2008, that 27% of Americans would be willing to cancel their life insurance coverage to save money in hard times.2 But if the unthinkable happens, a lack of insurance could make even the toughest times more difficult for loved ones.

LIFE wants to awaken Americans to the need for life insurance, and its remarkable utility as an estate planning and tax-saving tool.

Did you realize that life insurance could be more than merely an inheritance planning tool? It may also be a vital piece of the financial strategy puzzle for empty-nesters who want to retire to a comfortable lifestyle. Own a business? A buy-sell agreement funded with life insurance allows a surviving business owner to buy the company interest of a deceased owner at a previously established price. Key-person insurance can aid a business if a core employee passes away. (It is possible for a business to fund a buy-sell agreement and key-person insurance with pre-tax dollars, making these moves truly tax-efficient.)

If you do have life insurance, have you reviewed it lately? Some people purchase a life insurance policy and name a son or daughter as a beneficiary. This thoughtful decision has one little downside. If you own the policy, the death benefit is included in your taxable estate.3

You have an alternative here. You don’t have to own your life insurance policy. Your children (or other beneficiaries) can own it. If they do, they will receive a large payout free from federal estate and income taxes when you pass away.3

You can make gifts to your kids to acquire the insurance, and your kids can pool their money and buy policies on Mom and Dad. The more kids you have, the less the premium burden. Not only that, some policies can build up cash value (tax-free growth within the policy).

Here’s another way to remove life insurance proceeds from your taxable estate: an irrevocable life insurance trust. You can have the trust own the policy, and you can periodically fund the policy through gifts made to the trust. The trust will get the proceeds from your policy when you die, and those proceeds can be distributed according to your wishes they can go to your loved ones or charity, they can be used to pay estate taxes.3

As you plan to build wealth, consider … There are cash-rich life insurance policies with tax-advantaged savings features that offer you the potential to earn interest based on the gains of an equity index. Others permit you to direct a percentage of your premiums to investment sub-accounts which may generate tax-free earnings. These policies can be useful when it comes to business continuation and employee benefits, retirement planning, education planning and estate planning.

Think life insurance isn’t affordable? You might be surprised. Let’s say you just want term life, just basic life insurance without the capability to accumulate cash value. You’ll pay relatively less for it: it isn’t that expensive compared to other forms of life insurance coverage. Premiums for standard-risk term life insurance got smaller and smaller from the mid-1990s through the late 2000s, and only recently have they started to increase as a consequence of higher capital and reinsurance costs (which are byproducts of tighter credit markets).

Many insurers have raised premiums on term policies by 1-5% within the last couple of years (sometimes more). Some insurance industry analysts think this may prove to be only a temporary increase. Others think now is the best time to buy term coverage.4

It can’t hurt to double-check your life insurance, to be certain you are using it wisely and that your coverage is adequate.

Visit us on the web:

http://www.theretirementgroup.com

– IMSofPA.com (Media, PA)   Today, fraud protection and credit cards is a very important matter of discussion related to merchant accounts.  You hear about the stories associated with lost or stolen credit cards.  Also having your identity stolen and later discover you had charges not made by you is a very scary situation.

There is no one solution that prevents fraud. It takes an assortment of ways to fight it.  Protection comes from knowledge and knowing the latest methods impacting the market. Researching issues listed below will help determine what your business can do to safeguard your fraud risk. Having the knowledge is an important step towards fighting fraud.

Keep an eye on people that:

1.Buy large amounts of merchandise without worrying about size, color, or price.

2.Don’t ask recommendations or questions on big dollar purchases.

3.Make an effort to distract or give you the bums rush during a sale.

4.Perform purchases and quickly leave the store, but then come back later and buy more merchandise.

5.Make large purchases just after the store’s opening, or as the store is closing.

This is just a sample of how fraud occurs on your account.  There are others to consider, but these are the most obvious.

Innovative Merchant Solutions is always available to assist our customers 24 hours a day 365 days a year. They have been built not only on high-tech solutions, but also on award-winning customer service. They have recently been awarded the Arthur Andersen Award for Best Business Practices in Customer Satisfaction and the Ernst and Young Entrepreneur Award.  

If you are an existing merchant or a new business looking to open up a merchant account and  obtain a free rate review with exceptional customer service, than look no further than Innovative Merchant Solutions.  Merchants can lean more about the basics of opening up a merchant account by visiting http://www.imsofpa.com/merchantaccounts.htm or contacting them toll free at 800-328-2269.

Providing merchant account services to Baltimore MD, Broomall PA, Charlotte NC, Chester County PA, Delaware County PA, Los Angeles CA, Newtown Square PA, New York NY, Philadelphia PA, Rhode Island, Trenton NJ, Wilmington DE, Woodland Hills CA and more.


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