1. Taking the wrong Required Minimum distribution. With the new rules finalized in 2002, many people are withdrawing too much, but if you're not taking enough, you may be subject to a 50% penalty tax.

2. Not taking advantage of the stretch distribution option. The "Stretch IRA” is a way for non spousal beneficiaries to maximize the payout from the IRA, over their entire life expectancy. Properly designating beneficiaries and informing them of the IRA owners Stretch intentions are keys to making this strategy work.

3. Beneficiaries not taking advantage of IRD. At the owners death the IRA is included in the estate, creating an estate tax liability as well as an income tax liability for the beneficiaries. Income with Respect to a Decedent according the Section 691( c )allows beneficiaries to take an income tax deduction for any estate Taxes paid on the IRA's assets, limiting double taxation of the IRA assets.

4. Making inappropriate spousal rollovers. Most IRAs list the owners spouse as the primary beneficiary, and one of the most popular strategies is to have the spouse roll the IRA over into their own IRA. But it can be more tax efficient to leave the IRA in the owners name, or disclaim the assets thereby allowing them to pass on to contingent beneficiaries.

5. Missing important dates. Estate taxes are due nine months after the IRA owner's death, the same for those beneficiaries who wish to disclaim the IRA assets. By September 30 of the year following year of the owners death, the beneficiary whose life expectancy will control the payout period must be determined. IRA beneficiaries must begin taking required distributions by December 31 of the same year to avoid IRS penalties.

6. Placing the title of an IRA into a trust. Changing the IRA ownership to a trust causes an immediate taxation—including a 10% penalty if the IRA holder is under 59 ½..

7. Not listing beneficiaries or updating the beneficiaries. Not listing a beneficiary may cause the distribution of the IRA to the owners estate. Not updating the beneficiay designation and coordinating them with other estate planning documents could give the money to the wrong person.

8. Paying unnecessary penalties on early distributions. If distributions must be taken before 59 ½ by following section 72(t) you can avoid the early withdrawal; penalties.

9. Assuming a nonworking spouse cannot contrubute. A"spousal” IRA can be set up for non working spouses earning little or no income, and they may contribute the same as the working spouse.

10. Not taking advantage of increased contributions. Contribution limits went to $3000 in 2004 and $4000 in 2005. if you're over 50 you may add another $500 catch-up.

Please note, changes in tax laws may occur at any time and could have a substantial impact upon each person's situation. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of RJFS we are not qualified to render advice on tax or legal matters.

Now is the time for you to maximize your IRA.

For your IRA Review Call me at 922-8588 Anthony J. Vignocchi