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April 14, 2016

Thomson Reuters Releases Special Report on the Tax Treatment of Roth IRAs

NEW YORK – Thomson Reuters has just released a special report on the tax treatment of contributions to, and distributions from Roth IRAs. The report, An Overview of the Tax Treatment of Roth IRAs, is designed to provide tax practitioners with advanced tax planning strategies using Roth IRAs to help their clients receive tax-free retirement income.

“Roth IRAs are effective tools for building tax-free wealth for retirement, but the rules governing them are complex,” said Alan D. Campbell, PhD, CPA, CMA, an associate professor of accounting at Troy University in Montgomery, Alabama, and coauthor of the report.

“With this report, we hope to help tax professionals understand relevant rules as well as how to properly apply them to effectively serve their clients,” added Dena S. Mitchell, MAcc, CPA, an assistant professor of accounting at Troy University in Troy, Alabama, and coauthor of the report.

In addition to providing a full-length discussion of tax strategies, the report examines the potential traps that might hinder their desired outcomes. It also provides illustrations of the calculations of common Roth IRA planning scenarios. The report addresses the following topics:

  • The types of income/compensation deemed permissible for contribution to a Roth IRA.
  • The types of investment transactions permissible and impermissible for a Roth IRA.
  • Discussion on the Unrelated Business Income Tax (UBIT) and how it affects Roth IRA account holders.
  • The Kay Bailey Hutchison Spousal Roth IRA.
  • Effects of modified adjusted gross income limits.
  • Backdoor contributions and how they function.
  • Rollovers from a traditional IRA to an eligible retirement plan.
  • When to make a contribution and how excess contributions are treated for tax purposes.
  • Converting a traditional IRA to a Roth IRA, and how to recharacterize a conversion.

The report also analyzes the tax treatment of Roth IRA distributions, distribution ordering rules and penalties for early withdrawals, and the rules on bequeathing a Roth IRA account upon the taxpayer’s death.

This special report is published courtesy of Thomson Reuters Checkpoint’s WG&L Practical Tax Strategies, a monthly journal that alerts readers to timely tax issues, focusing on practical strategies to reduce client taxes and satisfy statutory and regulatory compliance mandates.

The Thomson Reuters free special report is available for download at tax.thomson.com/checkpoint/tax-treatment-roth-ira.

Thomson Reuters Checkpoint provides integrated research, editorial insight, productivity tools, online learning and news updates along with intelligent links to related content and software. It is relied on by hundreds of thousands of tax and accounting professionals, 97 of the Top 100 U.S. law firms, 99 of the Fortune 100 companies, and all of the top 100 U.S. CPA firms.

Thomson Reuters
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Email: dana.greenstein@thomsonreuters.com