IRA/CESA/HSA

Most Recent Question

Question:  My client’s date of birth was November 5, 1937. Can he make a traditional IRA contribution for 2007? ...Answer

Compliance Points

• IRS Issues Proposed Regulation for Employer Contributions to Health Savings Accounts—The proposed regulation provides guidance for employers with regard to comparable contributions under Section 4980G. To see the proposed regulation click here. (posted 6/1/07)
  
  
• IRS issues 2008 Cost-of-living adjustments for Health Savings Accounts—The IRS has issued Revenue Procedure 2007-36. Section 4 provides the HSA dollar limits for 2008 HSA contributions and high deductible health plans (HDHP). For 2008:

• HSA contribution limit for self-only coverage will be $2,900
• HSA contribution limit for family coverage will be $5,800
• HDHP self-only deductible must be at least $1,100
• HDHP family deductible must be at least $2,200
• HDHP maximum out-of-pocket expenses for self-only coverage will be $5,600
• HDHP maximum out-of-pocket expenses for family coverage will be $11,200

Click here to see the Revenue Procedure. (posted 5/24/07)

• IRS Releases 2007 Form 1099-R and 5498 Instructions—The 2007 instructions for IRS Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc., and IRS Form 5498, IRA Contribution Information, are now available for IRA custodians/trustees that want to start updating their data systems. The instructions specifically address IRA custodian/trustee reporting of qualified charitable distributions, qualified HSA funding distributions, catch-up contributions due to employer bankruptcy, and repayment of qualified reservist distributions, all provisions of the Pension Protection Act (PPA) of 2006. (posted 5/18/07)
  
  
• IRS Grants Tax Relief for New Jersey and New York Storm Victims—The Internal Revenue Service today announced tax relief for New Jersey and New York taxpayers in the Presidential Disaster Area that was struck by severe storms and flooding April 14-18, 2007. The disaster area consists of the following counties:
  
  • Bergen, Burlington, Essex, Passaic, Somerset and Union in New Jersey and
    
    
  • Orange, Rockland and Westchester in New York.

  Deadlines for affected taxpayers to file returns, pay taxes and perform other time-sensitive acts falling on or after April 14, 2007 and on or before June 25, 2007 have been postponed to June 25, 2007. This relief includes making contributions to an IRA or HSA for tax year 2006 that were otherwise due to be made on or before April 17, 2007. To see the IRS guidance in full click here.
  (posted 4/27/07)

• IRS Releases More Disaster Relief Guidance—Special tax law provisions may help taxpayers recover financially from the impact of a disaster, especially when the president declares their location to be a major disaster area. Depending on the circumstances, the IRS may grant additional time to file returns and pay taxes.

  Relief Granted Recently

  • Relief for March 2007 Alabama storm, tornado victims, see News Release
  • Relief for March 2007 tornado, storm victims in Sumter County, Ga., see News Release
  • Relief for February 2007 Louisiana storm, tornado victims, see News Release
  • Relief for Dec. 25, 2006 storm victims in Volusia County, Florida, see News Release
  • Relief for February 2007 Florida tornado victims, see News Release (posted 3/13/07)
  
  
• IRS Issues Guidance on Rollovers to HSAs from HRAs and health FSAs—The IRS issued Notice 2007-22, which provides detailed guidance on the HOPE Act provision allowing rollovers from health Flexible Spending Arrangements and Health Reimbursement Arrangements to Health Savings Accounts. Click here to see the Notice. (posted 2/21/07)
  
  
• IRS Announces New Tax-filing Date for 2006.—Due to Emancipation Day in the District of Columbia the tax-filing due date for 2006 will be April 17, 2007. Click here (posted 1/25/07)
  

• Treasury and IRS Issue Guidance on Provisions of the Pension Protection Act—The Treasury Department and the IRS issued Notice 2007-7 providing extensive guidance on several Pension Protection Act rules. The guidance addresses many questions on PPA provisions, including:
  • Direct rollovers from qualified plans to inherited IRAs for nonspouse beneficiaries
  • Calculating distributions from such IRAs
  • Tax-free qualified charitable IRA distributions for IRA owners and IRA beneficiaries who are at least age 70½ (posted 1/11/07)
    
    
• Disaster Relief—In 2006, the IRS granted tax relief for victims of storms and flooding in New York and Washington. These Presidentially declared disaster areas are eligible for certain tax relief under Internal Revenue Code (IRC) Section 7508A and Treasury Regulation Section 301.7508A-1. The regulation provides a list of tax-related deadlines eligible for postponement that the Internal Revenue Service (IRS) expands in Revenue Procedure 2005-27. See our December 2005 article on disaster relief extensions for a description of those actions that may qualify for relief. For information on specific locations, click on the following links:
• IRS Grants Tax Relief for New York Storm, Flooding Victims
• IRS Grants Relief for Washington Storm, Flooding Victims (posted 1/10/07)

Featured Articles

• The Health Savings Account Potential and Your Commercial Clients
  
  
• 2007 IRA Reporting Changes - IRS Address PPA Provisions

• Avoiding IRA Distribution Mistakes—Simple things can help avoid adverse consequences
  
  
• Nonspouse Beneficiary Direct Rollover Rule—An opportunity to grow deposits