Posts By : Darcy

New Rules for Roth IRA Conversions

Beginning in 2010, most investors will be eligible to convert their traditional IRAs to Roth IRAs, regardless of how much money they make. There is also a special rule in place for 2010 only that will allow you to recognize all of the conversion income in 2010 or split it equally between the next two tax years (2011 and 2012).

Money put into a traditional IRA is tax –deductible no matter how much money you make, unless you are covered by an employer-sponsored plan, in which case you may receive a reduced or no deduction for the contribution to the IRA. With a Roth, contributions are not tax-deductible, but earnings can be withdrawn income tax free if you’re at least 59 ½ and have had the Roth at least 5 years. Additionally, you are not required to take required minimum distributions beginning at age 70 ½.

Roth conversions may be appropriate if you think you will be in the same or higher tax bracket when you withdraw the funds and you have sufficient funds outside of the IRA to pay the conversion tax.

‘Banking Convenience Account for Depositors Act’ Goes Into Effect January 1, 2010

Public Act 96-0123, the Banking Convenience Account for Depositors Act, goes into effect January 1, 2010 to allow a customer to open an account known as a “convenience” account, with the “primary account owner” being designated as the “depositor,” and the secondary owner being designated as the “convenience depositor.” Both parties may deposit funds into the account or withdraw funds from the account, but upon the death of primary depositor, there is no right of survivorship; all funds shall be deemed to have been deposited by the “depositor.” This law is intended to address unintended results such as when a child becomes the sole owner of an account that the child held in joint tenancy with a parent, even though the parent had only placed the child’s name on the joint bank account so that the child can pay the parent’s bills and have access in case the parent becomes ill.  The law has a built-in repeal provision as of five years after enactment.

Young Adult Dependent Coverage Law

On June 1, 2009, Illinois’ new Young Adult Dependent Coverage Law (215 ILCS 356z.12) gives parents with health and/or dental insurance policies that cover dependents the right to add or continue coverage for unmarried dependents under age 26 (or 30 for some U.S. military veterans) regardless of student status.

This is in addition to an Illinois law, 215 ILCS 356z.14, that went into effect on December 12, 2008, that requires all individual and group health insurance policies and HMO contracts to provide coverage up to an annual limit of $36,000 for the diagnosis and treatment of autism spectrum disorders for children under 21.

See www.insurance.illinois.gov for more details on both laws.