Tax Law Update

Effective for 2009 participants in IRA's, TSA/403(b) plans, SIMPLE plans, 457 Deferred Compensation plans and 401(k) plans to may waive their  Required Minimum Distribution, (RMD). Participants are required to resume their RMD's in 2010.

Sales Tax Deduction Choice. Taxpayers may choose to deduct sales tax instead of state income tax.

Educator Expense Deduction Reinstated. The provision allowing educators and other professionals to deduct up to $250 annually above the line for out-of - pocket expenses in elementary and secondary schools has been reinstated for the 2008 and 2009 tax years. 

Effective January 1, 2009 school board  employees may defer up to $25,000 in their  Tax Sheltered Account Program/ 403 (b). The basic limitation  is  $16,500.  In addition participants age 50 or older may defer an additional $5,500. Employees with 15 or more years of service may still contribute an additional $3,000 annually. 

Traditional IRA's or funds eligible to be rolled into a traditional IRA may now be rolled into a TSA, once a qualifying event occurs. Examples of qualifying events include age 59.5 and termination of employment. This is big news for DROP participants. Now you can roll your DROP funds into your existing TSA accounts. However, it is necessary to make certain that your TSA will accept a rollover. 

The Traditional and Roth Individual Retirement Account limitation is  $5,000. Participants age 50 or older may save an additional $1,000.

The Coverdell Educational Savings Account (Education IRA) limitation is $2,000. 

SIMPLE Plan employee maximum contribution limit is  $11,500. Workers age 50 and older may save an additional $2,500. 

Need help with tax planning? E-mail your questions or call (954) 340-1588.

Keep checking this site for more tax law changes. 

Revised November 7, 2008