1. IRA Provisions Tax 1 Chap 8 Tax 3 - Chap 19 (indivs text) (A) Taxpayer Relief Act of 1997

2. (1) Phase out of IRA deduction n effective after 1997 n Active participant in ER plan; - no longer include indiv whose SP cov’d; - still a phaseout: But 150,000 - 160,000 n For active participant - new phaseouts:

3. n MFJ Phaseout – 98 50-60 – 99 51-61 – 00/01 52-62/53-63 – 02/03 54-64/60-70 – 04/05 65-75/70-80 – 05/06 70-8-/75-85 – 07 80-90 n Single Phaseout – 98 30-40 – 99 31-41 – 00/01 32-42/33-43 – 02/03 34-44/40-50 – 04 45-55 – 05 50-60

4. (2) Roth IRA (Sec 408A) n Effective after 1997 n nondeductible contrib n up to 2000 (w/o consid of active partic rule) n No mand distribs (B4 death) n Contribs allowed even >70 1/2 n Phaseout 95-110 single, 150-160 MFJ

5. n After 5 yrs - distrib w/o tax or pen - (no tax on growth, nondeduc contribs returned) n 1) 59 1/2 n 2) to B after death n 3) disabled n 4) 1st time homebuyer - 10,000 limit (all IRA’s now except educ IRA)

6. n Other distrib > contribs - incl’d in GI + 10% early w/d Pen n Rollover from existing IRA; - not if AGI > 100,000 or MFS; - include (gen) amt taxable if w/d;  B4 ‘99 include ratably over 4 yrs; - no early w/d pen n Total contrib limit all IRA’s  2000 (b4 phaseouts)

7. (3) Educ IRA’s n Begin 1998, nondeduc 500/yr per B (under 18), 2000 after 2001 year n Non deduc 500/yr per B (benefit) (under 18) n Distribs - Qualif’d educ exps, <30 - excld’d B GI (exclus) n May rollover - to educ IRA of diff fam B - tax & pen free n Otherwise - distrib at age 30 - earnings taxable + 10% pen

8. n Cannot claim hope or life long Lrng credit same year as exclus n contrib = gift of pres int n Phaseout - mod AGI 95-110 single, 150-160 MFJ n Qualif’d educ exps - post second ed - tuition, fees, rm & bd; - at least 1/2 time for rm & bd

9. (4) Pen free w/d IRA for higher ed exp (all IRA’s) n 10% pen early w/d not apply; TP, SP, child, GC; Qualif’d higher ed exp; - post second ed - tuition (CCH) fees, bks, supps, rm & bd; - includes grad ed (per comm report); - reduced by exclusions (Schol, svgs bonds, educ asst prog) (not - gift, inherit) n After 97 - exps pd after 97 for acad periods beg after 97

10. IRS Restructuring & Reform Act of 1998 - Roth IRA & Educ IRA n Chap 19 (indivs text) - Roth IRA n Roth IRA - inc recog on rollover n trad IRA rollover to Roth - include in GI – full amount - deductible trad IRA – earnings - nondeduc trad IRA n prior law (97) conversion b4 99 (=98) - recog GI ratably over 4 yrs (beg 98)

11. n New law (98) option – recognize ratably over 4 yrs or – include entire amt current yr (election) n cannot change election after due date (normally 4/15/99) (extension?) n Restrictions under 4 year spread

12. – W/d of any converted amt = GI (when w/d) – recog max = w/d (?) – death of t/p accels recog unless surv sp inherits and surv sp elects same 4 yr period – this elec also irrevocable (after dec’s last return due date) n Effective - taxable years after 12/31/97

13. n Roth IRA - AGI limit on rollover to Roth from Trad – AGI limit 100,000 (97 law) – 100,000 limit not include GI from conversion rollover (trad to Roth) (98 law) (Relief Act (98 also) did not enact MFJ limit of 150,000 by 2004) n Effective - taxable years after 12/31/97

14. n Roth IRA - AGI limit on rollover – 100,000 limit not include req’d min distribs from IRA’s for indivs at 70½ yrs (min distribs not eligible rollover, still in GI) n Effective - taxable yrs after 2004

15. IRS Restructuring & Reform Act of 1998 n Chap 19 (indivs) & Chap 8 n Educ IRA’s (clarifications on 97 law) – all distribs - ratable share of prin & earnings – Excess contrib - if remain in acct, 10% excise tax (pen) – treated as distrib’d - w/i 30 days after B reach 30 yrs or dies

16. n Rollover (tax free) (of Educ IRA) (3 Reqs) – to another educ IRA – upon death or age 30 of B – to new B = member of former B’s family (& under 30)

17. Increased Traditional IRA Contributions Limits EGTRRA ‘01 n 2002 – 20043000 n 2005 – 20074000 n 2008 & later5000

18. Additional Traditional IRA (Catch up) Contribution EGTTRA ‘01 n Age 50(by end of tax year) n 2002 – 2005additional 500 n After 2005additional 1000

19. Modification Educational IRA Rules EGTRRA ‘01 n 2000 instead of 500 limit n mfj phase out 190 – 220 n Elementary & secondary school expenses included n Can claim HOPE or Lifetime Lrng same year but not same expenses n Corps can contribute regardless corp income and w/o phase out n Effective after ‘01

20. New Credit – Contributions to IRA’s & Certain QRP’s n 2000 credit limit n Reduced by taxable distributions (current year, 2 hrs prior, & up to due date n Phase out AGI 25 (single) 50 (mfj) n In addition to any exclusion or deduction n Against regular tax & AMT n Not dependents or full time students n Calculated per table n Effective: after ’01 and before ‘07