Investment and Finance

The codes identify the type of distribution, and whether a Form 5329 penalty is required.
Code 1 identifies the distribution as an early distribution with no known exceptions subject to the 10% IRS Form 5329 penalty.
Code 2 = early distribution but a exception applies and no penalty lis levied.
Code 3 = Disability and no penalty required.
Code 4 = Death and no penalty required.
Code 5 = Prohibited transaction.
Code 6 = Section 1035 tax free exchange.
Code 7 = Normal distribution and no penalty required.
Code 8 = Excess contribution.
Code 9 = Cost of current life insurance protection..
Code A = May be eligible for 5 or 10 year averaging.
Code B =designated Roth account distribution.
E—Distributions under Employee Plans Compliance Resolution System (EPCRS).
F—Charitable gift annuity
G—Direct rollover and rollover contribution.
H—Direct rollover of a designated Roth account distribution to a Roth IRA.
J—Early distribution from a Roth IRA.
L—Loans treated as deemed distributions under section 72(p).
N—Re-characterized IRA contribution made for 2012.
P—Excess contributions plus earnings/excess deferrals taxable in 2012.
Q—Qualified distribution from a Roth IRA.
R—Re-characterized IRA contribution made for 2012.
S—Early distribution from a SIMPLE IRA in the first 2 years, no known exception.
T—Roth IRA distribution, exception applies.
U—Dividends distributed from an ESOP under section 404(k).
W—Charges or payments for purchasing qualified long-term care insurance contracts under combined arrangements.

The trustee custodial fees paid to set up and manage your IRA are investment expenses listed as an miscellaneous itemized deduction, subject to the 2% AGI limitation on IRS Schedule A.

You can contribute up to $5,500 ($6,500 if you are 50 or older) provided you have at least $5,500 / 6,5000 of wages, salary or net self-employment earnings in 2013 and in the case of a traditional IRA (deductible IRA) , you have not reached age 70 1/2 by the end of the year.

IRA Annual Report Form 5498 must be sent to you from the bank by January 31st. It must include the market value of the account as of December 31st. A statement showing contributions for the year must be sent by May 31st.

Prohibited transactions generally include the following transactions: a transfer of plan income or assets to, or use of them by or for the benefit of, a disqualified person; any act of a fiduciary by which plan income or assets are used for his or her own interest; the receipt of consideration by a fiduciary for his or her own account from any party dealing with the plan in a transaction that involves plan income or assets; the sale, exchange, or lease of property between a plan and a disqualified person; lending money or extending credit between a plan and a disqualified person; and furnishing goods, services, or facilities between a plan and a disqualified person.

One strategy is where the grandparents can help the grandchildren's education by making a gift under the Uniform Gifts to Minors Act. Each grandparent can give up to $13,000 per child annually free of gift tax, which should be placed in a UGMA bank account in the grandchild's name, with the grandparent or parent as custodian. Another strategy is for the grandparents to purchase Series EE or Series I bonds, or give the money to the grandchild's parent (who must be at least age 24) to buy the bonds. If the bonds are later cashed and the money used to pay qualified college education costs for the grandchild, the interest will not be taxed. The exclusion is phased out for high income taxpayers. Maximum annual purchases of Series I or Series EE are $30,000. Series I bonds also include the feature of being indexed to inflation. Speak to your local CPA about these tax saving strategies.

An income forecast is an operating statement usually covering one year showing what the business expects to earn. It should include your operating costs, including financing costs and the income from sales. The bottom line result is the business net profit for the period.

Most businesses operate seasonally. They have busy periods and slow periods. They are cash rich at times and cash poor at other times. A cash flow statement helps determine whether the business will have enough cash to pay bills in the slow periods. It will help management know if and when they may need to look for financing.

For all Treasury securities such as bills, bonds or notes, the minimum purchase amount is $1,000. Bids must be made in multiples of $1,000.
Non-competitive bids from a single bidder may not exceed one million for the same offering of Treasury bills, or five million for the same offering of Treasury notes or bonds.