Retiree Annuities May Be Promoted by Obama Aides

According to Bloomberg.com, the Obama administration is considering how the government can encourage workers to turn their savings into guaranteed income streams following a collapse in retiree accounts when the stock market plunged.

The U.S. Treasury and Labor Departments will ask for public comment by next week on ways to promote the conversion of 401(k) savings and Individual Retirement Accounts into annuities or other steady payment streams, according to Assistant Labor Secretary Phyllis C. Borzi and Deputy Assistant Treasury Secretary Mark Iwry, who are spearheading the effort.

Annuities generally guarantee income until the retiree’s death, and often that of a surviving spouse as well. They are designed to protect against the risk that retirees outlive their savings, a danger made clear by market losses suffered by older Americans over the last year, David Certner, legislative counsel for AARP, said in an interview.

Questions for the Tax Lady: September 28th, 2009

Check out the following new Questions for the Tax Lady answers and feel free to ask me questions through one of the links below. You can send me an email, direct message or @ reply, and I will do my best to get an answer for you!

Question #1: Roni, I’m a self-employed taxpayer and I completely forgot about the recent quarterly payment due date. I have the money to make the payment, should I just mail it in late?

Answer: Yes. The most recent quarterly payment due date was September 15^th. However, if you were unable to get your payment in then I would recommend sending it in as soon as possible. If you are only a couple of days late then the IRS will most likely not care, but if you just ignore the payment entirely then you might incur a penalty this tax season.

Question #2: What is the difference between a Roth IRA and a traditional IRA?

The main difference between a traditional and Roth IRA is the tax implications. With a Roth IRA all contributions are made from income that you have already paid taxes on. Your contributions are not tax deductible, but you will not have to pay income taxes on future withdrawals. On the other hand, with a traditional IRA the contributions are deductible but future withdrawals will be taxed.