July Newsletter

Some Basic Rules About Individual Retirement Accounts

The third prong of any retirement plan (in addition to Social Security and a pension) should be some form of tax-favored savings. The IRA whether traditional or Roth is still a popular form of tax-favored savings. Many employees can also make deductible contributions to 401(k) plans.
  1. Contributions to a traditional IRA generally result in an income tax deduction on the full amount contributed.

  2. Workers may contribute up to $5,500 annually (for 2014) to a traditional or Roth IRA. Additional contribution of $1,000 can be made by a worker age 50 or older.

  3. Investment possibilities for IRAs are very flexible. An individual may invest in bank certificates of deposit, stocks, bonds, mutual funds and even certain real estate investments.

  4. To avoid a penalty, distributions from a traditional IRA generally must not begin earlier than age 59½.

  5. Participants age 70½ or older are required to take minimum distributions each year. The minimum withdrawal for the year in which the participant attains age 70½ is based on the life expectancy of the participant. Life expectancy is based on statutory tables.

  6. An IRA is also an shelter for lump-sum distribution from a pension plan when an employee changes jobs. Tax is deferred on the amount rolled over into the IRA until payment.

  7. Contributions to a Roth IRA are not tax deductible but withdrawals from a Roth are not subject to income tax.

Latest Report on Virginia Waiver Reform from the Department of Behavior Health and Disability Services (DBHDS):

Virginia is in the process of reforming its waiver programs for the developmentally disabled. The contracted expert advisor to DBHDS recommended two needs-based waivers. (1) Comprehensive waiver which would provide more intense services and (2) Supports waiver which would provide supplemental services.

Stakeholder subcommittees have been formed to further advise DBHDS on the design of the two waivers. Collectively the stakeholders are made up of over 100 people, the majority being volunteers.

Commissioner Debra Ferguson (DBHDS) recently issued a brief report on the Stakeholder subcommittees for Virginia’s waiver reform. The subcommittees are: Eligibility; Case Management; and Waiting List.

Briefly the recommendations are as follows:

Eligibility recommends a single eligibility criteria for the two new waivers. The criteria will be more functionally based.

Case Management recommends a single point of entry for both new waivers through the Community Services Boards (CSBs). The CSBs would contract with private case management providers to offer individuals on either waiver their choice of case management provider.

Waiting List recommends one set of criteria for both waivers; design the new waivers to allow movement between them as necessary. Assignment on list based on urgency of need rather than chronologically. There needs to be a transitional and fair process to align those now on the waiting list with the new criteria

These are only recommendations. A Waiver Design Advisory Committee will now consider the recommendations and advise both DBHDS and DMAS.

Speaking Event: Edward Zetlin will be presenting at the Langston-Brown Community Senior Center located at 2121 N Culpeper St, Arlington, VA 22207 on August 12, 2014 at 1:00 pm. His topic will be on understanding the probate process.

Contact us at (703)379-0442; ed@zetlinlaw.com



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