IRA Reform Passes Senate Unanimously
The Wisconsin Senate passed the IRA Reform Bill, Senate Bill 439, today by a vote of 33 to 0. The bill, which I authored, is a comprehensive reform package that will make state law consistent with the federal tax code, encourage people to invest in their retirement, and help members of the military.
Here’s how the bill works:
The IRA Reform Bill Removes Penalties
Current Wisconsin law does not allow for all individuals to convert from a traditional IRA to a Roth IRA without a stiff penalty. That’s why I decided to introduce the IRA Reform Bill to allow all individuals, regardless of their income level, to convert to a Roth IRA penalty free. I have heard from constituents, CPAs and financial planners who overwhelmingly support removing stumbling blocks to planning for retirement. This provision was enacted on the federal level in 2005 for tax years starting in 2010, and it is time for Wisconsin to do the same.
The IRA Reform Bill Allows You to Save More
The IRA Reform Bill will also make Wisconsin retirement contribution limits match federal law, ensuring Wisconsin residents can continue to contribute the maximum amount to retirement accounts. Keeping Wisconsin’s tax treatment of retirement accounts current with federal law will encourage Wisconsin workers to save for retirement. Encouraging people to invest in their future makes good financial sense not only for retirees, but the entire state.
The IRA Reform Bill Helps Members of the Military
The IRA Reform Bill also adopts federal changes made in the Heroes Earning Assistance and Relief Tax (HEART) Act of 2008. These changes would exempt Guard members and U.S. military reserves from certain IRA penalties, including withdrawal penalties, if they are called to active duty for more than 179 days. It also allows military death benefits to be added to a Roth IRA notwithstanding the annual contribution limits, allows reservists called to active duty to withdraw funds from their health flexible spending accounts without incurring penalties, and excludes from gross income any state or local bonus payment made to military families if their payment is related to their service in a combat zone.
The Future of IRA Reform
The IRA Reform Bill is now headed to the Assembly for concurrence. The bill is supported by the Wisconsin Institute of CPAs, the National Association of Insurance and Financial Advisors, the Wisconsin Bankers Association, and the State Bar of Wisconsin.
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Great News!!! For those interested in Leah Vukmir, go to "Facebook" and search "Leah Vukmir" OR go to Google and Search "Leah Vukmir Facebook". All you need to know about her and more!
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Maybe Lita was talking about the British pop singer, though it's hard to say how Dido could make Vukmir a household word.
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Lita in Tosa --
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You are going to make 'Vukmir' a household name! Dido
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Hey CarpieD,
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Same thing occurred a few years back with regard to the estate tax in Wisconsin. The federal limit on the amount of estate exempt from taxation went up every year until 2010, when the limit disappeared. However, Wisconsin chose not to follow the federal limit at the time and our father's estate paid $ 50,000 in Wisconsin estate taxes that would not be due today. It's a revenue issue, not a mistake. Wisconsin is one of the last states to make any liberalizations, because of the lost tax revenue.
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SOB: The changes WERE introduced 5 years ago on the FED level. But only EFFECTIVE in 2010. Now we're on the same page as the FEDs. No harm, no foul, no problem. So pipe down with your conspiracy theories...
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Let it go SOM.
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Am I the only person wondering why this presumably 'extradorinary' action had to be performed by the (D) Legislature in the first place? I mean, did this 'fast-tracked' bill have to be passed ASAP because somebody in the Wisconsin Department of Revenue screwed up by NOT paying attention to these kinds of changes on the Federal level THAT WERE INTRODUCED FIVE YEARS AGO? Or, was this a failed attempt by the (D) Legislature to try to tax those wealthy residents who might want to convert their traditional IRA to a Roth by trying to hide these Federal tax changes from Wisconsin residents as long as they could?
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I contacted Senator Sullivan's office about the limitations on tax free contributions to 401k accounts, which affect far more people. I was advised an amendment was added to address that problem as well and also hopefully advanced. Here are the details of the legislation:
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Load more comments View all comments Back to topMortified West Allis Resident - Feb 23, 2010 1:33 PM - Report Abuse
tosaoutsider - Feb 22, 2010 4:48 PM - Report Abuse
Meanwhile, it looks like the jerks get jerkier.
Mortified West Allis Resident - Feb 21, 2010 2:40 PM - Report Abuse
P.S. It's Ditto NOT Dido.
Lita in Tosa - Feb 20, 2010 11:06 AM - Report Abuse
StubbornOldMan - Feb 18, 2010 9:32 PM - Report Abuse
Do you still think it was definitely NOT a conspiracy based on WG's post? Well, 'conspiracy' *might* be too strong of a word, but come on...
Based on Senator Sullivan's opening remarks, he seems to imply that Wisconsin was lagging far behind the other states when it came to adopting the Federal guidelines for Roth conversions, hence the 'need' for his quick action to introduce SB439 and save the day. Something tells me that those other states had this change implemented well before it was discovered in Wisconsin. I'm still waiting for Senator Sullivan to answer my "Why?" questions I posed earlier. His answers will may prove that one of us is right.
You need to keep an open mind rather than think that everybody in the (D) tax-and-spend Madison legislature is looking out for your best interest. Why do you think so many teachers and public workers move to Arizona and Florida after they retire. Weather's not the only reason, trust me.
Who's this SOB guy? I'm a nice SOM.
WG - Feb 18, 2010 3:52 PM - Report Abuse
CarpieD - Feb 18, 2010 11:30 AM - Report Abuse
Gas pains - Feb 17, 2010 2:51 PM - Report Abuse
Rejoice in the news that the Wisconsin's IRA rules are probably going to be made compliant with Federal rules.
That's good enough for me.
StubbornOldMan - Feb 17, 2010 11:48 AM - Report Abuse
I first heard about this 'problem' in Wisconsin Tax law about a month ago on some of the conservative talk radio shows, so I immediately considered the possiblity of a (D) conspiracy by the 'tax-and-spend' Wisconsin Governor and Legislature. If that's not it, then why? There's a reason it took FIVE YEARS to adopt the same tax laws as other states have with respect to these Roth conversions, but I'm sure nobody here will be willing to fess up because the real reason might be embarrassing.
WG - Feb 17, 2010 11:14 AM - Report Abuse
If state tax laws are not updated, the maximum tax-free contribution amounts to individual retirement accounts and 401k under state law would revert to 2001 levels and be significantly lower than those allowed under federal law. Senate Bill 439 would make sure Wisconsin tax law remains consistent with federal law and allow tax free contributions of up to $6,000 to IRAs and $16,500 to a 401k.
In addition, state law would be changed to recognize changes in federal law removing a $100,000 adjusted gross income limitation on conversions from a traditional IRA to a Roth IRA. A recent analysis by the Legislative Fiscal Bureau indicates this law change could provide both a short-term boost to state finances and a long-term tax advantage to retirees.