Time Expiring to Claim $760 Million in Refunds for 2010 Tax Returns

If you did not file a tax return for 2010, you may be one of over 900,000 taxpayers who may be due a refund from that year. If you are, you must claim your share of almost $760 million by the April 15 tax deadline. To claim your refund, you must file a 2010 federal income tax return. Here are the facts you need to know about unclaimed refunds:

• The unclaimed refunds apply to people who did not file a federal income tax return for 2010. The IRS estimates that half the potential refunds are more than $571.
• Some people, such as students and part-time workers, may not have filed because they had too little income to require filing a tax return. They may have a refund waiting if they had taxes withheld from their wages or made quarterly estimated payments. A refund could also apply if they qualify for certain tax credits, such as the Earned Income Tax Credit.
• If you didn’t file a 2010 return, the law generally provides a three-year window to claim a refund from that year. For 2010 returns, the window closes on April 15, 2014.
• The law requires that you properly address, mail and postmark your tax return by that date to claim your refund.
• If you don’t file a claim for a refund within three years, the money becomes property of the U.S. Treasury. There is no penalty for filing a late return if you are due a refund.
• The IRS may hold your 2010 refund if you have not filed tax returns for 2011 and 2012. The U.S. Treasury will apply the refund to any federal or state tax you owe. It also may use your refund to offset unpaid child support or past due federal debts such as student loans.
• If you’re missing Forms W-2, 1098, 1099 or 5498 for prior years, you should ask for copies from your employer, bank or other payer. If you can’t get copies, get a free transcript showing that information by going to IRS.gov. You can also file Form 4506-T to get a transcript.
• The three-year window also usually applies to a refund from an amended return. In general, you must file Form 1040X, Amended U.S. Individual Income Tax Return, within three years from the date you filed your original tax return. You can also file it within two years from the date you paid the tax, if that date is later than the three-year rule. That means the deadline for most people to amend their 2010 tax return and claim a refund will expire on April 15, 2014.

Current and prior year tax forms and instructions are available on IRS.gov or by calling 800-TAX-FORM (800-829-3676).

Additional IRS Resources:

• IR-2014-30, IRS Has $760 Million for People Who Have Not Filed a 2010 Income Tax Return

Tax Rules for Children with Investment Income

You normally must pay income tax on your investment income. That is also true for a child who must file a federal tax return. If a child can’t file his or her own return, their parent or guardian is normally responsible for filing their tax return.

Special tax rules apply to certain children with investment income. Those rules may affect the tax rate and the way you report the income.

Here are four facts from the IRS that you should know about your child’s investment income:

1. Investment income normally includes interest, dividends and capital gains. It also includes other unearned income, such as from a trust.

2. Special rules apply if your child's total investment income is more than $2,000. Your tax rate may apply to part of that income instead of your child's tax rate.

3. If your child's total interest and dividend income was less than $10,000 in 2013, you may be able to include the income on your tax return. If you make this choice, the child does not file a return. SeeForm 8814, Parents' Election to Report Child's Interest and Dividends. 

4. Children whose investment income was $10,000 or more in 2013 must file their own tax return. File Form 8615, Tax for Certain Children Who Have Investment Income, along with the child’s federal tax return.

Starting in 2013, a child whose tax is figured on Form 8615 may be subject to the Net Investment Income Tax. NIIT is a 3.8% tax on the lesser of either net investment income or the excess of the child's modified adjusted gross income that is over a threshold amount. Use Form 8960, Net Investment Income Tax, to figure this tax. For more on this topic, visit IRS.gov.

For more on this topic, see Publication 929, Tax Rules for Children and Dependents. Visit IRS.gov to get this booklet and IRS forms. You may also have them mailed to you by calling 800-TAX-FORM (800-829-3676).

Additional IRS Resources:

• Tax Topic 553 - Tax on a Child's Investment Income
• Find out if Net Investment Income Tax applies to you
• Questions and Answers on the Net Investment Income Tax
• 1040 Central
• IRS Tax Map

Intuit: How Design Drove Its Turnaround

Businessweek Design Section writes for Businessweek: Over the past six years, Intuit (INTU), maker of TurboTax and other accounting software, has placed design at the center of what it does—a shift it credits for its turnaround. Intuit Chief Executive Officer Brad Smith and Kaaren Hanson, vice president for design innovation, explain.

When did you know something was amiss?
Hanson: Back in 2007, 2008, we realized that we were no longer any better than our competitors. At the same time, mobile was really coming into play. So we knew we needed to change. When we look at any product at Intuit, we think about three factors. We expect to create a benefit that people care about. It needs to be easy. And it needs to evoke positive emotion. To do that, we went after three strategies. First of all, we made sure everybody in the company had a visceral experience of what great design was like. We started with our most senior leaders. Brad had his team at an off-site, and we had them each bring in something that delighted them. And we had them talk about what made that experience delightful to them—that’s when we locked in on how we want our customers to feel.

And the other two strategies?
Smith: The second is the triad. We have the designer, the engineer, and the product manager working together. It used to be that when we said we were going to be design-driven, the engineers said, “Well, here’s the technology constraints.” The product manager said, “Well, here’s the thing we have to solve,” and then gave it to the designers and said, “Make it pretty before it ships.” Now the designers are a part of it, Day One. And the third part was we needed superstrong designers. So we hired some.

Any instructive mistakes?
Hanson: Well, when we started off, we thought it was going to be fantastic. But after a year of thinking that design is finally going to be able to help change the company, absolutely nothing changed. What we hadn’t realized was that talking is worthless. The gap between knowing and doing is tremendous. It wasn’t until we created a series of coaches, called the Innovation Catalysts, that design became a part of our DNA.

At one stage, 70 percent of your executives had new direct reports. Was that hard?
Smith: You always have some who resist change, but 7 billion hours a year are spent inputting information into software to do your taxes, and for half of Americans, the single biggest check they’ll get is their tax refund. So our vision is to eliminate 7 billion hours of tax prep drudgery and get to the money as fast as possible. Then we put one more constraint on: It needs to happen on a mobile device. All of this turned out to be a grand challenge.

Is a Roth IRA better than a Roth 401(k)?

Dan Moisand for MarketWatch.com writes: While Roth IRAs and Roth 401(k)s are both funded with after-tax dollars and withdrawals from either can be tax-free, there are several differences that can be important. This week's featured question delves into some of the key differences.

Q. Could you tell me differences in dispersments of 401k Roth verses IRA Roth... Does one have an advantage to the other? — L.C.

A. Whether one type of plan is more advantageous to you, L.C., is a function of the particulars of your situation. Generally, people accumulating funds favor the 401(k) while retirees tend to prefer the IRA. You'll see why after I outline the basics starting with distributions.

Distributions — Distributions of earnings from a Roth 401(k) will be tax free if taken after age 59 ½ and it has been five tax years or more since Jan. 1 of the year you first contributed to the Roth 401(k). Withdrawals can only be made, if you are eligible for a distribution from the 401(k) (death, disability, separation from service)

Withdrawals from a Roth IRA can be taken at any time in the following order: Contributions, converted amounts, earnings. Withdrawals of contributions are always tax free. Generally, converted amounts and earnings are tax free if the applicable five-year rules are satisfied and taken after age 59 1/2.

Required Minimum Distributions (RMD) — RMDs are required from Roth 401(k)s once your reach age 70 1/2, unless you are still employed by the company providing the 401(k) then and less than a 5% owner. Once such employment ends, RMDs are applicable.

No RMDs are required from your Roth IRAs during your lifetime.

Contribution eligibility — If your 401(k) offers a Roth option, all employees eligible to contribute to the 401(k) may contribute to the Roth regardless of their income.

A maximum contribution to a Roth IRA is limited to persons who have earned income of $5,500 or more but an Adjusted Gross Income (AGI) under $114,000 for singles, $181,000 for joint filers. Single filers with an AGI above $129,000 and joint filers with an AGI over $191,000 cannot make a Roth contribution.

Contribution amounts — For 2014, Roth 401(k) contributions are limited to the lesser of 100% of wages or $17,500 ($23,000 if over age 50)

Roth IRA contributions are limited to the lesser of 100% of wages or $5,500 ($6,500 if over 50)

Matching — Contributions to a Roth 401(k) may be eligible for a matching contribution from your employer. No match is made to Roth IRAs.

Conversions — Moneys inside a 401(k) can only be converted to the Roth 401(k) if the plan specifically allows such conversions. Conversions to Roth 401(k) cannot be reversed or "recharacterized.”

Any of your IRA moneys, other than those subject to Required Minimum Distributions, can be converted to a Roth IRA. Conversions can be recharacterized as late as Oct.15 of the year after the year of conversion.

So, because more money can be accumulated in a Roth 401(k) at any income level, generally those saving for retirement prefer the Roth 401(k). Retirees tend to prefer the Roth IRA, because no RMDs are needed allowing funds to continue to grow tax free.

You can learn more in detail about the author Dan Moisand Here.

Dan Moisand is a founding partner with  

You can visit Dan Moisand's firm by clicking here.

IRS Adopts Aggregate IRA Annual Rollover Limitation

The IRS has announced that it intends to follow the Tax Court’s interpretation of the statutory one-rollover-per-year limitation on Individual Retirement Account (IRA) rollovers as an aggregate limit. The IRS has previously applied the one-per-year limitation under Code Sec. 408(d)(3)(B) on an IRA-by-IRA basis, as indicated in Publication 590, Individual Retirement Arrangements, and issued Proposed Reg. §1.408-4(b)(4)(ii) consistent with that application .

However, in A.L. Bobrow, 107 TCM 1110, Dec. 59,823(M), TC Memo. 2014-21 (TAXDAY, 2014/01/29, J.3), the Tax Court held that the limitation applies on an aggregate basis, so that an individual could not make an IRA-to-IRA rollover if the individual had made such a rollover involving any of the individual’s IRAs in the preceding one-year period.

The IRS intends to withdraw the proposed regulation and revise Publication 590 and anticipates that it will follow theBobrow interpretation, regardless of the end resolution of that case. Adoption of that interpretation of the statute will require IRA trustees to make changes in the processing of IRA rollovers and in IRA disclosure documents. Therefore, the IRS will not apply the Bobrow interpretation of Code Sec. 408(d)(3)(B) to any rollover that involves an IRA distribution occurring before January 1, 2015.

Additionally, proposed regulations expected to be issued applying this interpretation will not take effect prior to 2015. Application of this interpretation by the IRS will not affect the ability of an IRA owner to transfer funds from one IRA trustee directly to another, because such a transfer is not a rollover and, therefore, is not subject to the one-per-year limitation.

Shoeboxed v Receipt Bank: here’s what you should know plus some big surprises

We recently came across "Zac Zavos" and his blog at "Conversant Media" where he on Shoeboxed v Receipt Bank he writes: I love running the agile ship that is Conversant Media. One thing which really excites me about my role is improving our business processes. As an execution business, it’s these things which sets us apart from the more long-in-the-tooth media entities. And improving process often means automating it.

So I was excited to hear about businesses using Shoeboxed for processing their invoices into XERO.

As the Conversant team know all too well, Fridays I’m often bunkered down doing accounts. Using XERO and having a great bookkeeper and accountant helps, but I reckon I still spend too long on accounts. My Board have told me this enough times in case I was in any doubt.

The Shoeboxed service offered the prospect of freeing up my Fridays a little.

Using their service, you send them your invoice (by taking a photo of your receipt using a smart phone, or forwarding the email containing the receipt, or even posting the invoice to them using neat envelops they provide).

Then in theory they do the heavy lifting for you: parsing the receipt for information and providing it in a form for your review. From there you can then post this invoice direct to XERO’s accounting system.

Sounds pretty sweet. I was excited.

I always research other options for potential tools to use in our business, so I did some research and trialled Receipt Bank at the same time.

My experience with both services was mixed, but I’ve come out of the process with a firm conclusion: if you’re a small business with medium complexity using XERO, it’s unlikely you’ll benefit much from either of these services.

In fact, it’s my view you really shouldn’t use either of them.

Here’s why.

The following are the limitations I experienced using both Receipt Bank and Shoeboxed.

Limitations of Shoeboxed

• The actual receipts aren’t sent to XERO (they are linked from XERO)
  • From an implementation approach this isn’t clever and was a showstopper for me. It effectively means you are highly coupled with Shoeboxed. A core concept of system usage is loose coupling. You really don’t want your accounting system being coupled to an invoice process tool. They should be easily changed with minimal bindings between the systems. Your source of truth should be your accounting system. So the invoices should naturally reside there. By leaving them with Shoeboxed, you also run the risk if the service is closed down (or worse), then your receipts and their fate lie out of your hands.
• The files aren’t secure – your data is in the open
  • When linking the receipt from XERO, Shoeboxed puts an obscured link to the file which itself is not secured. It’s hard to find…but not secure. And obscurity is not security. Again, a showstopper for me. Invoices contain sensitive information and shouldn’t be public.
• Shoeboxed does not accept .doc files
  • Our business is sent most invoices in this file-format. Why oh why can’t they process this file format in the age of online cloud storage (which has long overcome the potential security risks with a .doc format)?
• The value ad of the processing is low
  • The processing of data in my trial was OK at best. I often had to enrich, change due dates, and company names, and so on. This is all these guys should do well and they don’t do it.  It’s a problem given XERO makes it so easy to enter a receipt already, especially given their new Files release.
• System uptime and transparency weren’t great
  • When I signed up to Shoeboxed, my emails forwarding receipts were never processed (or even bounced back – they just disappeared). It took two days and four phone calls to get a single file processed. Their help desk was superb when I spoke to them, but they did inform me they were experiencing a large system outage over the past week. My problem was that they didn’t inform me – the customer – about this. No tweets. No system status pages. Nothing. This concerned me as it felt like they weren’t being transparent about their issues – a big deal if you trust them with your business documents.

To be fair, Shoeboxed does support multiple Xero accounts reasonably well and the people I spoke to in Australia have been great. But the limitations above are, in my view, enough raise real doubts about using the service if you’re serious about your business.

Limitations of Receipt Bank

• Receipt Bank does not support multiple XERO accounts
  • I had to create separate Receipt Bank accounts with various email addresses and login/out each time to process invoices for the two business entities we ran. If you run multiple XERO entities, this is a showstopper. (Oddly though its iPhone app does support multiple accounts.)
• Receipt Bank service not enter the invoice’s specified due date
  • Again – a showstopper for me. When I enter a payable into XERO I want to know when the supplier is asking for the money to be paid. This helps me manage their expectations and my cashflow. But Receipt Bank just adds ‘x’ days to each invoice (where you specify the ‘x’).  Not good enough in my view given this is pretty much one of the key bits of information in a receipt.
• Receipt Bank does not accept .doc files – just like Shoeboxed.
• While Receipt Bank does actually post files to XERO directly, it stores  documents in an image format rather than PDF (which would contain the text it parsed out in the first place).

The security issues and lack of .doc file formats are real showstoppers for me.

But more broadly, I do wander what led both companies to the position they are today: where the core of their offering (processing invoices and extracting data) is a small and arguably poor part of their service. [end]

Conversant Media is an online company that produces the Australian culture website Lost At E Minor and the sports opinion website, The Roar.

Two Millennials Discuss Doing Their Taxes

We came across a most interesting conversation at a site called "The Billfold", authored by Jazmine Hughes & John Sherman.  

Jazmine: (Ok, I literally know nothing about 1099s, but here goes) SO HEY FRIEND! It’s tax season! Are you all done?

John: Yay! Erm, sorta.

I spent, like, four hours one night last week entering tiny numbers into TurboTax, then was crestfallen at the result, and did the same with H&R Block online. Now both of them are emailing me like, HELLO? DO YOUR TAXES AND PAY US… so I’m putting it off. For now. I did actually go to see a human person at an H&R Block office, and she told me it would be $300 just to process my 1099-MISC, nevermind the taxes I will inevitably owe, so I scuttled back to my desk.

Jazmine: You worked a ton of jobs in 2013. How many W-2s do you have?

John: Five.

Jazmine: Yikes! What jobs are these for, and how did you document the other (2? 3?) jobs you held?

John: It’s a lot. I’m lucky that two of the jobs I had last year were at the same restaurant, so they’re on the same form. So that’s two, then plus the other four W2s (bookstore, bookstore, restaurant, nonprofit) is six, and the seventh job I had is my freelance gig, which has a 1099.

Jazmine: So what was your 1099 for?

John: I copy edited or proofread (slightly different pay rates) something like a dozen novels last year, all with the same company.

Because I was trying to be smart, I kept track of my freelance payments as I went, in a labeled folder with pay stubs and deposit receipts, so I knew how much I’d made before I even got the form. Because I am also not very put-together, the folder lived on top of a pile of books behind my futon.

Jazmine: That’s impressive. I keep track of my minimal freelance payments in a google doc called “GIRL, GET THAT MONEY.” Did you do the responsible thing and set up a freelance tax bank account?

John: I don’t think so? I don’t know what that is, so probably no? And a Google doc is pretty evolved. I feel like an old fart with all my paper. Maybe next year I’ll save stuff on a floppy disk. It will be labeled “BOY, GET A CLOUD SERVER.”

Jazmine: A freelance tax account is just what grown up, responsible people do when they know they’re going to owe on taxes. I’ve heard about people opening an additional bank account, depositing an estimate on taxable wages from freelance work, and then just using that money when it comes tax time.

John: That sounds incredibly responsible. Dauntingly so. I’m for sure gonna look into that for this year. I did just amend my W-4 at my current job, which a labyrinth of forms told me will reduce my tax burden.

Jazmine: What does that mean?

John: I’m honestly not thoroughly sure, BUT the basic idea is that I’ve elected to have more money taken out of my paycheck regularly, at the risk of overpaying my taxes this year. I’ve also elected to have a small, additional amount of money withheld from each paycheck.

So it’s kind of like opening a separate bank account, except I’m sending the money to the government first, which now that I write it out seems really stupid.

Jazmine: How much money, approximately, did you make from freelancing? How much money do you think you’ll have to pay back to the IRS? (I’m assuming that all your W-2 taxes are fine and dandy.)

John: I made a little over $4,800 freelancing last year, and I’m expecting to owe almost $900. Although, before I entered my 1099 my refund was looking to be about $900, so it’s possible that I owe closer to $1,800 on that amount alone.

Jazmine: Wait. Explain that second part to me. Your refund, just with W-2s, was supposed to be $900?

John: Yes.

Jazmine: And then when you entered in your 1099 info that changed?

John: Yes. It turned inside-out. I really have no idea why, but I wonder whether it has something to do with my tax rate based on my total income?

One thing you can do is deduct expenses from your taxable income for things that are related to your work. So if you bought a computer, or if you have a home office, or if you need to buy pens or a burner phone or duffel bags for toting cash, you can deduct the cost of buying those things. I managed to delineate an area in my 150 sq. ft. bedroom that I convincingly use “exclusively” for my freelancing, so that shaved a bit off of my taxable income, but only like $100. I did buy some nice sweatpants, so maybe I can deduct those?

Jazmine: I write best in no pants, so I don’t know.

John: Maybe I should get a more expensive editing outfit.

Jazmine: Why/how did you start freelancing? Was it to pad your bank account when you were working all those crazy jobs or because we went to liberal arts college and we all feel like we have a “really good book/listicle/thinkpiece” inside of us?

John:  Definitely option A. (Though don’t we all have a listicle thinkpiece inside us, just dying to be set free?) It was an opportunity to make some money on the side, at which I leapt.

The more I did it, though, the less “on the side” it has turned out to be. Case in point, I’m having to fill out a bunch of forms about it.

Jazmine: Did it decrease at all when you got your current job?

John: Somewhat, though I find it hard to turn down a money-making opportunity, even if it means that now I’m squeezing it in between 8 p.m. and bedtime instead of mornings before going to work at 2 PM.

Jazmine: How does your freelance income impact your month-to-month finances? Does it arrive all at once? In little drops?

John: It arrives in large-ish drops, spread out depending on the number and size of my projects. What’s nice is that it’s rolling, so once I finish a project I can estimate how much it will pay and expect to get a check in two weeks or so.

So if I’ve been saving up for something or want to pay down a chunk of my credit card bill, I can do that and expect to make it up fairly soon. That said it’s sometimes unpredictable; I waited a month for my last check.

Jazmine: You told me that the complex and annoying tax part of freelancing almost makes you not want to freelance anymore. Is that still true?

John: To some extent. If you make less than $600 doing it you don’t have to deal with a 1099, so I’m sort of inclined to try and cap my work at that amount. At the same time, though, it’s a great way to live with a little bump in income every month or two, minus April.

It’s the sort of thing that would be cheaper if I did it either significantly more or significantly less. As it is I think I’ll keep chugging along and just plan better for next year so it’s not such a bite all at once.

Jazmine: What are you gonna do differently next year, then?

John: My hope is that my W-4 will behave and that the tax I pay in my day job will counterbalance the tax I owe for my side thing, but I’m also going to look into setting up a freelance tax account thing since you mentioned it 10 minutes ago.

Jazmine: That’ll be $80 bucks. My advice is not tax-deductible.

John: Sigh. Add it to the list.

Jazmine: So what are you going to do when it comes to filing your taxes? Are they simple enough to do online? Are you going back to H&R Block?

John: I’ll probably just do them online like I started to. I figure it’s the cheaper option. (FWIW, the H&R Block online option seems to be cheaper overall than TurboTax, which kept telling me I had to upgrade my package in order to finish my taxes.) I went to H&R Block initially because I thought they might have some government-issued magic wand to wave at my little envelope of things, but I guess the wand costs $300.

They basically told me to do the online version instead of paying for a person to prepare my taxes. I went through the whole rigamarole with both TurboTax and H&R Block online, mostly to price-check my options, but haven’t clicked “OK pay for stuff now” on either one yet. I’m not sure whether this is ok with them. The email reminders are getting a bit pointier.

Jazmine: Eesh. What advice would you give me as someone who will probably be in this situation next year, and is also very attractive and hilarious and committed to writing more and is possibly named Jazmine?

John: I’ll say this, to any Jazmine fitting such a description: There’s an essential difference between the sort of freelancing I’m doing and the sort she’s doing, which is writing. I am editing and proofreading, using skills I have to supplement my income with no real enrichment or reward beyond the money—subsistence freelance, you could call it. I tend to feel a bit mercenary. Taxing a mercenary is fine and good, but taxing an artist just seems cruel.

I’ll let you know how this game of price-check chicken goes. I say keep an eye on the cumulative payout of your freelance stuff, and if it starts creeping up toward $600 start socking a little away.

Also: get paid in cash. But that’s advice for life. [end]   Visit "The Billfold" here to comment.

_________

You can follow the co-author Jazmine Hughes on Twitter Here.   You can follow the co-author John Sherman on Twitter Here.

Tax Considerations When Trading Popular Commodity ETFs

At SeekingAlpha, Tom Lydon, ETF Trends writes

Summary

• There are different tax considerations for various commodity-related exchange traded products.
• Commodities ETPs can include futures-backed ETFs, ETNs and physically backed metals ETFs.
• Investors will have to deal with the slightly different taxes associated with commodities investments.

Commodity exchange traded funds surged over the last three months after a lackluster 2013. With commodity-related ETFs and exchange traded notes (ETNs) back in the limelight, it is important for investors to understand how these products operate and how the IRS taxes these investment vehicles.

Commodity ETFs and exchange traded notes have been among the best performers year-to-date, with the iPath Dow Jones-UBS Coffee Total Return Sub-Index ETN (JO) rising 81.6% so far this year on the severe drought conditions in Brazil, the world's top producer of coffee.

Additionally, the United States Natural Gas Fund (UNG) is still up 18.2% year-to-date despite falling prices on warmer weather conditions. Natural gas surged to a 5-year high in February.

While it may be fun to play these types of short-term market moves in the commodities market, investors will have to deal with the slightly different taxes associated with the investments.

Commodities ETFs and other funds that use futures contracts to gain exposure to a market are structured as limited partnerships. Consequently, investors may have to fill out a Schedule K-1 instead of Form 1099, and they may incur Unrelated Business Taxable Income (UBTI), which could be taxable in an IRA. However, most ETFs provide K-1s in a timely manner and typically do not generate UBTIs.

Futures-backed ETFs, unlike equities and stock-based ETFs, are based on the so-called 60/40 rule: 60% long-term gains at a maximum 23.8% rate and a 40% short-term gains at a maximum 43.4% rate, depending on the tax bracket, regardless of how long the investor holds the ETF.

Moreover, at the end of the year, the ETF must "mark to market" all outstanding contracts and treat them as if the fund sold those contracts, and investors would realize those gains for tax purposes.

Taxation of ETNs differs from that of ETFs. ETNs are a type of bond or debt security issued by an underwriting bank and subject to the credit risk of the issuer. Gains in stock, bond and commodity ETNs are taxed at a maximum long-term 23.8% rate and maximum 43.4% rate.

Lastly, physically backed ETFs, like the SPDR Gold Shares (GLD), which gained 14.6% year-to-date, are treated as if investors held the physicalbullion. Physically-backed metal ETFs are taxed as collectibles with long-term gains at a maximum 31.8% tax rate and short-term gains taxed up to a 43.4% rate.

Max Chen contributed to this article. You can follow the author Tom Lydon on Twitter Here.

The Road to Retirement: 401ks, IRAs & More / A look at Americans' options among retirement plans

At InvestorPlace.com Charles Sizemore, Editor, Macro Trend Investor writes: President Obama just fired a shot across the bow that every American with a retirement account should heed.

In his budget proposal for 2015, Obama is proposing that Social Security shortfalls be financed by means previously considered politically untouchable. The president will recommend that high-income taxpayers have the amount of their salaries eligible to be deferred in 401k plans, IRAs and other retirement vehicles be curtailed as a way of generating more tax revenue in the here and now. Worse, the total assets that could potentially be held in tax-deferred retirement accounts would be capped at approximately $3.4 million.

It’s worth mentioning that these proposals have little chance of getting past the Republican-controlled House, and that even many Democrats would vote against it, given that it could cost them their seat in Congress. Plus, even if the proposals were to come to fruition, they would not affect most American savers. If you have your IRA capped because you have more than $3.4 million in it, this is what I would call a “high-quality problem.”

Still, the president’s proposals are noteworthy because they break longstanding taboos about the sanctity of retirement accounts and they set a dangerous precedent. Today, IRAs are being capped. Tomorrow, will they be seized?

Personally, I don’t see that happening … but then, 50 years ago, few would have seen the traditional corporate pension plan giving way to the 401k.

Retirement planning is a practice that is constantly evolving, and we have to keep up with the times. So, let’s take a look at the current retirement landscape and go over the various investment options available to you.

401k Plans

The 401k is the lynchpin of most Americans’ retirement plan and with good reason. They are widely offered, easy to understand, and your employer takes care of most of the burdensome paperwork and even makes your contributions for you via salary deferral. You also get an instant tax break, and your dividends, interest and capital gains accumulate tax-free until you take distributions in retirement.

Plus, because of employer matching, a 401k plan often ends up offering instant returns that you simply can’t get elsewhere.

What do I mean by that? It’s hard to beat instant 100% returns. And that is precisely what you get when your employer matches your 401k contributions dollar-for-dollar. Not all employers match, and some are more generous than others. But most employers offer matching in the ball park of 3% to 6%. If you don’t take advantage of this, frankly, you deserve to starve in retirement.

If you can afford it, I recommend you max out your annual 401k contributions; in 2014, that amounts to $17,500. However, for many Americans — and particularly young Americans — $17,500 is simply too much to part with in a given year.

But you can afford to put in the 3% to 6% that your employer is willing to match. And if you can’t … well, you probably need to re-evaluate some of your lifestyle choices. That 3% to 6% compounded over a working lifetime can make the difference between retiring in style and moving in with your kids.

IRA and Roth IRA Accounts

Congress doesn’t do much right, it seems. But when it created individual retirement accounts (IRAs)in 1974, it gave Americans one of the most versatile investment vehicles ever conceived, and one that has become the fundamental building block for millions of retirement plans.

When Congress created the Roth IRA in 1997, they took a great idea and made it even better.

With a traditional IRA, you receive a tax break in the tax year in which you make a contribution, and you pay no taxes on the dividends, interest and capital gains that accumulate. You only pay taxes once you start to take distributions — in retirement. With a Roth IRA, you get no tax break in the year of the contribution, but you are able to remove the funds tax-free in retirement.

In 2014, you can contribute $5,500 to either type of IRA and $6,500 if you are age 50 or older.

If you have income from a job or from a small business, you should have an IRA or a Roth IRA — or perhaps both, depending on your situation. But if you were going to only have one, which would be right for you? The answer to this question is going to depend primarily on three factors:

1. Your age
2. Your income
3. Whether you have access to a 401k plan or comparable retirement plan at work

Age: When you fund a traditional IRA, Uncle Sam is giving you a tax break. But he still wants his money. Hence, we have “minimum required distributions.” When you reach the age of 70½, you are required to start withdrawing from your IRA account and to pay ordinary income taxes on the withdrawals.

These days, a lot of Americans continue to work well into their 70s, whether they need the money or not. If you are approaching or already over the age of 70, it makes sense to contribute to a Roth IRA, which has no distribution requirements, because you are not permitted to contribute to a traditional IRA after the age of 70½ … and even if you could, it wouldn’t make sense as you would have to start withdrawing it immediately thereafter.

Income: Your ability to contribute to a Roth IRA gets phased out at higher incomes — and unfortunately, the income levels aren’t as high as you might think.

You can contribute the full $5,500 to a Roth IRA if you are a single taxpayer with a modified adjusted gross income (MAGI) of less than $114,000. Contribution amounts start to phase out at MAGIs between $114,000 and $129,000, and if you make $129,000 or more, you cannot contribute at all.

Married couples can make a full contribution to a Roth IRA if their combined incomes are less than $181,000. Contribution limits for a Roth IRA phase out between $181,000 and $191,000, and at incomes of $191,000 or more, you cannot contribute at all.

So, if you are considered a high-income taxpayer, the Roth IRA is not an option for you.

But let’s assume that your income makes you eligible for either a traditional or Roth IRA. There still are other income factors to consider.

Let’s say that you are married with two children and, thanks to the responsibilities of raising children, your spouse does not work. Let’s also assume you have a mortgage. If this describes you, chances are good that your dependent and home deductions put you in a very low tax bracket. In this case, the current-year tax deduction for a traditional IRA isn’t going to be worth much, and you’re going to be much better off with a Roth IRA.

But 10 to 15 years from now, your kids will have left the nest and your spouse has returned to work. You’re also paying less in mortgage interest because you’ve paid down a large chunk of your mortgage. You’re going to be in a much higher effective tax bracket. Taking an immediate deduction with a traditional IRA suddenly looks a lot better.

The questions you have to ask yourself are “What tax bracket am I in today?” and “What tax bracket do I expect to be in later?”

If your situation changes, no big deal. This is not monogamous marriage. You’re allowed to open multiple IRAs and to contribute to whichever one makes the most sense in a given tax year. Just make sure that you keep the total contribution under the $5,500 limit.

Retirement Accounts at Work: “If you have access to a 401k or comparable retirement plan at work, your ability to deduct a traditional IRA contribution on your tax return may also be phased out. This doesn’t mean that you can’t contribute, mind you. It simply means you can’t deduct the contribution.

For a single taxpayer, you can take a full deduction at MAGI of $59,000 or less. Above that, your deduction is phased out, and no deduction is allowed at MAGI of $69,000 or more. For a married couple, the phaseout starts at MAGI over $95,000, and no deduction is allowed at MAGI of $115,000 or more.

In this case, the Roth IRA clearly is going to be a better option for you.

But if you are unable to contribute to a Roth IRA due to, say, high income restrictions, the nondeductible traditional IRA is still a viable option. You just need to keep track of your basis so that you are taxed only on your earnings. (This is something you’d probably want to discuss with your accountant).

When would a nondeductible traditional IRA be appropriate? If you are aggressively saving for retirement, and you have already maxed out your company 401k plan, then tossing an additional $5,500 into an IRA can be a nice bonus.

Traditional Pensions and Annuities

The only defined-benefit pension (i.e. a retirement payout that is based on negotiated promises and not based on market returns) that most Americans get is Social Security. And while most of us cannot live on Social Security alone, it does provide a nice baseline of income to pay for you basic living expenses.

It won’t buy you a beach house in Florida or a retirement full of travel and adventure, but it will pay for most Americans’ grocery and utility bills and day-to-day expenses.

If you’re one of the roughly 20% of Americans who has a traditional pension, consider yourself lucky.

In most pension arrangements, a retiree is entitled to a defined benefit. What this means is that the pension provider is on the hook to maintain a guaranteed payout for the retiree’s life and often times the life of their spouse as well.

There are a few limits: For instance, pensions generally have some allowance for payout increases based on inflation, but generally no allowance for an increased payout due to better-than-expected investment returns. And when you and your spouse die, the payouts stop. Also, there usually is no provision for transferring your pension benefits to your children or other heirs. Nonetheless, the security and the company-sponsored facets of this type of retirement plan makes it an enormously cherished one.

But unless you work for the public sector or are a member of a union, chances are good that you will not be getting any sort of fixed payout in old age other than Social Security. Pensions have been in rapid decline for decades — specifically, private-sector pensions have declined from nearly 35% in the early ‘90s to 18% today. Businesses are increasingly shedding these cost-prohibitive plans for more corporate-friendly 401ks, making pensions the relative dinosaur of the retirement-planning world.

The good news, however, is that you can create your own pension via an immediate annuity.

An immediate annuity is essentially the opposite of life insurance. Rather than pay an insurance company a monthly premium in exchange for a lump-sum payout at death, you pay the insurance company a lump sum today in return for a guaranteed monthly payout for the rest of your life.

Note: Immediate annuities should not be confused with variable annuities. Variable annuities are a saving and investment vehicle and might be a good option for investors who have already maxed out their 401k/IRA options for the year. An immediate annuity is a distribution vehicle designed to convert existing savings into a secure payout.

But be careful here. You retirement income is only as safe as the insurance company making the promises. Depending on where you live, your annuity may (or may not) be guaranteed by your state. So, consider the financial health of any insurance company in which you’re considering trusting your savings.

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