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April 5, 2009

Computation period

Your Guide

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Definition

The period beginning immediately prior to the time that the contribution or conversion that is being returned or recharacterized was made to the IRA and ending immediately prior to the removal of the contribution or conversion.
Computation period considerations
If more than one IRA contribution was made and it is subsequently now being returned from the IRA, the computation period begins immediately prior to the time the first contribution being returned was contributed.
The NIA is computed for the computation period
See related definitions :

Referring Cite

TD 9056, IRS Form 5329

Additional Helpful Information

  • NIA calculations and allocations must be based on the overall value of an IRA and the dollar amounts contributed, distributed or recharacterized to or from the IRA. As a result, the principal amount of regular Roth IRA contributions cannot be protected against adjustment for their pro rata share of net income, including any net losses, during the computation period
  • If an IRA is not usually valued on a daily basis, the fair market value of the account at the beginning of the computation period is the most recent, regularly determined, fair market value of the account. This is determined as of a date that coincides with or precedes the first day of the computation period. For instance, assume the IRA is not valued on a daily basis but a monthly statement is provided; if the calculation is being done in June, the month-end value on the statement for May would be used as the fair market value for the beginning of the computation period.

Written By

Denise Appleby

Denise is CEO of Appleby Retirement Consulting Inc., a firm that provides IRA resources for financial/ tax/legal professionals. She has over 20 years of experience in the retirement plans field, which includes training and technical consultation.

Denise writes and publishes educational /marketing tools for advisors; available at http://irapublications.com. Denise co-authored several books on IRAs

Denise is a graduate of The John Marshall Law School, where she obtained a Masters of Jurisprudence in Employee Benefits, and has earned 5 professional retirement designations.
She has appeared on numerous media programs, sharing her insights on retirement tax laws.

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