Pinnacle Business Solutions Corp.

Social Security and Medicare 2016

Full Retirement Age
If you were born in 1942 or earlier, you are already eligible
for full Social Security benefits. The following chart will
guide you in determining your full retirement age.
Year of Birth Full Retirement Age
1943 – 1954 66
1955 66 and 2 months
1956 66 and 4 months
1957 66 and 6 months
1958 66 and 8 months
1959 66 and 10 months
1960 or later 67
Note: Although the full retirement age is rising, you
should still apply for Medicare benefits three months
before your 65th birthday. If you wait longer, your Medicare
insurance (Part B) and prescription drug coverage
(Part D) may cost you more money.

Delayed Retirement
If you choose to delay receiving benefits beyond your
full retirement age, your benefits will be increased by
a certain percentage, depending on the year you were
born. The increase will be added in automatically from
the time you reach full retirement age until you start
taking benefits or reach age 70, whichever comes first.

Early Retirement
You may start receiving benefits as early as age 62. However,
if you start your benefits early, your benefits are reduced
approximately one-half of 1% for each month you
start your Social Security before your full retirement age.

Qualifying for Social Security Benefits
You qualify for Social Security benefits by earning Social
Security credits when you work in a job and pay Social Security
taxes. The credits are based on the amount of your
earnings. Your work history is used to determine your eligibility
for retirement or disability benefits or your family’s
eligibility for survivor’s benefits when you die.
In 2015, you receive one credit for each $1,220 of earnings,
up to the maximum of four credits per year. Each
year the amount of earnings needed for credits goes up
slightly as average earnings levels increase.
The number of credits you need to be eligible for benefits
depends on your age and the type of benefit.

Retirement Benefits
Anyone born in 1929 or later needs 10 years of work (40
credits) to be eligible for retirement benefits. People
born before 1929 need fewer years of work.

Disability Benefits
To qualify for disability benefits, you must meet two
earnings tests. (1) Recent work test, and (2) duration of
work test.
Recent work test. You must have worked a certain number
of quarters in the most recent years before disability.
Age Disabled Length of Years Worked
Before 24 Six quarters during the three prior years.
24 to 30 Credits for half of the time between age 21 and the
time of disability
After 30 20 credits in the 10 years immediately before
becoming disabled
Duration of work test. You must have worked a certain
number of years during your lifetime.

Survivor’s Benefits
When a person who has worked and paid Social Security
taxes dies, certain members of the family may be eligible
for survivor’s benefits. Up to 10 years of work is needed
to be eligible for benefits, depending on the person’s
age at the time of death. Survivors of very young workers
may be eligible if the deceased worker was employed for
1½ years during the three years before his or her death.

Social Security Facts
• Social Security is the major source of income for most
elderly individuals. Nine out of 10 individuals age 65
and older receive Social Security benefits.
• Social Security provides more than just retirement
benefits.
– Retired workers and their dependents account for
74% of total benefits paid.
– Workers who are disabled and their dependents
account for 16% of total benefits paid.
– Survivors of deceased workers account for about
10% of total benefits paid.
• An estimated 165 million workers, 94% of all workers,
are covered under Social Security.
• In 1940, the life expectancy of a 65-year-old was 14
years. Today it’s 20 years.
• By 2033, there will be almost twice as many older
Americans as today—from 46.6 million today to 77
million in 2033.
• There are currently 2.8 workers for each Social Security
beneficiary. By 2033, there will be 2.1 workers for
each beneficiary.

MEDICARE
What Is Medicare?
Medicare is our country’s health insurance program for
people age 65 or older, people under age 65 with certain
disabilities, or people of any age with a qualifying medical
condition, such as end-stage renal disease (ESRD) or
amyotrophic lateral sclerosis (ALS, Lou Gehrig’s disease).
Medicare helps with the cost of health care, but it does
not cover all medical expenses or the cost of most longterm
care. Medicare is financed by a portion of the payroll
taxes paid by workers and their employers. It also is
financed in part by monthly premiums deducted from
Social Security checks.

Medicare Has Four Parts
Parts A, B, C, and D of Medicare help cover specific
services.
• Medicare Part A (Hospital Insurance). Hospital stays,
skilled nursing facility care, home health care services,
and hospice care.
• Medicare Part B (Medical Insurance). Medical and
other services, clinical laboratory services, home health
care services, outpatient hospital services, and preventive
services.
• Medicare Part C (Medicare Advantage Plans). Medicare
Advantage Plans (like an HMO or PPO) are a way
to get your Medicare coverage through private companies
approved by, and under contract with, Medicare.
These plans include Part A, Part B, and usually other
coverage like prescription drugs (Part D).
• Medicare Part D (Medicare Prescription Drug Coverage).
In general, Medicare offers prescription drug
coverage (Part D) to everyone with Medicare. This
coverage is offered by private companies approved by,
and under contract with, Medicare.

Medicare Eligibility
The Social Security credits you earn also count toward eligibility
for Medicare when you reach age 65. You may be
eligible for Medicare at an earlier age if you get disability
benefits for 24 months or more. Those who have permanent
kidney failure or get disability benefits because
of amyotrophic lateral sclerosis do not have to wait 24
months to receive Medicare coverage. Your dependents
or survivors also may be eligible for Medicare at age 65
or earlier if they are disabled. People who have permanent
kidney failure and need kidney dialysis or a kidney
transplant may be eligible for Medicare at any age based
on a spouse’s or parent’s earnings, as well as their own.

We will be hosting a Seminar on October 6, 2016 !! The topics of discussion will be on Social Security & Medicare...

Check Out our Flyer Below

**Saving for Your Child's College**

Custodial Accounts (UTMA/UGMA)
-Assets in a custodial account belong to the minor. A custodian, usually an adult relative, controls the assets until the minor reaches the age set by state law (21 in most states). Assets in a custodial account can be used to pay for education expenses for the minor.

Savings Bond Interest Exclusion
-Exclusion Rules Interest from qualified savings bonds redeemed by the taxpayer can be excluded from income if: • The taxpayer paid qualified education expenses during the year for the taxpayer, spouse, or a dependent claimed on the taxpayer’s return. • Filing status is not Married Filing Separate. If proceeds from the redemption (interest and principal) are more than adjusted qualified education expenses, only a percentage of the interest is excludable. Example: Marty redeemed qualified bonds for $10,000, including accrued interest of $5,500. He paid $8,000 of qualified education expenses during the year. His excludable interest is: $ 5,500 × $ 8,000 qualified expenses = $ 4,400 tax-free interest $10,000 redemption proceeds interest

Income Limit - The exclusion is limited by adjusted gross income. Check with your tax preparer for income limitations.

Qualified Savings Bonds • Series EE bonds issued after 1989 and Series I bonds. • Issued to a person who was age 24 before the bond’s issue date. The issue date is the first day of the month in which the bond was purchased (for example, a bond purchased on May 25 has a May 1 issue date). The issue date is printed on the front of the bond. • Issued in the name of the taxpayer and/or spouse. There can be no other co-owners, including the taxpayer’s child. The bond can have a pay-on-death (POD) beneficiary, including a child.

Qualified Education Expenses • Tuition and fees required for enrollment or attendance at an eligible educational institution. Qualified expenses do not include courses involving sports, games, or hobbies, unless part of the student’s degree program. • Contributions to a qualified tuition program. • Contributions to a Coverdell education savings account.

Qualified Tuition Plans (529 Plans) & Educational Savings Accounts (ESAs) QTP and ESA Tax Benefits Contributions to a QTP or ESA are not deductible. Earnings accumulate tax free. Distributions are not taxable if less than the beneficiary’s adjusted qualified education expenses in the year of distribution. Contributors can contribute to both a QTP and an ESA in the same year for the same designated beneficiary.

Qualified Expenses • Tuition, fees, books, supplies, and equipment required for enrollment or attendance of the designated beneficiary at an eligible institution. • Expenses for special needs services of a beneficiary with special needs incurred in connection with enrollment or attendance. • Room and board for students enrolled at least half time in a degree or certificate program. Expenses are limited to the room and board allowance included in the cost of attendance set by the school for financial aid purposes or the actual cost of campus housing, if greater. Did You Know? Most colleges and universities set room and board allowances for students who live on campus, off campus, and with parents. Check the school’s financial aid website for costs of attendance. For ESAs, the following additional expenses are allowed. • Expenses for enrollment or attendance at any public, private, or religious school that provides K – 12 education as determined under state law. – Tuition, fees, books, supplies and equipment, academic tutoring, special needs services. – Room and board, uniforms, transportation, supplementary items and services, including extended day programs if required or provided by the school. • Purchase of computer technology, equipment, or internet access and related services to be used by the beneficiary and family during elementary or secondary school years. Does not include computer software unless predominantly educational. • Contributions to QTPs for the designated beneficiary.
Adjustments Qualified expenses are reduced by: • Tax-free assistance (scholarships, fellowships, grants, employer-provided assistance, veteran’s benefits, and any other nontaxable payments except gifts or inheritances). • Amounts used to figure an education credit.

Gambling Winnings and Losses
Reporting
Taxpayers must report the full amount of gambling winnings for the year on Form 1040, U.S. Individual Income Tax Return, line 21. A deduction for gambling losses for the year is allowed on Schedule A (Form 1040), Itemized Deductions, line 28, up to the amount of winnings.

Gambling winnings cannot be reduced by gambling losses and reported as the difference. Taxpayers must report the full amount of winnings as income and claim losses (up to the amount of winnings) as an itemized deduction. Therefore, records should show the winnings separately from the losses.

Diary of winnings and losses. Taxpayers must keep an accurate diary or similar record of losses and winnings. The diary should contain at least the following information.
• The date and type of specific wager or wagering activity.
• The name and address or location of the gambling establishment. • The names of other persons present with the taxpayer at the gambling establishment.
• The amount(s) won or lost.

Proof of winnings and losses. In addition to the diary, taxpayers should also have other documentation to establish proof of winnings and losses.
• Form W-2G, Certain Gambling Winnings.
• Form 5754, Statement by Person(s) Receiving Gambling Winnings.
• Wagering tickets, cancelled checks, substitute checks, credit records, bank withdrawals, and statements of actual winnings or payment slips provided by the gambling establishment

Pinnacle Business Solutions Corp : Newsletter

Check out our July 2016 Newsletter!
http://www.pinnacle-biz.net/newsletter.php?nid=282

Contents:
-Protecting Your Social Security Number
-Ten Clever Vacation Tips
-The IRS is Not Always Right
-Plan for Tax Filing Season Changes

Pinnacle Business Solutions Corp : Newsletter Please feel free to read our client newsletter. It is provided to keep you up to date on the latest tax and accounting news.

Wills and Intestacy
A will allows the testator (the person creating the will)
to specify:
• Who receives property at the testator’s death.
• Whether beneficiaries receive gifts outright or in trust.
• Who will act as personal representative.
• Who will be the guardian of minor children.
In the absence of a will, these matters are settled by
state law.

Who Needs a Will?
• Include persons who are not heirs. Wills are needed
to provide for a person who is not an heir under state
law—unmarried partners, stepchildren, friends, charities,
in-laws, etc.
• Exclude an heir. Heirs are the persons who inherit an
estate under state law in the absence of a will. A will
is needed to prevent an heir from inheriting probate
assets.
• Minors and disabled adults. Trust provisions can be
included in a will to delay receipt of an inheritance or
to allow assets to be used on behalf of an adult who is
disabled.
• Estate tax planning. Married couples can include
trust provisions to reduce estate tax.
Dying Intestate—Without a Will
State law determines who receives probate property if a
decedent dies without a will.
• Most states provide first for the surviving spouse and
children. Children of the decedent always inherit a
share in some states while in others they inherit only
if they are not also children of the surviving spouse.
Children also receive a share in some states if the surviving
spouse has any children who are not also children
of the decedent.
• Intestacy laws generally provide for distribution by
representation, also known as per stirpes distribution.
The share of any heir who dies before the decedent
passes in equal shares to that heir’s children.
• When there are no descendants, the surviving spouse
receives the entire estate in some states but more commonly
shares the estate with the decedent’s parents.
• When there is no spouse and no descendants, parents
and siblings share the estate in some states. In others,
parents inherit the entire estate, and siblings inherit
only if there is no surviving parent.
• If there are no parents or descendants of parents,
grandparents generally inherit next, followed by their
descendants.
• The final beneficiary under intestacy law is the state.
Only relations up to a certain degree inherit under
each state’s laws. After that point, the decedent’s
property “escheats” to the state. State laws vary—a
third cousin thrice removed may inherit in one state
but a second cousin may be too remotely related to
inherit in another.
Example: Nola died at age 103 without a will. Under state
law, her property passes to her descendants per stirpes. Nola’s
three children, Brian, Kyle, and Lloyd, all died before Nola.
Nola’s six grandchildren inherit her $900,000 estate. Brian’s
only child receives $300,000. Kyle’s two children each receive
$150,000. Lloyd’s three children each receive $100,000.

Property Passing at Death
The disposition of property after death depends on the
form of ownership of each asset. Some assets may need
to be probated while others pass automatically to new
owners. Property ownership is a matter of state law so
rules vary. Generally:
• Joint assets. Joint tenancies and tenancies by the entirety
pass to the surviving joint tenant. Bank accounts
in joint tenancy only for convenience and not intended
to pass the property to the surviving joint tenant
may be probate assets in some states.
• Assets with designated beneficiaries. Life insurance
policies, annuities, IRAs, and similar assets pass to
designated beneficiaries if the beneficiaries are alive
when the insured or plan owner dies. Pay-on-death
(POD) bank accounts and transfer-on-death (TOD)
security registrations also pass assets to beneficiaries.
TOD deeds (available in some states) allow real property
to pass to a beneficiary without probate.
• Trust assets. Property passes to beneficiaries specified
in the trust document.
• Life estates and remainders. Property passes to the
remainder owners at the death of the life tenant.
Probate Assets
Other assets—those that will not pass automatically to
new owners at death—are subject to state probate rules.
These assets pass to the beneficiaries named in the decedent’s
will or, if none, according to state intestacy law.

Probate
Probate is the court-monitored process for administering
the estate of a decedent. The process includes notifying
heirs, submitting and validating the will, collecting
decedent’s assets, paying taxes and creditors,
and distributing property to the estate’s beneficiaries.
An estate is probated in the decedent’s state of domicile.
If the decedent owned real property outside his or
her home state, an ancillary probate proceeding in that
state may also be required. Probate is required if the decedent’s
probate assets are above the state’s threshold
(generally $10,000 –$100,000). When probate is required,
nonprobate assets are not included in the proceeding.
Small Estates—Collection of Personal Property
By Affidavit
If the decedent’s probate assets are less than the state
threshold, no court proceeding is required. The assets
can be collected using an affidavit under state procedures
for small estates. Typically, the decedent’s successors
(those entitled to property under the will or state
law) complete an affidavit following the form specified
by state law. The affidavit is given to anyone in possession
of decedent’s assets (banks, brokerages, DMVs,
etc.). Ownership of the assets passes directly to successors,
who also report any after-death income.
Wills and Nonprobate Assets
Only probate assets pass according to the terms of a decedent’s
will. Nonprobate assets pass to the surviving
joint tenant or beneficiary.
Example: Betty’s will leaves half her estate to her church
and half to her children. In 2014, Betty changed title to her
home to joint tenancy with her children. When Betty died, the
only probate asset was her car. Her church is entitled to onehalf
of the value of Betty’s car.

Internal Revenue Service

Check Your Withholding
If you both work, keep in mind that you and your
spouse’s combined income may move you into a higher
tax bracket. The IRS Withholding Calculator, available
at www.irs.gov, can help you determine whether you
need to give your employer(s) a new Form W-4, Employee’s
Withholding Allowance Certificate. Use the results to
fill out and print Form W-4 online and give it to your
employer(s).

Select the Right Tax Form
Choose your individual income tax form wisely because
it can help save you money. Newlywed taxpayers may
find that they now have enough deductions to itemize
on their tax returns, rather than taking the standard
deduction. Itemized deductions must be claimed on a
Form 1040, not a 1040A or 1040EZ.

Choose the Best Filing Status
Your marital status on December 31 determines whether
you are considered married for that entire year for
tax purposes. The law generally allows married couples
to choose to file their federal income tax return either
jointly or separately in any given year. Figuring the tax
both ways can determine which filing status will result
in the lowest tax.
For most married couples, filing jointly will result in a
lower tax liability. This is especially true if there is a significant
difference in your incomes. The so-called “marriage
penalty” only applies to couples who both earn
relatively high salaries.
Certain situations may make it more advisable for married
taxpayers to file separately.
• If both spouses have their own itemized deductions,
such as medical deductions, they may be able to claim
higher overall deductions because of the percentage
limitations on Schedule A.
• If one spouse has past due debt with the IRS or another
government agency, such as child support obligations
or student loans, filing separately will prevent
the other spouse’s share of any refund from being
used to offset debts for which he or she is not liable.
• If one spouse has messy or missing records, or is thinking
of taking a risky tax position, the other may want
to file separately to avoid becoming liable for potential
additional taxes or penalties.
Planning for your wedding may be over, but don’t forget
about planning for the tax-related changes that marriage
brings. More information about changing your
name, address, and income tax withholding is available
on www.irs.gov, or contact your tax professional.

Simple Projections
Based on your tax information from last year, it will be
easy to prepare a dummy return to show what your tax
situation would be if you had been married. You can
print out Form 1040, other tax forms, and tax tables from
www.irs.gov. On the blank forms, combine tax information
from last year’s returns. For example, combine the
wage amounts from both returns and enter the total on
Form 1040, line 7, of the blank form. Do the same for
items such as interest, other income, and include deductions
if either person itemized.
Use filing status, deductions, and exemption amounts
as if you had been married. The resulting tax and refund
or amount due will give you an indication of whether
your current withholding is sufficient to cover your tax
liability when incomes are combined and will also help
identify any problems that may need to be addressed
when you file as married taxpayers.

Internal Revenue Service

Internal Revenue Service

Tips for Newlyweds
Updating your status from single to married may bring about some unanticipated changes, including changes relating to your taxes. While wedding planners don’t typically use an IRS checklist, here are a few things to keep in mind when filing your first tax return as a married
couple. As with any tax issue, contact your tax professional to
help you navigate your own unique situation.

Notify the Social Security Administration (SSA)
If one of you has taken on a new name, report the change to the SSA. File Form SS-5, Application for a Social Security Card. It is important that your name and Social Security number match on your tax return. The IRS will match your information with records provided by the SSA and, if the records don’t match, any electronically filed return will be rejected and any paper filed return will have the mismatched individual’s personal exemption cancelled until the error is corrected. Avoid making a name change too close to tax season. While the SSA can process a name change in about two weeks, the delay in data-sharing between the SSA and the IRS can make any change near the end of the year problematic. In such situations, it may be advisable to file the tax return using your maiden name and change your name with the SSA after the return has been filed. Form SS-5 is available on the SSAs website at www.ssa.gov, by calling 800-772-1213, or by visiting a local SSA office. A copy of your marriage certificate and driver’s license or passport will be required.

Notify the IRS If You Move
The IRS will automatically update your new address upon filing your next tax return, but any notices the IRS sends in the meantime may not get to you. The U.S. Postal Service does not forward certain types of federal and certified IRS mail. IRS Form 8822, Change of Address, is the official way to update the IRS of your address change. Download Form 8822 from www.irs.gov or order it by calling 800-TAX-FORM (800-829-3676).

Notify the U.S. Postal Service
To ensure your mail, including mail from the IRS, is forwarded to your new address, you’ll need to notify the U.S. Postal Service. Submit a forwarding request online at www.usps.com or visit your local post office. Most post offices will not forward refund checks so be sure the IRS has your correct address. Using electronic direct deposit for refunds can prevent them from being delayed due to address mix-ups.

Notify Your Employer
Report your name and/or address change to your employer(s) to make sure you receive your Form W-2, Wage and Tax Statement, after the end of the year. Notify Financial Institutions Financial institutions with which you do business need to be notified to ensure that any Forms 1099 are sent to the proper address. This would include banks and brokerage firms, as well as employer-sponsored retirement plans.

Internal Revenue Service

Pinnacle Business Solutions Corp : Newsletter

Check out our Jane 2016 Newsletter!
http://www.pinnacle-biz.net/newsletter.php

This month's newsletter discusses the recent federal rule changes impacting salaried employees who will be entitled to overtime pay in late 2016. There is also information to help protect a recently departed loved one's identity from being stolen. These articles, plus recent announcements from the IRS regarding audit rates, and new Health Savings Account (HSA) limits for 2017 round out this month's newsletter.

Contents:
-Ghosting Identity Theft
-New Overtime Rules
-The Chances of Being Audited
-2017 Health Savings Account Limits Announced

Pinnacle Business Solutions Corp : Newsletter Please feel free to read our client newsletter. It is provided to keep you up to date on the latest tax and accounting news.

**Prohibited Transactions**
Generally, a prohibited transaction is any improper use of your IRA account or annuity by you, your beneficiary, or any disqualified person.
Disqualified persons include your fiduciary and members of your family (spouse, ancestor, lineal descendant, and any spouse of a lineal descendant). The following are some examples of prohibited transactions with an IRA:
• Borrowing money from it.
• Selling property to it.
• Using it as security for a loan.
• Buying property for personal use (present or future) with IRA funds.

Fiduciary
For these purposes, a fiduciary includes anyone who does any of the following:
• Exercises any discretionary authority or discretionary control in managing your IRA or exercises any authority or control in managing or disposing of its assets.
• Provides investment advice to your IRA for a fee, or has any authority or responsibility to do so.
• Has any discretionary authority or discretionary responsibility in administering your IRA.

Effect on an IRA account
Generally, if you or your beneficiary engages in a prohibited transaction in connection with your traditional IRA account at any time during the year, the account stops being an IRA as of the first day of that year and the account is treated as distributing all its assets to you at their fair market values on the first day of the year. If the total of those values is more than your basis in the IRA, you will have a taxable gain that is includible in your income. The distribution may be subject to additional taxes or penalties.

IRAs
Traditional IRAs
Your traditional IRA can be an individual retirement account or annuity. It can be part of either a simplified employee pension (SEP) or an employer or employee association trust account.

Individual retirement account. An individual retirement account is a trust or custodial account set up in the United States for the exclusive benefit of you or your beneficiaries. The account is created by a written document. The document must show that the account meets all of the following requirements.
• The trustee or custodian must be a bank, a federally insured credit union, a savings and loan association, or an entity approved by the IRS to act as trustee or custodian.
• The trustee or custodian generally cannot accept contributions of more than the deductible amount for the year. However, rollover contributions and employer contributions to a SEP can be more than this amount.
• Contributions, except for rollover contributions, must be in cash.
• You must have a nonforfeitable right to the amount at all times.
• Money in your account cannot be used to buy a life insurance policy.
• Assets in your account cannot be combined with other property, except in a common trust fund or common investment fund.
• You must start receiving distributions by April 1 of the year following the year in which you reach age 70½.

Individual retirement annuity. You can open an individual retirement annuity by purchasing an annuity contract or an endowment contract from a life insurance company. An individual retirement annuity must be issued in your name as the owner, and either you or your beneficiaries who survive you are the only ones who can receive the benefits or payments.

Simplified employee pension (SEP). A SEP is a written arrangement that allows your employer to make deductible contributions to a traditional IRA (a SEP IRA) set up for you to receive such contributions. Generally, distributions from SEP IRAs are subject to the withdrawal and tax rules that apply to traditional IRAs. A SEP IRA is owned and controlled by the employee, and the employer makes contributions to the financial institution where the SEP IRA is maintained. The employer can decide how much to put into a SEP each year, which gives some flexibility when business conditions vary.

Deemed IRAs. A qualified employer retirement plan can maintain a separate account or annuity under the plan (a deemed IRA) to receive voluntary employee contributions. An employee’s account can be treated as a traditional IRA or a Roth IRA. For this purpose, a “qualified employer plan” includes:
• A qualified pension, profit-sharing, or stock bonus plan [section 401(a) plan],
• A qualified employee annuity plan [section 403(a) plan],
• A tax-sheltered annuity plan [section 403(b) plan], and.
• A deferred compensation plan (section 457 plan) maintained by a state, a political subdivision of a state, or an agency or instrumentality of a state or political subdivision of a state.

SIMPLE IRAs
A savings incentive match plan for employees (SIMPLE) plan is a tax-favored written agreement (salary reduction) between you and your employer that allows you to choose to reduce your compensation (salary) by a certain percentage each pay period, and have your employer contribute the salary reductions to a SIMPLE IRA on your behalf. All contributions under a SIMPLE IRA plan must be made to a SIMPLE IRA, not to any other type of IRA. The SIMPLE IRA can be an individual retirement account or an individual retirement annuity, described above. If your employer maintains a SIMPLE IRA plan, you must be notified, in writing, that you can choose the financial institution that will serve as trustee for your SIMPLE IRA and that you can roll over or transfer your SIMPLE IRA to another financial institution.

Roth IRAs
A Roth IRA can be either an individual retirement account or individual retirement annuity, described above. To be a Roth IRA, the account or annuity must be designated as a Roth IRA when it is opened. A SEP IRA or SIMPLE IRA cannot be designated as a Roth IRA.
Designated Roth accounts. Designated Roth accounts are separate accounts under 401(k), 403(b), or 457(b) plans that accept elective deferrals that are referred to as Roth contributions. These elective deferrals are included in your income, but qualified distributions from these accounts are not included in your income. Designated Roth accounts are not IRAs and should not be confused with Roth IRAs. Contributions, up to their respective limits, can be made to Roth IRAs and designated Roth accounts according to your eligibility to participate. A contribution to one does not impact your eligibility to contribute to the other.