IRAs, Medicare and Annuities: Recent Changes You Need to Know About

Recent court rulings and regulatory filings contain some important news for households with individual retirement accounts, Medicare beneficiaries with chronic conditions, and owners of variable annuities that generate a guaranteed income. Here's a roundup of the recent developments and guidance on how to use the information to your advantage.


Limiting IRA Withdrawals

If you pull money from an individual retirement account before age 59½, you normally owe income tax on the withdrawal and a 10% penalty. But an exception known as the "once-per-year rollover rule" allows tax-free withdrawals if the funds are returned to an IRA within 60 days.


On Jan. 28, the U.S. Tax Court issued a ruling that cracks down on perceived abuses of the 60-day rule. The court acted in response to a case involving a married couple who took several back-to-back 60-day distributions from three separate IRAs in 2008—a move that essentially allowed them to use the money for a total of almost six months, says Ed Slott, an IRA expert in Rockville Centre, N.Y.


Medicare Appeals

Thanks to the outcome of a recent lawsuit, Medicare recipients who have chronic illnesses, conditions or injuries may be eligible to have Medicare review denied claims for nursing care or occupational, physical or speech therapy.

The lawsuit requires Medicare to end a long-standing practice of denying coverage of such services to patients whose conditions are unlikely to improve.

Medicare coverage can be available for such services at home, in a skilled-nursing facility or as outpatient therapy. But to receive this coverage, patients must meet Medicare's other coverage requirements.


Annuity Buyback Offers

In June, Hartford Financial Services Group plans to launch an offer to buy back certain variable annuities with lifetime-income guarantees. The offer is the latest from insurers trying to reduce the risks and expenses associated with these guarantees.

But those who get an offer should carefully consider before accepting.

"We found that very, very few of our clients" benefited from accepting these offers, says Mark Cortazzo, a financial planner in Parsippany, N.J., who also runs a $199 advisory service for variable annuity owners at

-By ANNE TERGESEN - The Wall Street Journal

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