Question by samhandwich22: Regarding investing in a roth IRA- what is a dividend? what is a capital gains distribution?
I opened a roth IRA via sharebuileder. I am trying to invest in a mutual fund and as a 23 year old, I am very unexperienced in this area (they dont teach you these things in college!).
It is asking me if i wanted to reinvest dividends and also asking me if i want to reinvest capital gains distributions? I dont know what either of these mean. Whats the best way for me to get the most money out of my roth IRA?
Answer by William
Yes, you want to reinvestment them. Dividend and capital gains distributions are paid by the specific mutual fund. Reinvesting them means that they are automatically used to purchase additional fund shares – sort of like compounding of interest on a savings account.
What do you think? Answer below!
Can a person working overseas, claiming tax exempt status,invest in a Roth IRA account? If yes or no, please explain.
I have a question about 401K and Roth IRA contribution limits that no one seems to be able to answer for me. I contribute about 10% of my salary to my 401K plan each year. My employer matches 5%. I also have a Roth IRA that I had before I started with my present employer.
My question is about contributions to the Roth IRA. The accountant at HR Block told me that I cannot contribute to my Roth IRA since I contribute to a 401K Plan. Is that true?
I find it hard to believe that I can’t tuck away more retirement into the Roth IRA. I’m turning 50 next month.
Although I can increase my contribution to the 401K Plan, I would prefer doing a maximum contribution to my Roth IRA, because my investment choices are much more robust that the limiting number of mutual funds I’m allowed to invest in with the 401K.
I hope you can answer this for me, and tell me what I’m allowed to contribute to each retirement account.
Wanted to know if any good fds that i can invest into my ira with american fds? Thanks
My Wife and I are over 70 years. At present my wife is employed.For the last twelve years we have been contributing yearly, the maximum amount allowed,to the Roth IRA. My wife is retiring end of April,2012.
My question is, how much maximum amount we can contribute to the Roth IRA for the year 2012, since my wife will be employed for 4 months only.
I have a nightmare situation.
I bought $4,000 of calls inside my Roth IRA. The day it was expired, it was way out of the money. Unfortunately for me, it closed in the money by 12 cents the last 10 minutes of trading. I tried to close the position, but wasn’t able to do so before the market closed. The following day, I owned the underlying security, and it moved almost 6 points on me. The bottom line is I lost over $45,000. I need to pay this to the broker-dealer, even though my entire account was only worth $8,000. SO….I need to pay this amount. Can I write if off at least? I’m not sure this is possible because it’s in a Roth IRA. Help please.
Back in 2007 or 2008 I set up a roth IRA. i was living with my grandparents at the time, and as embarrassing as this is I have no idea how to find my roth IRA and what’s going on with my money. Any help or guidance would be greatly appreciated.
I want to move my Roth IRA from one trustee to another for private reasons.I requested the current trustee to rollerover the funds to the new trustee, but instead, I received a check via mail. I plan to send the check to the new trustee.
Are there tax consequences for receiving this check? Will IRS penalize the funds I am sending to the new trustee?
Thank you for your cooperation.
Trustee-to-trustee transfer of your Roth IRA – Is it a tax-free transaction?
Are you thinking of transferring your Traditional IRA from one trustee to another? If answered yes, you must be facing a plethora of questions regarding the charges and the taxes that you may have to pay for the entire transaction. Well, for all those baby boomers, who have been bad at managing their finances, it is always advised that saving money in a retirement account like a 401(k), 403(b) or a Roth IRA account is necessary to avoid debt. Though debt consolidation options are there to help the seniors get out of debt but savings is always the best way to stay on top of your finances. With the present unemployment rate hovering around stubbornly at the 9% rate and the high level of dissatisfaction of the people with their salary structure, most people frequently change jobs to boost their income. In such a situation, what happens to their Roth IRA accounts? What if someone wants to transfer the entire account to the new trustee? Read on to educate yourself on some solved doubts on Roth IRA conversion.
Are the Roth IRA rollover rules changing?
Since its December, 2011, its time to implement some changes in the Roth IRA conversion rules. But before addressing the rules on the conversion, let’s have a look at the rules that entail the Roth IRA rollover from one trustee to another. If you want to complete a successful Roth IRA rollover, you have to follow certain things like:
You need to own a well-established Roth IRA account
Your income should be within the limit of the Adjustable Gross Income (AGI) under the limits of the IRS
You have to pay taxes if necessary
Move the distributions from one trustee to another or from one qualified plan to another within 60 days.
A simple guide to a trustee-to-trustee transfer of your Roth IRA account
Most people are confused about the tax reporting process on the transferring Roth IRA accounts. If you’re executing a company-to-company transfer of your Roth IRA account, the IRS does not require you to report the transaction. However, if the transfer is reported as a rollover, it needs to be reported to the IRA. A rollover is when you take out the entire fund from one custodian’s account and transfer it to yet another one. This entire process should be done within 2 months and what matters to the Internal Revenue Service (IRS) is the process in which the funds are conveyed from the old trustee to the new one. Here are some steps.
Start a new IRA account: When you’ve chosen your new trustee or custodian, you’re supposed to open a new IRA account. You may choose a brokerage, company or even a bank.
Ask the custodian to initiate a transfer: Your next job is to ask your new custodian to set off a trustee-to-trustee transfer from your Roth IRA account. You may need to fill out a form where you may have to give the information about your old Roth IRA account, its name and account number.
Opt for the trustee-to-trustee transfer: Instead of choosing the rollover option, you should choose the trustee-to-trustee transfer option. In the direct transfer method, the old IRA trustee transfers the money to your new trustee instead of giving you a check.
Verify with your new trustee: After the funds are transferred, you should check with the receiving trustee for getting the verification of the completed deal. They should get in touch with the old company on your behalf.
Decide the new investment options: Soon after your funds are transferred to the new trustee, you should choose the new investment options to maximize your benefits. You need not report the Internal Revenue Service (IRS), because the funds had sidestepped you and were deposited directly to your new account.
So, if you’re wondering about the ways in which you can transfer your Roth IRA account to another trustee, you should go through all the above mentioned points. If you’re simply transferring the amount, you need not worry about reporting to the IRS.
Jason Holmes is a regular writer with http://www.debtconsolidationcare.com/ and is also a contributory writer with other financial sites. His expertise is woven around various aspects of the debt industry and with his e-books he tries to impart to people the different situations and simple solutions to get out of difficult situations. Some of his works include e-books like ‘Credit Score The Quintessential Therapy for a Happy Pocket’, Take Creditors and Collection Agencies to Small Claims Court’ and, My Story- From Depression To a Smile’.
Question by NewIntheCity: What to do with the capital gain from the excess roth IRA contribtution?
I overcontributed $ 1200 to my roth IRA for 2006. This contribution has made some capital gain. I understand that I need to file a IRA distribution to take out the excess contribution to avoid IRA penalty. However, what should I do with the gain from the excess contribution?
Answer by jerry
Earnings on the excess will be considered as received in the year the contribution was made, and are taxable for that year, plus the 10% penalty (assuming you are under 59 1/2).
You can possibly avoid the excise tax if you more the excess Roth contribution and the earnings on the excess either by transferring to a regular IRA (trustee-to- trustee) before the deadline for the year in which the contribution is made.
I would probably suggest contacting your IRA broker to see if they can help you out and offer any alternatives.
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Question by Xanctity: How do I go about getting a Roth IRA started?
I’m 23, married, and interested in opening a roth IRA but I have no idea where to go, what bank to use or what my options are. I’ve done my research and know that this is the type of account I want but haven’t been able to find advice on how to get the ball rolling. Any advice or suggestion would be appreciated =)
Also, what is the minimum amount to open the account?
Answer by SEC
When it comes to investments, it is usually in your best interest to seek the aid of a professional. A Certified Financial Planner in your area can not only help weed through the countless choices you have, but also show you how the investment fits into your overall financial picture. Check out www.cfpboard.org to find a planner in your area.
Know better? Leave your own answer in the comments!
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