Apr 29

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?

Best answer:

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!

Apr 22

Question by Maximus4488: Is tax on an IRA distribution that is converted to a Roth considered unearned income?
Last tax year 2009, I chose to convert $ 5000 of my kids Traditional IRA to his Roth IRA. I understand that the $ 5000 will be taxable to him. However, is the taxable amount considered unearned income to him and now subject to”Kiddy Tax” ?

Best answer:

Answer by the tax lady
Yes, it’s unearned income and subject to kiddie tax.

If it’s not on a w-2, it’s kiddie tax–that also includes IRAs, unemployment, etc.

He will have to file a form 1040 with an 8615 attached.

Give your answer to this question below!

Apr 22

I know it’s taxed when you get the money from traditional IRA, but is it taxed on your current income bracket or the amount of money you take out?

say you retire earlier and sell your biz.. so you pay no income tax, then even if you take out your IRA early, pay 10% penalty, do you still pay income tax on the money?

Mar 22

I’m a full time income less student since 2008 , and I withdrew my money from Roth IRA (contributed in 2007)
to pay my tuition.
The amount I contributed was $4000, earning was $264. It was withdrawn less than 5 years after establishing the Roth.
My non reimbursable medical expenses were more than 7.5% of my AGI as well.
Are $4000 that I contributed and distributed early CONSIDERED as a taxable INCOME or NOT?

Feb 4

Hello. I have read IRA distribution rules over and over and understand the many examples clearly, but none applies to MY situation.

I have had a Roth IRA since 1999, when I converted to it. Since then I have made the maximum after tax contributions allowable (into an aggressive stock fund), and my balance is now around $90K. I am considering withdrawing all of my contributions because I fear being wiped out by the economy, and I cannot sit back and watch that happen. I cannot move the money to a “safe” harbor because all the safe funds (such as money market) at Vanguard are closed to new investors. What would the penalty be if I pull my contributions, if there is one? Must I wait five years from the year of each contribution to withdraw penalty free (in other words, can I withdraw only my contributions through 2004) or am I free from withdrawal restrictions on my entire after tax contributions? Please clarify.

Jan 12

For Required Minimum Distribution, Can I use only one traditional IRA instead of all several traditional IRAs? Thank you very much for answering the question.

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