Question by Brian T: Is it possible to change a Roth IRA to a traditional IRA?
I am young, and I know most financial advisors/calculators out there tell you I would stand to benefit from being in a ROTH IRA. However, after researching this, I know longer believe there’s any guarantee the gov’t will keep the policy of not taxing my returns when I retire 30 years from now. I’d rather take the tax benefit now. Your thoughts?
Best answer:
Answer by dan
If you contributed the money into the Roth this year (2007) you can do what is called a “recharacterization.” The company you invest with will have a form to fill out. The only thing is, you can recharacterize THIS year’s contribution back to the traditional IRA, but any contributions you made to a Roth in prior years cannot be recharacterized.
What do you think? Answer below!
Question by roth: When calculating income for Roth IRA eligibility, do capital gains count toward the total?
I know about the 99k-114k phaseout for single filers in 2007. So for example, if you made 90k in salary and had 25k in capital gains would you be able to contribute to a Roth IRA?
Best answer:
Answer by Spock (rhp)
capital gains do count
see IRS Pub 590 for the details of how to modify AGI for this calculation
http://www.irs.gov/publications/p590/ch02.html#d0e9254
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Question by ferggkeane: I want to rollover my traditional ira to a Roth ira verses?
I only have $ 5000 in traditional, and want to roll it over now because i’m taxed in the 15% tax range. And when i but it in a roth ira, it’ll be tax free when i take it out when i retire. Verses the traditional ira, which would be taxed at a higher rate when i retire in 20 years, ( that is if i’m in a higher tax braket). Does this sound like a smart thing to do?
Best answer:
Answer by badgerboise
Rolling it over to a Roth IRA is a fine idea to prevent being taxed on future earnings. However, bear in mind that if the $ 5000 you presently have in the traditional IRA was deposited as a tax exempt, you will be required to pay the tax on that amount in the year you roll it over. If you do a rollover, it is easier if you do not let the money pass through your hands in making the transfer. That way if a snag occurs, you are not responsible for any penalties or taxes.
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Question by Kai: How do I declare roth IRA contribution for taxes?
I contributed $ 5,000 to my roth IRA in 2008. How do I declare this when filing taxes? My company has not provided any 1099 or other document, are they supposed to? I plan to file my taxes using Turbo Tax, how/where should I declare the contribution?
Awesome, thanks for the answers. I knew it wasn’t tax deductible, I just thought I had to declare the contribution as income. Thanks all for the clarification.
Best answer:
Answer by chatsplas
DON’T.
It’s Post-tax dollars.
Why aren’t you contributing to a 401k or traditional IRA? Then you get tax advantages. Can make contribution to IRA up to tad date.
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Question by momo: What’s the 2008 contribution limit for Roth 401k and Roth IRA combined?
Like the question asks what is the combined total limit for the Roth 401k and the Roth IRA? I’ve read too much conflicting information that you can contribute the full 5k in the Roth IRA and 14k in the Roth 401K? Then I’ve checked with financial advisors and they indicate otherswise. Hm, please CITE sources with your response, need accurate information.
Lastly, if anyone know what the combined limit between the Roth401k, Roth IRA and the traditional 401k also list it as well.
Thanks!
Can Icontribute to all three: Roth 401k, 401k and the Roth IRA?
I know you can do the last two but what about all three?
I am of course referring to just partial amounts so I don’t exceed the 15k annual limit and the as far as I know the 5k limit for the Roth IRA is considered separate. Thanks!
Forgot to mention within the Roth IRA AGI limits and under the age of 50.
Best answer:
Answer by v b
The 401K roth is simply another 401K choice. If the limit is $ 15,000, then if you put $ 10,000 into the ROTH 401K, you only have a potential $ 5,000 for the regular 401K.
Since a regular 401K doesn’t prevent one from contributing to a ROTH IRA, a ROTH 401K won’t prevent one either.
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I would like to roll-over Traditional IRA to Roth IRA in March 2011 . I’m 50, early retiree and physically outside the US; my unearned income from(dividend,investment and interest)and no other earned income.
What are the tax consequences? Or Should I roll-over part of my Traditional IRA into Roth IRA. I’m really concern about the tax any potential tax ramification of such move. Please advise. Thank you.
Question by Pure_Alpha: Can I have a Roth IRA and open a SEP-IRA for my business?
I own my own business (its a C Corp) and I have a Roth IRA from a previous job. I would like to open a SEP-IRA for my business (no other employees yet). I want to put my paycheck in the SEP. (Ithink I can deposit $ 45K/yr tax free into a SEP.) Can I have two retirement accounts?
Best answer:
Answer by digdowndeepnseattle
Yes you can have a Roth and a SEP. Because you’re a C-Corp and not considered self-employed you can’t put 45k in the SEP (2007 number, it’s 44 in 2006) unless you make(made) over 180k. SEP contributions are limited to 25% of your income. And, if you made that much then you can’t contribute to the ROTH as you exceed the income limitation for that.
If you anticipate making less than 180k in w-2 wages then you should consider a solo-401k. To maximize your contribution in that plan you only need to make 118,000.
And, if you do make over the 180k and are over age 50 then you should STILL consider a 401k as you can get 50k into one of those.
Also, if you anticipate having employees then definately a 401k….you don’t have to put nearly as much in for them in that vehicle.
Lastly, it’s not tax free…it’s tax deferred.
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Question by Mike201JC: Does transferring a Roth IRA to another institution impact the five year rule for qualified distributions?
If I transfer a Roth IRA from one financial institution to another, will the five year waiting period for tax-free qualified distributions be impacted, or will it still be calculated from the date I first contributed to the IRA at the original institution?
Best answer:
Answer by Bash Limpbutt’s Oozing Cyst©
No, rollovers between like type accounts (i.e. Roth to Roth) do not affect the calendar at all.
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Question by jekelnHide: Foreign earned income exclusion and Traditional IRA to Roth IRA conversion taxes/ capital gains?
I qualify for foreign earned income exclusion. This shows as a negative on income on the tax form. If I convert a traditional IRA to a Roth IRA, the IRS will withhold some taxes. Since my income is negative, can I get these taxes back at the end of the year? Alternatively, can my negative income offset capital gain taxes?
Using the Turbotax program, it takes the value from form 2555, and places it as a negative number in form 1040. Reading the instructions from form 2555, it says to place the value in parenthesis which indicates a negative, correct?
Best answer:
Answer by Jss
How can you have negative income unless you have loss from business or capital loss?
Just making sure that you are doing Form 2555 correctly.
Yes, it is always better to withdraw from IRA only when you have minimum income
For articles on your U.S. tax return, http://taxipay.blogspot.com/2008/04/list-of-articles.html
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Question by Sterling J: In my case, can I take the owed taxes from the Roth IRA to pay the taxes due without incurring penalties, etc?
I converted a Traditional IRA to a Roth IRA. The federal taxes were withheld – all is well with that (I think). The state taxes were not withheld. Now I owe the state a bunch of money. Can I take the owed amount (or less) from the Roth IRA to pay the taxes due without incurring penalties, etc? Would this be considered a “premature withdrawal”?
Best answer:
Answer by chatsplas@sbcglobal.net
Don’t do it.
Yes it would be premature withdrawal.
You know you can undo the conversion? And convert part of the money this year and part next year. Up to 4/15 you can.
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