Question by B. Cummings: Does how much you contribute into a roth IRA, take that much away from your taxible income?
For example if I contribute $ 2000 into a roth IRA, and had a taxable income of $ 35,000 would it now be $ 33,000 of taxible income?
Best answer:
Answer by engineer50
No. Roth contributions are made with after-tax dollars. There is no deduction from income.
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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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tax our 401(k) retirement accounts and other retirement accounts into oblivion? Should we allow this and trust Congress to do what is best for us and the country, or should we take other action in our “democracy”?
http://www.investmentnews.com/apps/pbcs.dll/article?AID=/20081007/REG/810079894
Fees can take big bite out of retirement contributions
Making an annual contribution to a retirement plan? A recent study could give you pause. It says that more than half of the average person’s IRA contribution is being eaten away in fees.
Read more on Pocono Record
$5000 x 2 = $10,000 per year
assume they generate 12% interest
I am 60 years old and have $30,000 in an IRA CD which will mature in August 2010. At that time, I am thinking about converting it to a ROTH IRA CD and paying the taxes on the $30,000 (it’s all pre-tax money). If I convert it to a ROTH, will I have to wait five years before I can withdraw any money from it? I’m talking about principal, not any subsequent earnings.
This is my scenario. I currently have a ROTH IRA. For this and next year I would like to take out a traditional IRA, and in a few years (2010) convert this to my current ROTH IRA. I had read somewhere I thought you can only do a rollover like this one time. Does anyone know the rules on this? Thanks!
Thanks for the answers. I know it’s kind of tricky. I would rather get the tax break now and pay the taxes in a couple of years because of my financial situation. But i would want to do it all at once. For example, rollover the total of all my traditional IRAS into my existing ROTH. Don’t mind paying the taxes at that time, but dont want it counted as a withdrawl and get penalized, etc. I eventually just want it all in one account. I’m just scared there is a catch somewhere ( or will be in 2 or 3 years). Several years ago, they let you do that rollover thing all at once, and I did do it at that time.
To the last response from TBONE. You mentioned in 2010 you can rollover a traditional ira into a roth ira…this is the whole crux of my concern…I know I can roll it into “an IRA” but can I roll it into “an existing IRA” that I had before i started opening up the traditional iras?
Thanks!
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”?
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