IRA Rules

Archive for August, 2005

Question: Convert regular IRA to Roth IRA?

Money you withdraw from your IRA account are counted as income. If you have regular savings set aside, you don’t necessarily need to spend the IRA Withdrawal, so you put it into Roth IRA to let it grow tax-free. How much can you convert regular IRA money to Roth IRA money each year? Is this capped by the Roth IRA contribution rule?

Answer: If you are planning to convert a traditional IRA to a Roth, do not take a withdrawal from your traditional IRA. Do a “trusteee to trustee” conversion. This means, pick the financial institution that you want your Roth to go into, and fill out their paperwork to do the conversion. You can convert up to your entire Traditional IRA into a Roth, there is no dollar limit on the amount that can be converted.

If you do take a withdrawal of your Traditional IRA, you have only 60 days to re-invest that money into another IRA (Roth or traditional), or you will be taxed on the amount withdrawn (and pay a penalty if you are under 59.5).

The income limits for contributions and conversions are different. The traditional to Roth conversion is allowed only if your adjusted gross income is under $100,000. However, in 2010, this income limit is eliminated and anyone with a Traditional IRA will be able to convert to a Roth.

Money Management : How to Withdraw IRA Monies Without Penalty

Question: where on tax form do IRA’s go?

If I take a lump sum on an inherited IRA, I’ll be subject to taxes. Will it be a capital gain for Schedule D or does it go straight to form 1040?
I’m actually inheriting two small IRA’s and I control when I submit my paperwork to close these accounts. One can be done in 2009 and I can mail the forms in on the other one on Dec. 31st so it gets processed in 2010. I’m not aware of any rules to the contrary.
the tax lady:
I was thinking mailing it Dec. 31st. Would that not be good enough?

Answer: on the front of the 1040, there are lines for retirement income, and one for IRA’s
IRA’s are not capital gains, not reported on D

401(k) & IRA: An Introduction to Tax Free Retirement Accounts – Bills.com Video Blog

Retirement Planning : How Does a Roth IRA Compound Interest?