IRA Rules

Archive for January, 2006

Question: PLEASE HELP! online poker income- can i make IRA contirubtion?

my only income for the year was about 12000 in online poker income. i want to make a 5000 IRA contribution to eliminate tax liability. Is this “earned” income and can i do this? wasnt there a legal case which ruled it as eaerned.

Answer: If you were a professional and you could report the income on Schedule C, you would be entitled to fund an IRA. However, you would also be required to pay about $1,800 of self-employment taxes which is probably more than you owe now. So you wouldn’t save taxes.

Retirement Plans & Investments : How to Avoid the Roth IRA Excess Contribution Excise Tax

Question: IRS rules about withdrawals from a regular IRA?

How much do you have to withdrawal from your IRA after you reach 70 and 1/2? Or how little can you withdrawal from your IRA after 70 and 1/2?

Answer: You have several options. The right one depends on whether or not the IRA is needed for retirement income. If the IRA is going to sit “for a rainy day”, then there is a mathmatical formula that calculates your Required Minimum Distribution (RMD). This is the minimum amount that Uncle Sam says has to be liquidated yearly. Its his little way of making sure that you remember that he gave you tax-deferral for years, and now he is wanting to collect his taxes. As the balance on the IRA grows, so does the amount that must be liquidated. Talk to your financial advisor or insurance professional about purchasing a Lifetime Income Annuity that will not only satisfy the RMD, but will guarantee a stream of income as long as the IRA owner lives. Otherwise, its time to annuitize the IRA to create income, either with a period certain or lifetime income.

How to: Leave your job/ retire? what are your 401k options