IRA Rules

Archive for August, 2006

Question: Can I make the bank increase my IRA CD’s rate if rates go up once I’m over 62 years old?

I’ve heard that if for example I open a 10YR IRA CD at 2% and the interest rates for that IRA CD at the bank climb up to say 3% I can go in and have them change the rate on my CD up to the new 3% rate even though my IRA CD has not matured. Is that true ? Is it an IRS rule ?

I’ve also heard that you can only do this once a year. Is that also true ? If so, does the yearly rule apply on an account by account basis or is it for all my IRA CD accounts ?

Answer: my only question is, why are you saving money in a CD? If inflation is 3.5% a year and you are only getting 2% on your money, you are losing it purchasing power every year. Find a low risk, well diversified mutual fund!

Self Directed IRA Tips With Give the IRS the Slip

Savings – Compound Interest and the Rule of 72

Question: Question about preexisting Roth IRA?

I stopped investing in my Roth IRAs about a year ago when my income put me outside of the income eligibility limits (>177K). Married, filing jointly. My understanding with the new rules that one could open a separate traditional IRA and then automatically place those funds into the preexisting Roth accounts. Does this make sense?
My understanding is that those with traditional IRAs who make more than 100K may now rollover those funds to a Roth, whereas before they could not. I understand that monies invested in Roths are taxed upfront. My question is, now that I can no longer contribute to my Roth, can I simply open up a traditional IRA with $5000 and then simply reinvest it into my existing Roth account?

Answer: I believe the strategy that you are referring to is to open a non-deductible IRA (since your income is too high for it to be deductible). You make your $5,000 contribution and then you are eligible to convert this into a Roth IRA. The term you are looking for is convert which you are now eligible to do because they lifted the income limits.

Please let me know if you have any questions.

http://evolutionofwealth.com

New Rules, New Options for IRAs