IRA Rules

Archive for December, 2009

Question: I moved my Roth IRA to a different institution. How does that affect the 5 year rule for withdrawals?

I’ve had an Roth IRA for 9 years, but recently moved it to a new institution. If I want to take money out of my contributions, how is the account affected by the 5-year rule? Does this account have to be open for 5 years at the new institution before I can withdraw?

Answer: you have fulfilled the 5 yr rule no matter where it was deposited

Are IRA withdrawals considered earnings?

Part 1 of Solo 401k vs. Self Directed IRA – Intro & Eligibility

Question: Foreign Earned Income and Roth IRAs and Roth 401k?

Hi. I am an expatriate. I file Form 2555 (Foreign Earned Income) and am able to exclude the maximum from my pay. My pay is above that threshold. I also have dividends, capital gains, and a military pension as my sources of income.

I’ve searched the IRS.gov website and can’t find the answer to my questions, keep in mind I file Form 2555 with our joint Form 1040:

1. Am I allowed to contribute to a Roth IRA (yes or no) according to the IRS rules?

2. Am I allowed to contribute to a Roth 401k (yes or no) (my employer offers it along with a traditional 401k) according to the IRS rules?

3. Am I allowed to open and contribute to a spousal Roth IRA for my wife (yes or no) according to the IRS rules?

If you have the answers, please, would you also share the reference (title, chapter, page, and paragraph number(s)) so I can research it and have it for reference?

Again, please keep in mind I file Form 2555 and a joint Form 1040.

Thanks.

Answer: I am going to assume that you have over $10,000 in nonexcluded wages and that you and your spouse are under 50. Add $1,000 for each spouse age 50 or older. I am also assuming that your modified AGI is under $166,000 (which includes the excluded income).

1. Yes
2. Maybe
3. Yes

Answers to 1 and 3 are specifically addressed in IRS Pub 590. If you do not meet my assumptions, this publication details all other cases as well.

http://www.irs.gov/pub/irs-pdf/p590.pdf

To answer 2 you need to contact your HR Department. If you meet the rules for participation established by your employer, you may participate.

How to Set Up a Retirement Savings Account