IRA Rules

Posts Tagged ‘investment’

Question: Taking a loss on Roth IRA and contributing to Simple IRA?

I closed my Roth IRA account in 2009 to claim losses on it. Now, I have an option to contribute to simple IRA for 2009 and I am thinking about it. If I open a simple IRA now and contribute to it for 2009, will it somehow interfere with my claiming losses on Roth IRA account? I am asking because the rules say the IRA accounts has to be closed to claim losses on it so I am concerned that if I open another IRA account it might somehow set a red flag at IRS.
Thanks.

Answer: If you closed *all* of your Roth accounts and can show that the total distributed was less than the amount of after-tax money you put in, you can deduct the loss on schedule A in the 2% section. For most people, this is worthless deduction.

Opening a new IRA is not the same as rolling the money over. Nor is it a Roth account, so you still meet the test that all Roths have been closed.

Tips from the IRS-Making Work Pay Credit

Question: how to borrow from IRA?

Will I break the rule of borrowing IRA only once/ year if I borrow from both ROTH & Coventional IRA accts at the same time?

·Is there a maximum percentage to borrow ?
·Can I put the money back to the same existing acct ?
·Is it safer to open a new IRA acct to put the borrow money back in? ( rollover), but my existing IRA still have balance left. It’s not liquidated.

If I return the borrow money back within 60 days, then questions below hold true?
·No penalty, no interest & no tax will be imposed?
·No restriction on how I can use this money on ?
·No need to report the withdrawal to IRS for the following year tax return ?
·My IRA broker will not report this withdrawal to IRS if I returned all the money within 60 days?

Thanks in advance of your responses.

Answer: Something to note before trying the 60 day rollover borrowing is that the trustee is required to withhold 20% towards taxes from a distribution eligible for a rollover. So to avoid any tax or penalty you would not only need to return the money you received to a suitable IRA, but also the missing 20% withholding (which you would later get back from your taxes).

So you might think you are going to do a $50k rollover and they send you a check for $40k. But you have to put $50k back into that account or similar IRA within 60 days.

If you actually want to transfer funds between IRA‘s, that should be done with direct trustee to trustee transfer, which has no withholding requirement and does not count against frequency of rollovers

Money Management & Personal Finance : How to Invest in a Roth IRA