IRA Rules

Posts Tagged ‘ira’

Question: How does the IRS know if my Roth IRA contribution did not break AGI limits?

There is nothing on my 1040 that asks about Roth IRA contributions.
There is nothing on my account at Fidelity (which has my Roth IRA) that specifies my Adjusted Gross Income for this year.

If this is the case, how does the IRS know whether my contribution amount made for 2009 did not break any rules related to contribution limits based on income.< I know Roth IRA contributions phase out somewhere around $150,000 AGI).

I already filed my 1040 and got my refund but I am still contributing to my Roth IRA for 2009.

Any thoughts will be appreciated.
Thanks!

Answer: You probably shouldn’t have to report Roth contributions on your tax forms (they are non deductible), but it’s still something you should keep track of yourself. The problem is if you get audited, you’ll have to explain your actions to the IRS if something is wrong are there will most likely be some penalties. Also, you will probably get a tax form (5498) from the company you’re working with in May or June showing contributions for the year. So it’s probably not going on your taxes (1040) for filing, but your contributions are still being reported to the IRS. You should probably consult with a tax advisor to double check everything.

Stocks, Mutual Funds & Retirement Investments : IRA Conversion Rules

Question: How do I calculate the 59-1/2 age rule for IRA’s, 403B, etc.? Is it exactly 6 months after my 59nth birthday?

I will be 59 on August 26, therefore is my 59-1/2 birthday exactly on February 26th?

Answer: You’ve got it! Feb 26, 2009.

Part 4: Ten Most Frequently Asked IRA 401k 403b Questions

Question: What does your retirement / finances look like compared to mine?

I’ve worked really hard on straightening out my finances over the last two years. I just wanted to see how my approach compares to others. The personal finance sites make it seem like everyone is maxing everything out:

My wife and I contribute about 28,000 into our 401K’s each year and we max out our IRA’s (8,000) each year.

We might have trouble on the IRA in 2007 because of income limits. It that happens, I’m planning on just opening a mutual fund account on the side.

So far, we have @ 45K. We’re both 27.

Besides that, we have a mortgage and car payments. Everything else is paid and I plan on starting a separate mutual fund for the kids college (I don’t like all the rules associated with the college savings plans).

Answer: The only reason that I say that I am better off than you is because I’M ALREADY RETIRED. Just kidding, you are doing it extremely right. Now that I say that, let me give you some thoughts:
1) Buy, read and study the books by James P O’Shaughnessy, What Works on Wall Street, John J Bowen, Creating Equity and Benjamin Grapham, The Intelligent Investor.
2) Buy, read and study Jane Byrant Quinn’s book Making the Most of Your Money. It is a little dated but the information in it is like great foundational information to start your understanding on personal finance.
3) Find a “Financial Peace University” class in your community. You are following this program to a great extent, but this will confirm and add to your knowledge. www.daveramsey.com to find a location.

Then follow what you learn and at age 45 you can come join me in retirement. Oh by the way, retirement is really being more like a tire, it is being retreaded because now you can do exactly what you were born to do. Whether that be volunteer work, owning and managing assets, travel, enjoying life, enjoying family, going on a mission trip, or all of the above.

Roth IRA Conversions – The 5-Year Rule