Roth Ira Contribution

Frequently Asked Questions

1. QUESTION:
   What do I need to do if I mistakenly make a Roth IRA contribution which I am not entitled to make?
   My wife and I have been making contributions to Roth IRAs for a few years. Last December my wife started working again and we anticipate that her income this year will push our joint income above the 0K cutoff for a Roth contribution. Before I came to that conclusion, however, I made a 00 contribution to my Roth IRA for 2007 – which I now think I am not entitled to make. My institution says that they cannot reverse out the transaction to make it appear as though no contribution was made. What will be the consequences of this mistake and is there anything I can do to fix the situation?

   • ANSWER:
     IRS publication 590 answers this. Basically, you will need to pay a 6% excise tax on the excess amount (see 590 to understand exactly what the “excess amount” is).

     You should be able to withdraw the excess contribution, as long as you have no earnings (investment gain). If you do have gains, you’re required to withdraw them, as well.

     You can apply the excess to a future year, with some provisions.

2. QUESTION:
   How do I declare roth IRA contribution for taxes?
   I contributed ,000 to my roth IRA in 2008. How do I declare this when filing taxes? My company has not provided any 1099 or other document, are they supposed to? I plan to file my taxes using Turbo Tax, how/where should I declare the contribution?
   Awesome, thanks for the answers. I knew it wasn’t tax deductible, I just thought I had to declare the contribution as income. Thanks all for the clarification.

   • ANSWER:
     The Roth IRA does not give you a tax deduction for the year you contribute. It is made with “after tax” dollars. That’s the bad news.

     The good news is it isn’t taxed (hopefully still won’t when you retire) when you take the money out.

     Either way, you don’t put it anywhere on the Form 1040.

3. QUESTION:
   Can I exceed my annual Roth IRA contribution?
   In 2007, I can only dump in ,000. In 2008, that goes up to ,000. The problem is that it’s not enough. Can I jack up my after-tax contribution amount on my 401k with my employer & then roll that over into my Roth IRA?

   • ANSWER:
     Nope.

4. QUESTION:
   Can I use Roth IRA contribution to purchase stock options?
   The company I work for gives me a very nice discount on company stock options. Can I use my Roth IRA contribution to purchase these options? For example: Let’s say I have an exercise price of .00 per share and the current stock value is .00 per share. Can I exercise 5000 shares this year to greatly pad my retirement with tax-free money?

   • ANSWER:
     If your Roth IRA has a brokerage account option that allows options with defined risk parameters AND your company will allow you to use IRA money to purchase options inside the IRA you can do this. Most plans do not allow it.

     You should think carefully about over-investing in your company through any retirement plan. Your paycheck is already exposed to the company. Putting your retirement at additional risk may not be the safest use of your money.

5. QUESTION:
   How to correct Roth IRA contribution error?
   On my electronic tax return, I incorrectly stated that my Roth IRA contribution for 2010 was ,000 instead of ,000. What form do I have to submit to correct this error?
   *EDIT:

   I did find the 1040X form online, but I don’t see a place where it mentions the Roth IRA. Do you happen to know the line number? Thanks!

   • ANSWER:
     That is because you are not supposed to mention Roth IRA contributions on your tax return at all. I have no idea why the software asked you. The amount should not have been stated on the return. There is no line number that should have it. If the software put it on your return, it did so incorrectly, and you would have to go through your return, line by line, and look for it, since it is not supposed to be on any of the lines.

6. QUESTION:
   If an excess distribution is made from a Roth IRA-lower than the contribution, can a capital loss be recorded?
   Example:
   Dec 2007: 00 Roth IRA contribution made in fund XYZ
   Jan 2008: Value of investment in fund XYZ falls to 00. Determined that 00 was an ineligible contribution so 00 is withdrawn.
   April 2008: 0 capital loss for tax year 2007?

   • ANSWER:
     Not unless you closed out *all* of your Roths.

     See publication 590 for a worthless itemized deduction that year. (The loss wouldn’t go on schedule D, but schedule A in the 2% section.)

7. QUESTION:
   What is the limit on the 2009 roth ira contribution?
   What is the limit on the 2009 roth ira contribution?

   • ANSWER:
     Depends on several factors:

     1) is your age. If you are under 50, then 00. Those over 50 can add an extra 00.

     2) it depends on your income level and tax filing status. In general, if you are single filing separate, and you make less than 1,000 then you can contribute the whole amount – and that phases out until 6,000, after which you have made too much to contribute. If you are married, filing jointly, the lower limit is 9,000 and the phaseout goes up to 9,000.

8. QUESTION:
   is a roth ira contribution reported as income?
   at the end of the year when you file taxes or does it increase your agi (aggregate gross income)? i ask because of the earned income tax credit and if it would have any affect on that because you have to make under a certain amount. i was going to make a 00 roth ira contribution.
   so if my agi for the year was 41,000 and i made a contribution to my traditional ira instead of my roth ira, it may lower the agi 41,000 amount?

   • ANSWER:
     No.

     The basic features of the Roth IRA: contribution not deductible, withdrawal generally tax free after age 59 1/2, including earnings

     As opposed to a traditional IRA – contribution deductible, withdrawal taxable

9. QUESTION:
   Do I have to file any forms with the IRS for making a ROTH IRA contribution?
   The online tax form that I am using asks if I made any IRA contributions. Are they talking about both traditional and ROTH IRAs. Do I have to fill out any additional forms to prove that I already paid taxes on the money contributed to my ROTH? Thank you for your reply.

   • ANSWER:
     There are no filing requirements on a Roth. That is handled by the account custodian.

     If the software asks about IRAs in general, just answer ‘Yes’. It will ask you later what type of IRA it was and will handle the reporting properly — i.e. none for a Roth.

10. QUESTION:
    What is the roth ira contribution for 2009?
    What is the roth ira contribution for 2009?

    • ANSWER:
      I’m in the same both. So far, the IRS hasn’t actually published that number yet. The guess is around ,500 to adjust for inflation for those under 50. However, just keep tabs on it as it gets closer to 2009.

      A good “general” rule of thumb is to increase this year’s max contribution by 0 to adjust for inflation to find next year’s max contribution.

11. QUESTION:
    Can I maximize my Roth IRA contribution if all income earned is in Canada?
    I’m an American citizen living and working in Canada for about 6 months on a working holiday visa. I opened a Roth IRA last year and am wanting to maximize my 2008 contribution… since all of my 2008 income has been earned in Canada, can I still max out my contribution or am I restricted on income only earned in the US? I am not worried about double taxation… I am just wondering if I can do this or whether or not its considered “over contribution”?

    Thanks so much!

    • ANSWER:
      Income earned in Canada will count as earned income for purposes of the Roth IRA contribution as long as you have not used the foreign earned income exclusion for this income.

12. QUESTION:
    Do I have to file IRS form 5498 for each Roth IRA contribution year?
    Do I have to file IRS form 5498 for each personal Roth IRA contribution year? Why?

    • ANSWER:
      Form 5498 comes from financial institutions where you have IRA assets. It is for your information and does not have to be filed with the IRS. The only kind of IRA that requires IRS filing is a traditional non-deductible IRA contribution. Form 8606 declares traditional non-deductible IRA contributions so you can track your cumulative basis (after-tax contributions). This is so you don’t end up paying tax when withdrawing the contribution portion later (only pay ordinary income taxes on the earnings portion of a non-deductible traditional IRA).

      All of the withdrawals from a traditional deductible IRA are taxed at ordinary income rates (since all contributions were pre-tax), therefore there is no cost basis to track and no form to file.

      All of the withdrawals from a Roth IRA (subject to the 5yr holding period rule and age condition) are not taxed, therefore cost basis is irrelevant.

13. QUESTION:
    Is an excess Roth IRA contribution taxable when withdrawing it after the tax filing deadline with extension?
    I contributed 00 to a Roth IRA in 2006, which caused an excess of 00. It is now after the tax-filing deadline with extension. I know that there is a 6% excise tax penalty already. My question is: Are there any taxes if I withdraw the 00? And would the early distribution penalty 10% apply since I am under 59 1/2?

    • ANSWER:
      You need to withdraw the ,000 plus any earnings attributable to the ,000.

      You will pay an excise tax of 6% on the ,000.
      You will pay income tax plus a 10% penalty on any earnings that have been withdrawn.

14. QUESTION:
    If I recharacterize an IRA contribution to a Roth, will I owe a penalty for paying taxes late?
    Assume I make a deductible traditional IRA contribution in early April and then recharacterize the initial contribution as a Roth IRA in July, will I have to pay interest and penalties when I file an amended return in early August?

    • ANSWER:
      If the contribution was made for 2008 tax year, the deadline to recharacterize it is 4/15/2009. After that it would be considered a conversion, and tax for the conversion would apply to 2009 taxes.

      If the contribution was for the 2009 tax year, you would have until 4/15/2010 to recharacterize it.

      So unless you already took a deduction and recharacterize before this April 15, doing things the way I mentioned, based on your time line, should not require amending 2008.

15. QUESTION:
    Tax and early distribution penalty on excess Roth IRA contribution?
    I have overcontributed to my Roth IRA for 2006 and need to take out the excess contribution and pay tax on the earnings of the excess contribution. I always use Turbo Tax Online to pay tax. How could I pay tax on earnings of the excess contribution through Turbo Tax?

    thanks,
    My broker told me most people just took the excess contribtution out without worrying about the gains. Is that correct? What potential penalty would be if I do that?

    • ANSWER:
      if you know the amount of interest/dividends, etc. just add this on to your tax return.

16. QUESTION:
    tax question part 2–Roth IRA early withdrawal contribution basis?
    Thanks very much to those who responded to my first question. Just two more: for the basis in Roth IRA contributions, must I enter only any amount contributed in the same tax year as the distribution, or is it the total of contributions to the Roth to that date? For ex., if I had contributed 00 total to the Roth in its 3 yr existence, and I withdrew 00, is 00 the basis? And do the contributions only count for my basis if I actually put in the money, or could the money in the Roth have been contributed by a relative? Thanks again.

    • ANSWER:
      If you contributed ,000 total and withdrew ,000, your basis is ,000. Since you withdrew less than the basis, your withdrawal is taxfree (assuming no rollovers or conversions).

      If a relative contributes for you, it is the same as if you contributed.

17. QUESTION:
    Can you contribute a prior year Roth IRA contribution and a current year contribution at the same time?
    For example, in March of 2010, can I contribute both my 2009 contribution, and my 2010 contribution?

    • ANSWER:
      Yes. You can contribute to 2009 until 4/15, 2010. anything after that is automatically a 2010 contribution. You can choose to put $ in as a 2010 contribution prior to April 15, just have to specify.

18. QUESTION:
    Future Penalties when Roth IRA Contribution Limits exceeded?
    My husband and I just barely exceeded the 0K limit. We are thinking of paying the 6% excise tax (only ) and applying the excess from 2006 to our 2007 contribution (when we will not exceed the limit). Will this help us avoid penalties in future tax years? Are the penalties in future tax years? Do we simply contribute less to our Roth IRA in 2007? Or is there a form to fill out?

    • ANSWER:
      You are thinking right! As tax return due date is passed, you can apply excess of 2006 to 2007 contribution that way you will have one time penalty (for this excess of 2006). But this will not help in your future excess contribution for coming years. (I hope I got your question correctly).

      To avoid penalty in future, you need to withdraw excess contribution and earnings (from that contribution) from Roth IRA before the due date of income tax return. Otherwise a 6% excise tax applies to any excess contribution to a Roth IRA.

      No need of filing any forms. Simply contribute upto maximum limit allowed for 2007 based on your income.

      Note: Remember that earnings on this excess contribution are considered as taxable income.

      For more more info check this link:

      http://www.theusefulinfo.com/finance/2007/04/what-if-you-contribute-too-much-or.html

19. QUESTION:
    Can a single person with no income over age 18 make a ROTH IRA contribution?
    Do you need income in that year equal to the amount you want to contribute, or can you make a contribution from previous years savings?

    • ANSWER:
      You need to have income in order to open a ROTH IRA. The only way I know to do that with no income is to open a spousal Roth, but that doesn’t apply in this case.

20. QUESTION:
    2008 Roth IRA contribution limit, filing jointly?
    Hello,

    My wife and I were wondering what the Roth IRA contribution limit is for 2008? I see under publication 590 that it is listed as 00, but is that our joint total, or are we each able to contribute 00, which would essentially be ,000?

    Thanks in advance!

    • ANSWER:
      If you file jointly you can contribute 00 for 2008 to your Roth IRA and 00 to your wife’s Roth IRA (assuming your combined taxable compensation is between ,000 and 6,000).

21. QUESTION:
    What is the calculation for the 2008 roth ira contribution?
    I basically want to know the minimum. I know the max is ,000, but I want to calculate my minimum for the time being since the deadline is just around the corner.
    What is the INITIAL minimum contribution for the 2008 ira contribution?

    • ANSWER:
      The minimum roth ira contribution is [FAQ-ANSWER]. It is a voluntary contribution.

22. QUESTION:
    If you don’t have to file IRS forms when making a Roth IRA Contribution each year, how does the IRS know how
    many years of contributions you should have in there? I’m consolidating a bunch of rollover iras into a a Roth, paying taxes on the money going in, and then combining that with my original roth ira. I understand that the IRS will have records of the taxes I paid on the rollover acocunts but how does it know I didn’t overload my original roth throughout the years, etc.

    • ANSWER:
      When you convert to a Roth IRA from a traditional IRA, the taxes are due in the year of the conversion. You would show the conversion on line 11 a and b on the form 1040A or 15 a and b on the form 1040. The amount taxable on the b line transfers to part 2 of the form 8606 and is not subject to the additional tax for early distribution.
      Publication 590

      http://www.irs.gov/publications/p590/ind

23. QUESTION:
    Does the amount converted from a traditional to a roth ira count toward the 00 roth contribution limit?
    I am allowed a 00 Roth contribution. I want to take 00 from my traditional IRA and convert it into an existing Roth IRA. Can I put in 00 PLUS the 00 conversion, or does the conversion limit my contribution to only 3000 additional dollars this year?

    • ANSWER:
      Your conversion amount does not count toward your contribution limit of ,000, ,000 if your over 50. There is a current income limit of 0,000 to qualify for a Roth conversion. If your over that income you can wait until 2010 when there is no income limit.

24. QUESTION:
    Roth IRA Contribution – Someone other than me contributing?
    I am an adult however every year my parents put money into my Roth !RA. Do I report this on my taxes even though I am not the one contributing? Do my parents put this on their taxes? I want to make sure we dont pay taxes on it twice….how does this work?

    • ANSWER:
      They are gifting money to you, that is all. There is no tax impact on you or your parents. Just make sure you meet the eligibility requirements for IRA contributions.

25. QUESTION:
    What is the max Roth IRA contribution when your self-emp. income is ,000 but have ,900 in deductions?
    Assuming that a self-employed person makes ,000 net (as reported on the K-1, partnership income form). However, the person have medical expenses for the year of ,900, which she intend to claim as medical deductions on the tax return form. Can that person still contribute the max of ,000 to her Roth IRA account?
    Does the IRS require simply a minimum of ,000 in compensation (i.e. total income received from the self-employment) or the higher hurdle of ,000 in Adjusted Gross Income?

    • ANSWER:
      Basics for Roth IRA are: ,000 maximum annaul contribution and a ,000 catch-up contribution if at least age 50, phased out for a single individual with MODIFIED AGI between ,000 and 0,000, for joint filers between 0,00-0,000.

      Assuming your partnerhsip earnings are the only source of income for you, then you fall within the limits and can contribute up to the maximum of your earnings up to ,000 (in your case, you have ,000 in “compensation”).

      If the medical expenses are expenses then those are deductible under “itemized Deductions” if you itemize. If the medical expenses are insurance then you can deduct them from your income to get to your Modified AGI.

      Check with your accountant/CPA for further answers. Also, there may be limitations if you worked elsewhere that offered a retirement plan even if you chose not to participate in it.

26. QUESTION:
    Can you file your 2009 tax return BEFORE making a Roth IRA contribution?

    I’m concerned about claiming the Credit for Qualified Retirement Savings Contributions (Form 8880) before making the Roth IRA contribution, which will be made before April 15.

    • ANSWER:
      Yes, since a Roth contribution is not deductible, it will have no affect on your 2009 taxes.

27. QUESTION:
    Do 401(a) contributions count against the annual Roth IRA contribution limits?
    My employer uses a FICA alternative (401a) plan, which takes mandatory pre-tax contributions from my paycheck and puts them into a retirement account. I think I saw some literature that warned that these mandatory contributions might count against IRA contribution limits, but I can’t find any evidence to support that. Can anyone help me with this question?

    • ANSWER:
      No it does not count in any way. A 401a plan is an opt out plan from Social Security by government employees. The funds going into the 401a are those that would have gone to SS. Both the employee and the employer pay into the 401a at a rate of 6.2% each. If the employer also offered a 401k in addition to the 401a then that could effect the ability to put into a ROTH or other IRA type plan. But because the 401a is a Private retirement security plan in lew of a government retirement security plan (Social Security) then it doesn’t effect your ability to put into IRAs. All State and Local government workers in Alaska do not pay into Social Security. Up here its called the State of Alaska SBS account. The State also has a 401k in addition to the 401a. Instead of putting into an IRA if you have a 401a then I would first obtain disability insurance. I have a friend who worked for the State government. Because government employees do not pay into Social Security under the 401a plan they are not eligible to receive Social Security disability if they are unable to work due to a disability. This is true even if they have enough paid in from a privious job. Once you opt out of Social Security you cant opt back in for SS disibility. If you were to have had the required 40 quarters paid into SS and also had a 401a then you can collect SS at 67 in addition to the 401a but for disibility you could not collect SS if you are covered under a 401a plan this is why the government offers those under 401a plans the ability to buy extra private disability insurance. Make sure you have the disability insurance inplace first…then do the IRA if you so desire. Dont do as my friend did and find out AFTER you become disabled what you should have done. Trust me on this.

28. QUESTION:
    Does the K maximum IRA contribution apply to Roth IRAs only? Does it also apply to employer-sponsored 401Ks?
    Is there a maximum contribution amount for employer-sponsored 401K plans? Does your total combined IRA contribution for ’08 (that’s Roth IRA plus 401K) have to be ,000 or less?

    • ANSWER:
      It applies only to Roth or Traditional IRAs. A 401k has a maximum of ,500 for 2008. If you have a 401k, you can’t have a Traditional IRA but you can contribute fully to a Roth IRA.

      That means you can contribute ,500 to a 401k and ,000 to a Roth IRA for 2008.

29. QUESTION:
    Can I change Roth IRA contribution year from 2007 to 2006? I made a mistake.?
    I put 4K to my Roth IRA in Jan/2007. It should be a contribution for 2006 but I mistakenly put as 2007(now my contribution for 2006 is zero). Is it possible to change year to 2006?

    • ANSWER:
      Too late. You would have had to change it before 4/15/07.

30. QUESTION:
    Can I transfer stock I currently own into a Roth IRA account as part of my annual contribution?
    I max my 401k every year and I’ve got a decent sized portfolio of investments outside of my 401k. I do not currently have anything in a Roth. Can I transfer some of the stock I have in various brokerage accounts into a Roth and have it count towards my annual max IRA contribution?

    • ANSWER:
      Contributions must be cash.

31. QUESTION:
    Can I deduct loss from excess contribution on Roth IRA?
    I just found out that I have excess contributions on my 2008 Roth IRA. My options are either withdraw those excess contributions or roll over to traditional IRA to avoid the 6% penalty. The thing is that my current investment values are much lower than the contribution amounts. So, let’s say I decide to make withdrawal instead of roll-over, do I withdraw the contribution amounts or the current value attributing to the decline in values?

    • ANSWER:
      The administrator will handle this.

32. QUESTION:
    Too much put into my 2006 Roth IRA contribution?
    In 2006 I made AGI over 95k but less than 115k thanks to an end of the year bonus. However I funded my Roth IRA at the full 4k amount earlier int he year. How do I resolve this?
    According to the Roth IRA limits at 95k you start limiting down and if you make 115k you cannot put monies to a Roth IRA. The limit is raised if I was married.

    • ANSWER:
      Hello, darkrevni! Incidentally, the income limit pertaining to Roth IRA contributions from Single or Head of Household filers is 0k, not 5k. At any rate, you have three options regarding your excess 2006 Roth IRA contributions:

      1) do nothing and pay a 6% excise fee on the excess
      2) withdraw the excess before the due date of the return (April 17th this year), making it as if you had never contributed it
      3) request that the excess be applied to 2007 (assuming that you have not already contributed your max for 2007)

      Check out the IRS link under “Source(s)” for more details. Good luck!

      ** Update **
      The below answer is incorrect. First, that answer is regarding traditional IRAs; Roth IRA contributions are never deductible in any situation. Second, the yearly contribution limit for either type of IRA is currently ,000. Some portions of contributions to a traditional IRA may indeed be non-deductible, bringing the more complex withdrawal that was noted. But ,000 is still the maximum. The following link to the traditional IRA section of Publication 590 explains: http://www.irs.gov/publications/p590/ch01.html#d0e1464

33. QUESTION:
    maximum roth IRA contribution allowed this year for married?
    Hi does anyone know what the max total amount I can contribute this year? I’m married (since 2008) and my husband and I might make more than 100k

    I make 60K a year and his income depends and he might clear 55k this year though.

    • ANSWER:
      I think it’s staying at 5K.
      For you 5K
      For your hubby 5K
      (If there is an increase – the news is not out yet)
      /

34. QUESTION:
    Roth Ira Contribution Question?
    Say, for example, I invest 00 into Vanguard Star Fund at the price of , and planning to make automatic investment of 0 each month.

    Now, what would be the purchase price of the fund the next time I deposit money into my roth ira account? Will my 0 monthly contribution goes into my existing STAR fund at the price of automatically, or it’ll buy the fund at the current market price?

    • ANSWER:
      Current closing fund share price as of the date of actual share purchase. This is called “dollar cost averaging” and is a good way to invest.

35. QUESTION:
    Can I invest my 2006 tax refund into my 2006 Roth IRA contribution?
    Or since I already filed my return, can I only invest with 2007 contributions??

    Does it matter since the Roth doesn’t really have a tax effect?

    • ANSWER:
      Yes, you still can.

      You can even put it into a traditional IRA, file an amended return and get more money back.

36. QUESTION:
    Can you still make a Roth IRA contribution for 2009 if you haven’t yet opened a Roth IRA?
    Since the deadline is April 15th, I was wondering if these needed to be already existing in 2009.

    • ANSWER:

37. QUESTION:
    Which will yield best results – partial contribution to a Roth IRA or full contribution to a traditional IRA?
    I make more money than allowable for a full contribution to a Roth IRA, but I can still make a partial contribution. Over the length of my investment, will the difference in contribution make a traditional IRA favorable when compared to the tax breaks when withdrawing from a Roth IRA?

    • ANSWER:
      Yes. I think you want to go with a traditional IRA.

      In my opinion, a Roth IRA is for someone with limited income, or all cash income. They’re pretty much not paying the taxes anyway.

38. QUESTION:
    Is max contribution to Roth IRA limited by earned income?
    I have K total wage in 2007, but K going to pension plan (most other income are passive, so I can still eat!) Only 00 shows on box 1 of W2, and K on box 3, Social Security wage. Is my maximum contribution to Roth IRA limited to only 00, or can I still contribute 00 for both myself and my spouse?

    • ANSWER:
      No, you are limited by the amount of earned income that you have on your w2, even if you have more money saved up somewhere else. https://www7.oftnet.com/IRAEligibilityCalc/learnAbout.jsp

39. QUESTION:
    How can I lower my income for Roth IRA qualification by increasing my 401k contribution?
    I participate in a 401k up to the point of employer match, and each year I’ve been making out the roth contribution. My income for 2007 will exceed the uppoer limit to qualify me for contributing to a roth. Can I meet the restricions by increasing my pre-tax 401k, even though it will be unmatched?

    • ANSWER:
      Good Question. In 2006 you can contribute 000 to your 401k regardless on employer match. If your over 50 years old you can contribute an addional 00. All those contributions will lower your marginal tax rate. Therefore you could reduce your income in regard to ROTH IRA limits. You should check with your CPA first. If you are over the limit for Roth contribution you will get hit with penalties from the IRS. Another option is the ROTH 401K. Ask your employer if that is an option. You can put in 000 per year with no income limit. You can email me on this subject if you have more questions.

40. QUESTION:
    Roth IRA contribution?
    I made a contribution for ROTH IRA 2006 and 2007 last year april.
    If I already send my tax for the 2007 year, but I didn’t say in the tax form I made a contribution for ROTH IRA is that a problem?
    If it is, what can I do.
    I know I can’t deduct the amount for ROTH, but do I have to inform the IRS I have such a ret. savings?

    • ANSWER:
      You don’t have to inform the IRS about your Roth IRA. The trustee does. You will receive (for information only) a Form 5498 from your trustee that documents your Roth IRA to the IRS.

41. QUESTION:
    Is this Roth IRA contribution deductible for 2010?
    I contributed 00 to my 2010 Roth IRA in Jan. 2011. Can I claim it deductible in my 2010 filing? Or I should wait and file it for 2011?
    It was designated as for 2010 when I sent a check in Jan. 2011.

    • ANSWER:
      Neither. Roth IRAs are not tax deductions. ie No tax benefit but reportable to make sure you can legally make the contribution. You claim it in 2010.

42. QUESTION:
    Do I have to a report Roth IRA contribution on federal and state tax return forms?

    • ANSWER:
      No.

43. QUESTION:
    When does Roth IRA contribution income limit end?
    I heard that soon anyone can convert their IRA to Roth IRA without an income limit. Is this true?

    If so, I am 51 years old and have 0,00 in SEP IRA and ,000 in non-deductible IRA.

    Should I convert all to Roth IRA? Or can you do such a thing?
    Should be0,000

    • ANSWER:
      I, respectfully, disagree with my fellow quite-competent contributor, Judy, Although, this decision should be made (and it need not be all or none) by you and your personal advisor(s), based on your entire financial situation. And, do you have the resources to pay the taxes from another source?

      Yes, the income cap for conversions will be lifted in 2010, and I believe you’ll be able to pay the tax over a two-year period. Required minimum distributions won’t apply at your age 70 1/2 and qualified withdrawals from your Roth will be forever tax free to you AND your beneficiaries.

      If it makes sense, you could always do half.

      PS – I welcome a contact from Judy to find out why she dislikes ROTH IRAs for taxpayers over 35.

      Disclaimer. The information in this response is for general purposes only, and shall not be construed as specific tax, legal, or investment advice for any individual. The questioner is urged to contact their own professional advisors before implementing any tax or investment strategy.

44. QUESTION:
    Is it better to make the entire Roth IRA contribution for the year all at once or to contribute monthly?

    • ANSWER:
      If you have the cash, it’s better to max out your IRA contributions asap. The longer your cash is in there, the longer you’re getting all that interest, capital appreciation, or dividends tax-free (assuming that you’ve invested it wisely).

45. QUESTION:
    Made contribution to traditional IRA, Roth IRA and 401K. What do I now do with traditional IRA?
    My financial advisor told me I could make traditional IRA contribution even though I am making 401k contribution. In 2003, I opened IRA and Roth IRA both. I DID NOT take tax deduction for traditional IRA. I have only lost money in my traditional IRA account. Now I understand that I shouldn’t have made traditional IRA contribution when I had maxed out in 401k. What do I do?

    • ANSWER:
      My idea would be to sell out your traditional ira and put the remaining into your roth ira. You should be talking to your financial advisor about all this. He or She should know all this and be able to guide you what to do. if not, time to get a new Financial advisor. But, at least check out this site which I pulled for you while doing my own research. It looks like it nails it on the head of what your asking about. Read it thoroughly and take it in, then talk to your financial advisor and go from there. Hope I was of some help to you. Good luck! Shuuutnstr =o)

      http://www.bankrate.com/brm/itax/news/taxguide/20060102e1.asp

46. QUESTION:
    Do you have to report a Roth IRa contribution on your 1040?

    • ANSWER:
      No. The IRA trustee will report the contribution to the IRS. You will receive a Form 5498 documenting the contribution from the trustee for your records.

47. QUESTION:
    roth ira contribution taxation?
    i am new in the us and this is my first year preparing tax returns. how roth ira contribution is after tax account, if i start my federal and state tax return with figure that doesn’t include roth ira contribution? when was the tax paid?

    • ANSWER:
      Roth IRA contributions are made with money you have already paid taxes on (you current income). They do not affect your taxes now OR later. IRA contributions are made with pre-tax income, so you pay no tax on the money you contribute but you will pay tax on the money when you take it out later when you are on a fixed income and really don’t want to pay taxes.

48. QUESTION:
    Roth IRA contribution possible – unemployed, dependent?
    I was wondering if my younger brother could make a contribution to a Roth IRA? He was unemployed for most of last year, but has some income due to the interest from joint CD accounts. I know that to be eligible for the Roth, you need income…so does that count?

    Thanks for your help!

    • ANSWER:
      He can deposit up to 00 (00 over 50) of EARNED income. The CD interest does not count.

49. QUESTION:
    Contributed in ROTH IRA early 2007 and find out later that we don’t qualify for ROTH contribution.?
    We contributed 00 in ROTH IRA in the beginning of 2007. And we found out recently that we are not eligible for ROTH contribution in 2007 due to an unexpected income. Can we just take 00 out of our IRA account? How about the gains?

    • ANSWER:
      you may be able to “re-characterize” the Roth contribution into a traditional ira contribution – check with your IRA provider & your accountant

50. QUESTION:
    Any suggestions on how/where to invest my Roth IRA contribution for this year?
    Any good mutual funds? foreign funds etc. to invest in?

    • ANSWER:
      Well the guy recommending UAUA is crazy, and the guy offering his services is a hustler.

      Buy a no load index fund like VFINX, FCNTX, SPY, QQQQ Chance is very good that you will do well over this year, and in years to come.

      See the article about UAUA below