Tag: Roth IRA
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Income Limits on Roth IRA Conversions Set to End
Currently if you earn over $100,000 you are not eligible to convert your Traditional IRA to a Roth IRA. The Tax Increase Prevention and Reconciliation Act of 2005 abolished the income limit and the change will take effect as of Jan. 1,2010. The government has also included a one-time option to spread your tax payment…
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Roth IRA & IRA Contribution Deadlines Approaching
Just a helpful reminder to everyone thinking about a Roth IRA or a Traditional IRA, the deadline for your contribution is coming up. Not surprisingly, it’s April 15th. When you go to make your contribution, the maximum is $5,000 this year ($6,000 if you are 50+), be sure to mark down that you are making…
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2009 Roth IRA Contribution Limits
With a new year comes a new limit for contributions, however 2009 will have the same contribution limits as 2008. This will be the first year that contribution limits will be based on inflation but 2009 will have the same limits as 2008. For 2009, the contribution limit for Roth IRAs will be $5,000 for…
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Roth IRA Conversion Could Trigger Tax Underpayment Penalty
If you convert a Traditional IRA into a Roth IRA this year, remember that the balance you convert will be considered income and so you may be penalized for underpaying your taxes. There are several safe harbor conditions that would save you from the underpayment penalty (for example, if you did not owe taxes last…
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Unconvert A Roth IRA Conversion
Here’s a gem of a recommendation from Kiplinger: If you converted a Traditional IRA to a Roth IRA this year and lost value on your investments, you can undo the conversion and then reconvert to save on taxes. The process is called “recharacterization.” If you ask the IRA sponsor to recharacterize your conversion and put…
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Roth IRA: No Required Minimum Distribution
If you have a Traditional IRA or 401(k), you are required by tax rule to start taking required minimum distributions (most of the major brokerages have tools to help you manage this) by April 1st of the year after you turn 70 1/2. One of lesser known benefits of a Roth IRA is that there…
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Tax Underpayment Penalty on Roth IRA Conversions
If you’re considering converting your Traditional IRA to a Roth IRA, remember that you will need to pay taxes on the conversion amount and you may be subject to an underpayment penalty because of it (if you fail to file estimated tax payments). The federal tax law regarding underpayment is straightforward. If you pay more…
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Warning About Snowflaking into Roth IRAs
Snowflaking, or micropayments, is a clever idea but when it comes to paying off debt but when you are talking about contributing towards retirement, you have to keep several things in mind. First, the rules of a Roth IRA, which will be easiest to snowflake into, state that you are only permitted to contribute earned…
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Early Withdrawal IRA Rules for Senior Citizens
I had a reader Wallace send in this question: What is the law regarding premature IRA CD withdrawals by senior citizens without penalty? Wallace, The law regarding premature IRA withdrawals depends on the type of IRA you have. If you have a Roth IRA, you can withdraw your principal without penalty as long as it’s…