I think it might be useful for some of the authors to post about how the new tax laws, especially as relate to capital gains and dividends, might change investment/retirement basics. {I have only started to think about this and will post the first reply! with some of my ideas}

First thoughts:

I was surprised that they managed to get both a capital gains tax reduction and new treatment for dividends in the recent bill... especially during a time of growing deficits. Who knows how long these changes might stay in effect. Regardless of the dates put into the bill, there is a lot more uncertainty about these rules going into the future than Roths which would probably be grandfathered.

I think traditional IRA loses some of its appeal under the new rules. Dividends are treated like ordinary income. Capital gains are treated as ordinary income. A simple brokerage account for some investors, especially buy and hold folks, looks pretty good. Also consider that taxable holdings get a stepped up basis upon death.

Roth IRA probably holds its own for now. You don't need to worry about transaction timing. Less record keeping. Plenty of options for handling dispersement timing. Tax shelter can be passed to next generation - but no stepped up basis. Roth looks better for more frequent trader.

Where does AMT fit into the new rules? I have seen very little said about this. AMT can negate other tax cuts if it is not changed as well.

I thought the reduction in taxes for dividends and capital gains is only temporary- after 2006 or 2008 the law expires and will have to passed again. I dont know how one can advise clients on long term retirement planning with such uncertainty and I would advise clients to ignore the the lower taxes on dividends and cap gains until it becomes permanent. Eligible individuals get a better deal with a roth IRA with the same after tax dollars because income subject to the 10% and 15% tax brackets has been increased which reduces the tax benefit of making pre tax contributions. The question is whether clients in the three highest tax brackets get a better tax benefit by deferral of 12 or 14k in 2003 versis a payment of 30-40% in taxes in the principal with lower taxes on dividends/cap gains in the next 3- 5 years.

I think that the new law should not discourage investment in deductible traditional IRAs and 401k and other qualified plan deferrals. The tax deduction (at rates up to 35%) out weighs the lower tax on dividends and capital gains up to 2006, in my opinion.

Congress seems reluctant to tackle the AMT. The new law increases the exemption temporarily but when that sunsets more taxpayers than ever will be hit by this annoying tax. State taxes are not likely to decrease based on the federal law changes. Taxes are not deductible for AMT so we have another widening in the gap between regular taxable income and AMT income. Even with a 20% capital gains rate taxpayers often pay AMT in a year with large capital gains because of failure in the methodology in calculating the AMT capital gains tax.

The marriage penalty relief must be as much of a joke in New York as it is in California. Doubling the standard deduction does nothing for taxpayers in a state with income taxes so high that nonhome owners itemize deductions.

I'm not usually a negative person but I don't see many positives in the new tax law. Calculating the tax on dividends will be difficult and it may be difficult to collect higher fees to make the required calculations.

MK: Congress is unlikely to make changes in the AMT because a) the tax cost would be high and b) the AMT is looked upon as democratic state problem, i.e., the 10 states with the highest amount of AMT tax collected all voted to elect Al Gore in the last presidential election and 16 of the 20 senators are democrats. (NY, NJ. CA. Mass, Ct, Ill., MD, Wis to name a few). AMT is not a problem in FLA, TX and NV which have no income tax and which the republicans need to win in 04. The republicans believe that there should be no tax on capital assets and will continue to press for reductions in capital gains and dividends which benefit residents in states they expect to carry in 04. There is a subtle strategy in republican thinking that not reducing AMT taxes will encourage voters in the high AMT states to elect republican senators, state legislators and governors who will reduce state taxes. The Flip side is that reducing AMT will benefit the democrats who represent voters who live in the high AMT states not the republicans who vote for the reductions. So why should republicans be in favor of AMT reduction?

Mary Kay, my thinking on brokerages vs traditional IRA goes like this:

Comparison: regular deductable IRA vs putting fund into a brokerage account and buy equities for long term.

Possible plusses for brokerage approach: (1) no restrictive max contributiions each year, (2) no income or filing status qualifications to meet, (3) no forced annual distribution schedule at any age, (4) stepped up basis upon death, (5) marginable assets, (6) can be pledged as security for a loan, and (7) it is possible to minimize any income taxes each year by either buy and hold, index fund or tax managed fund. Extra plusses if capital gain tax rate stays low vs treatment of all growth as ordinary income for an IRA. Extra plusses if dividends are treated as capital gains.

Negatives: (1) still have some taxes before withdrawal, (2) unclear protection in bankruptcy, divorce, or against lawsuits, (3) possible higher negatives than retirement money in college scholarship math, (4) tax law changes, (5) no immediate tax deduction, (6) state tax laws mostly remain the same.

I have probably left out a number of other factors and can update the tick points if anyone comments. I think the gap between IRA and brokerage approach to retirement savings narrowed with the new tax law changes. Time will tell if any or all of the changes are made permanent. My point is that the standard brokerage approach to retirement investing has some powerful plusses and for people who started late or are likely to invest in things that primarily have tax consequences when start to cash out, the brokerage route is not bad and looking better.

An interesting MSN Money article on this topic... covers just a few points:

http://moneycentral.msn.com/content/Retire...ills/P50423.asp

Regarding the new tax-laws, I don't think they warrant major shifts in your retirement investment. Many have advocated shifting asset-allocation -- or more specifically, what accounts assets are allocated under -- so as to minimize the percentage of money that the IRS gets. The problems with these strategies is that they place high-yield investments like stocks outside of tax-sheltered plans (401/403/Roth) and into normal taxable accounts, placing the shorter-term investments into tax-sheltered plans.

The rationale behind this is that the long-term investments are now taxed much more favorably, and that you can avoid the unfavorable tax on short-term investments by placing them into tax-sheltered accounts. This is a great strategy, if your only goal is to screw the IRS out of as much percentage of your money as you can, even if that means you get less money in the end. Would you want to make $7,000/yr instead of $700,000, just because the government gets a smaller percentage of your money at $7,000/yr?

Another thing is that placing short-term investments in retirement plans doesn't make sense. You should invest short-term when you need the money in the short-term. For retirement investments in 401/403/Roth, you won't get the money until retirement. And why would you place your longer-term investments outside of your retirement plan, giving you temptation to not stick with the long-term plan?

Your objective should be to place money such that your overall portfolio can grow the quickest. The objective is to appreciate enough money to live up to your standard of living in retirement, not to screw the IRS out of as much money as possible. Your portfolio will grow much faster if you have your aggressive long-term investments in tax-sheltered plans.

Because the earnings in RothIRA's are tax-exempt, your most aggressive investments should be in your RothIRAs (if they lose money before the end of the year, you can always turn them into traditional IRAs so you don't get stuck paying taxes on $3000 contributed that's now only worth $2000). You can then -- at the soonest possible time by IRS regulations -- convert the Traditional IRA back to a RothIRA, still be able to contribute $3k that year. When converting a traditional IRA to a Roth IRA as part of such a tax-plan, it is good to convert when it's at a low-point (so you'll pay less taxes). "Most aggressive investments" in this case would mean the portion of your portfolio that is seeking long-term average gains of 15% or greater, probably aggressive-growth/value-blend investments. RothIRA's are also the place to invest in your own personal stocks, if you choose to do so.

Your slightly less aggressive investments should be in your 401k or 403b. These are still, of course, aggressive investments -- still mostly stocks, or maybe high-yield junk bonds or international bonds (emerging markets bonds have performed in this caliber). "Less aggressive investments" would probably mean investments returning 8-14% long-term.

If you make considerable money, annuities may also be a consideration; though I think that new tax-law makes them less valuable, since initial contributions into annuities are taxed, though growth is tax-deferred.

In any regards, tax-sheltered plans (for now, while they require you to wait until 59+) should be long-term investments (or at least as long term as is the difference between your age and when you can start taking from them).

Other tax-sheltered plans that make sense -- if you have, or are planning on having children -- are college-savings plans. There is a education IRA, and there are also state-sponsored savings plans. When saving for a child's education, you may want to place the money in the name of someone that you trust, other than yourself, to be used for your child. Any assets your or your child has may detract from potential financial aid.

Outside of tax-sheltered plans, it makes sense to invest for pre-retirement goals first. Eliminating debt, paying current expenses, a car, a computer, a house, and so-on and so-forth. In general, if you need your money within a certain time-frame -- say by 1, 3, or 5 years -- then you should invest in something which is almost sure to outpace inflation over that time-frame. I think that many government bonds are a good place to start. I'd recommend investing in individual bonds as opposed to bond-funds, if you want a safer more stable investment. I-bonds, EE-bonds, and HH-bonds are government-guaranteed bonds, and government mortgage bonds are also good-yield bonds. Consider the benefits of gov't-guaranteed tax-advantaged bonds when deciding between that "low-yielding" gov't bond and a "higher-yielding" corporate bond: by the time taxes have been taken into account, the gov't bond may be just as good, plus the added security.

Regarding I-bonds, I think that they're a good option right about now, with rates of around 4.66% (alot better than anything offered by money-markets or CDs, even if you're penalized 3mo interest for withdrawing before 5 years). I've calculated a (png-versaion) increase in value over time, compensating for inflation.

Several articles on Fidelity.com may be of interest:

Ask an Expert: Retirement Investing and the New Tax Law

James Cramer: Critical Opportunity With New Tax Law

How the New Tax Law Affects Trades

DH, the prior post includes some comments I just don't understand. I will reply to three parts:

[1] You said: Another thing is that placing short-term investments in retirement plans doesn't make sense. You should invest short-term when you need the money in the short-term. For retirement investments in 401/403/Roth, you won't get the money until retirement. And why would you place your longer-term investments outside of your retirement plan, giving you temptation to not stick with the long-term plan?

I have multiple problems with this statement.

First, it assumes that a taxpayer knows in advance if something is a short term or long term investment. In stock investing, you do not control the market. The sell timing can be triggered by news, earnings, product rollout, regulatory changes, mgmt turnover, M&A and other circumstances beyond the investors control. Fifty years ago, people often bought and held stocks for decades. That style of investments is still common but "event driven" investing has become a credible alternative approach.

Second, if you buy something and it rises rapidly, you may have good reasons to sell. There are no consequences in an IRA or Roth for selling with less than a one year hold. There is a major tax penalty for selling short term in a taxable account. Recently, the delta between long and short term taxes has grown and it can make folks hesitate to sell anything short term taxable, even if the stock.

Third, you say your should "invest short term when you need the money short term". This seems to confuse two subtle issues: the length a specific investment is held and the period of time when you are actively investing. For may households, the period of actively investing can be decades to your remaining lifetime. Companies rise and decline typically on much shorter timeframes, and attractive periods to invest in a company cycle on even shorter time horizons. (eg. IBM has been around for decades, but there have been cycles of decline and rise for the stock.)

I do not believe that anyone should have a lot of confidence that their view of the future has a high probability, especially with regard to specific investments. Sorting investments by accounts based upon your predictions will often be wrong. More wrong over long time periods.



[2] You also said: "Because the earnings in RothIRA's are tax-exempt, your most aggressive investments should be in your RothIRAs (if they lose money before the end of the year, you can always turn them into traditional IRAs so you don't get stuck paying taxes on $3000 contributed that's now only worth $2000). You can then -- at the soonest possible time by IRS regulations -- convert the Traditional IRA back to a RothIRA, still be able to contribute $3k that year."

Perhaps the accountants can evaluate to what extent your proposal is legal. I can not recommend this approach on a number of practical grounds. You can't convert prior year Roth assets back and forth. For most folks, prior year assets should be greater than the current contribution (if any), so this statement is limited in scope. In a normal investing environment, it is rare to see a stock drop 50% in a year. If your picks are doing this, you have more fundamental problems than your taxes. Not everyone can qualify for a Roth every year. It is an administrative mess. I don't think anyone should make investments using this concept as a backstop.



[3] You said: "Regarding I-bonds, I think that they're a good option right about now, with rates of around 4.66% (alot better than anything offered by money-markets or CDs, even if you're penalized 3mo interest for withdrawing before 5 years). "

Blanket recommendations about investing often miss the mark. What is the level of investor knowledge and experience? What is their tolerance for risk? How before the assets will be tapped for living expenses. How much time do they expect to spend? What proportion of the portfolio are you describing? Each household has unique circumstances and anything that looks like a general purpose recommendation should be avoided. {I would depart from this only with folks getting started where you are talking about modest initial contributions when the level of knowledge is low and the primary goal is getting someone started.}

I-bonds are hardly zero risk. You run a long term risk of your assets not providing enough return to reach your goals.

First, it assumes that a taxpayer knows in advance if something is a short term or long term investment.

Reasonable stock-market investing focus' on long-term results. If you want to take your money out in 1, 3, 5 years, the stock market is not a good place for you. Look at the past 5 years as an example of that: the DJIA has just broken even. The 10-year time-frame is critical in the stock-market. There has never been a 10-year period in which stocks haven't outperformed every other major investment vehicle, and only one 10-year period in which they declined (during the Great Depression). That's a pretty good indicator of the future. Obviously, nothing is for certain.

True, there are many times when stocks and stock mutual funds will rise extremely rarpidly over a very short period of time, making selling them reasonable. I do not agree that "event-driven investing" is a credible alternative approach to holding onto stocks for long periods of time, since I don't see how that's different than market-timing. Obviously, it may be reasonable to have some rules when investing in individual stocks, such as to sell if they decline by 20% or whatever the individual sets; to sell incrementally when enormous profits are realized over short time-frames, so as to lock those profits in; and to sell when the stock's price reaches an unrealistic price.

One may not know whether individual stocks -- or even mutual funds -- will reach a point where they should be sold by reasonable people in the short-term or long-term. However, overall, investing in the stock-market and stock mutual funds is long-term.

Second, if you buy something and it rises rapidly, you may have good reasons to sell. There are no consequences in an IRA or Roth for selling with less than a one year hold.

This is true. I would not say that just because something rises rapidly, however, you should sell. You may want to lock in some of the profit and sell off some of your stake in it. However, the time to sell is when the stock is no-longer something you would have invested in in the first place. Basically, the time to sell is when the answer to "Would I buy this stock if I was looking at it fresh today?" is no.

Third, you say your should "invest short term when you need the money short term". This seems to confuse two subtle issues: the length a specific investment is held and the period of time when you are actively investing.

Different investments are very likely to produce positive results over different time-frames. The point I was trying to make is that if you're saving to buy a house in 5 years, you should not invest in something (like the stock-market) that has a significant possibility of going down in 5 years. If you are investing for a house in 5 years (let's say you want to buy it up-front), you should ask yourself a couple of questions. (1) How much money can you put aside each year for that purpose? (2) How expensive is the house you're planning on? (3) What is the difference between the summation of my yearly investing for a house and the cost of my house, compensated for inflation?

From this, you can figure out how much your money needs to grow to meet your objectives. Once you know that, you need to find an investment that is very likely to meet that growth-target over 5 years (e.g., over 5-year period, has almost always showed enough growth for your required needs). If you can't find an investment that has almost always met your required growth over 5 years, then you are being unrealistic (e.g., if you need 17% per year to meet your 5-yr objective). You either need to find a way to put aside more money each year, or find ways to knock down the price of your house, or both.

I do not believe that anyone should have a lot of confidence that their view of the future has a high probability, especially with regard to specific investments. Sorting investments by accounts based upon your predictions will often be wrong. More wrong over long time periods.

I'm talking with regard to general investments. Stocks and mutual funds are not a reliable 5-year investment, especially if there's a bear-market. The 10-year time-frame is critical. Short/medium-term bonds, however, may be a reliable 5-year investment. In any event, outside of emerging-market bonds, bonds will not produce the kinds of returns that stocks produce over 10-years. Thus, it makes sense to put your aggressive stock investments and mutual funds, into tax-sheltered accounts, where they will benefit the most from tax-deferred growth. While the stock-market requires a longer time-frame (10yrs) to be a reliable investment than the bond-market, it has always produced greater returns than the bond-market over 10yrs.

People investing in stocks are looking for high rates of returns, 8%, 10%, or better. Tax-sheltered plans, like 401/403/Roth, will provide the most benefit to these kinds of investments in terms of growth.

You also said: "Because the earnings in RothIRA's are tax-exempt, your most aggressive investments should be in your RothIRAs (if they lose money before the end of the year, you can always turn them into traditional IRAs so you don't get stuck paying taxes on $3000 contributed that's now only worth $2000). You can then -- at the soonest possible time by IRS regulations -- convert the Traditional IRA back to a RothIRA, still be able to contribute $3k that year."

Perhaps the accountants can evaluate to what extent your proposal is legal. I can not recommend this approach on a number of practical grounds. You can't convert prior year Roth assets back and forth. For most folks, prior year assets should be greater than the current contribution (if any), so this statement is limited in scope. In a normal investing environment, it is rare to see a stock drop 50% in a year. If your picks are doing this, you have more fundamental problems than your taxes. Not everyone can qualify for a Roth every year. It is an administrative mess. I don't think anyone should make investments using this concept as a backstop.

This approach is indeed legal. You can convert back and forth from Roth IRA's to traditional IRA's. Even more aggressive conversion strategies (e.g., individually converting each mutual funds) have been proposed. See Roth IRA Conversions -- An Aggressive Strategy. Your assumption that for most people, the assets should be greater, is very questionable. If one is heavily invested in the stock market, that is very possible one could lose money, especially in a bear-market. In any situation where your RothIRA value declines over a year, it is valuable to convert it to a traditional and then reconvert asap to a Roth.

The best strategy is to modularize conversions, as the article I mention suggests. Individual investments within a RothIRA that decline over a year should be converted to a traditional IRA, then reconverted back the next year asap by law. This allows one to reap maximum tax-benefits. Of course, this is only possible if you qualify for a Roth IRA. It's only an administrative mess if you keep sloppy records and don't understand what you're doing. Otherwise, though complicated, it is pretty clear.

Blanket recommendations about investing often miss the mark.

My point was not that I-bonds are the best investment for everyone's needs, but that I-bonds are a superior alternative to money-market's, CD's, and other ultra-short-term investments that are being crucified by inflation at the moment. If you want a zero-risk investment (in terms of not losing money to inflation) I-bonds are the best investment at the moment, so far as I can see.

I-bonds are hardly zero risk. You run a long term risk of your assets not providing enough return to reach your goals.

I-bonds are not necessarily long-term. They can be redeemed after 1-year, albeit a 3mo interest penalty up to the 5th year. However, this becomes increasingly insignificant as 5-years approaches, and they would still be vastly outperforming CDs and money-markets in the current environment, and many other environments. I-bonds are, at the moment, a superior alternative to CDs and money-markets (for money that you need in less than one year, you should put it in a money-market...though at less than 1%, the returns are barely better than a savings account). Furthermore, CDs and money-markets also run the risk of not reaching your goals, so there is no reason to invest in them, when they have inferior returns to I-bonds.

You said "I do not agree that "event-driven investing" is a credible alternative approach to holding onto stocks for long periods of time, since I don't see how that's different than market-timing. "

I don't think you understand event drive investing. This is a common mode in actively managed funds - value, growth, or any other type. It is different from market timing. I previously referenced: news, earnings, product rollout, regulatory changes, mgmt turnover, M&A ... you could add competitors activities, trade treaties, etc. You will note that I did not mention market level or stock price. Event driven means exactly that, making decisions on events rather than just the stock price or market levels. It is making decisions based upon the fundamentals involving a specific investment. Market timing is something different, it refers to making decisions based upon valuation changes of a specific investment or the overall market. Event driven could trigger a change in portfolio when neither the stock nor the market moved. By their nature, events are not predictable (perhaps with the exception of earnings announcements which follow a schedule) and therefore the timing of investment decisions are not predictable. I sure hope you don't think that actively managed funds hold all investments for more than one year. Usually some portion of a portfolio, perhaps even a significant portion, will be event driven or opportunistic investing.


You have said: "You can convert back and forth from Roth IRA's to traditional IRA's...In any situation where your RothIRA value declines over a year, it is valuable to convert it to a traditional and then reconvert asap to a Roth. " You scheme is vaguely described and is indeed an administrative nightmare. You seem to be talking about current year contributions rather than Roth conversions. I do not believe under any ordinary circumstances a tax payer can make changes to prior years after the extended filing deadline is passed. Some brokerages are now charging for these kinds of current year transactions as a method to deter multiple processing on small asset accounts. You can not just flip back and forth Roth assets, which was your nonqualified statement. I am hoping that Barry or one of the accountants will respond further on the legality, applicability and practicality of you suggstion.

One CANNOT "convert" a Roth IRA into a traditional IRA. One is able, within income limitations, to convert a traditional IRA into a Roth IRA. One who has done such a conversion can, within certain time limits, RECHARACTERIZE that conversion and move the assets back into a traditional IRA. The statement "you can always turn them into traditional IRAs so you don't get stuck paying taxes on $3000 contributed that's now only worth $2000)" is false because you do not pay tax on the $3,000 BECAUSE it is contributed to a Roth IRA. You have already paid tax on the $3,000 simply because it was part of your income, and you do not get a tax deduction for a contribution to a Roth IRA. In other words, you will pay tax on the $3,000 whether you contribute it to a Roth IRA or stick it under your mattress.

If one qualifies for a tax deductible IRA contribution, one can contribute money into a Roth, and if it declines, recharacterize it as a traditional IRA contribution, and take the income tax deduction. The limitation of this strategy is that it assumes any decline will come within the time period for doing the recharacterization. However, what happens if you contribute $3.000 to the Roth, it rises to $4,000, and then after the deadline for recharacterizations the value falls to $2,000? Or, suppose you contribute $3,000 to the Roth, it falls to $2,000, you move to the traditional IRA, convert it back into the Roth, and then, after the deadline, it falls to $1,000.

There are a lot of legal games you can play, if you are willing to take the time and trouble. But they only work if the investments behave the way you want them to in the allotted time period. The real world rarely works that way.

BPickerCPA writes:


To explain it a little bit clearer...For each year, you can contribute 3k to a RothIRA (increases to 5k in the next couple of years). Though that article is talking about traditional IRA to Roth's and then back again, information on Roth IRA => traditional IRA can be extracted from it. Aug. 15th is the deadline to recharacterize a Roth IRA to a traditional IRA, which is the 8th month of the year. In other words, you have 8 months from the time you contributed to the deadline for recharacterizing that contribution to a traditional IRA, and get the tIRA tax-deduction...if your investment goes down significantly, this may be a good choice.

* Depending on circumstance, you can get a tax-break for RothIRA contributions. Some individuals can get a tax-credit for a RothIRA contribution, traditional IRA contributions, and elective/voluntary contributions to other retirement plans, which -- though not equal to the amount contributed -- are still significant (I believe up to half of the contribution). If you file a 1040, it's line 49, the retirement savings contribution credit. Form 8860 can be used to determine if you can take a tax-credit for your RothIRA contribution. The restrictions on this tax-credit, though are prohibitive. AGI must be less than 25k, 37.5k, or 50k if single, head of household, or are married and filing jointly. You also can't take it if you were a student.

** I forgot to mention that this is from the 2002 forms. The rules will probably be similar for the 2004 forms, but it's worth it to check. With Bush in office, we've received a number of generous tax-gifts.

John G write:


Ok, I thought when you said event-driven, you were referring to stock-price movements. (they do have an impact on when to buy, but it is usually the inverse of what most people use...if a stock price drops). There are also some dangers to event-driven moves. For example, while many will move stock out of a company experiencing a strike, that is often the optimal time to invest in it (because a strike is a temporary event). There is also a danger when people respond to events they have no understanding of.

The SCO vs. IBM lawsuit is a perfect example. I don't think it's had any affect on IBM's stock (IBM could buy out SCO for what would be the equivalent of a few cents to them, and this lawsuit is at most a nuisance). However, the lawsuit has had an enormous impact on SCO's stock-price, which has risen almost 6-fold. But, anyone who understands the lawsuit knows that it is completely bogus and has no merit what-so-ever (I won't go into the nasty details of that). SCO's just blowing smoke in a last-ditch desparation effort to avoid bankruptcy (because, if you know their company and the industry they're in, you know that they have no product that's worth using and no business model other than lawsuits). This little example only illustrates that one should really thoroughly know something about the company one's investing in and it's industry. Now, does this little tidbit of knowledge allow me to make a good investment? No. IBM's stock has not been affected by this bogus lawsuit, and since I don't understand how Linux companies make money, I can't invest in any of them that may have been hit by the suit. But, at least I can avoid SCO's stock, which is inevitably going to collapse when the market in general realizes that this lawsuit is bogus (certainly, this will happen in a couple of years when the suit is laughed out of court, but maybe earlier).

PS: I don't know what's up with this post. Sorry about it. I continue having issues with posting on this board (mostly because it uses some wierd non-html standard, with [url] instead of <a>. I'll clean up this mess when I have time.

dh,

James Lange's article does a much better job of explaining what HE'S saying. While your post might be alluding to the same strategy, your verbiage is NOT stating the same thing he is. Your response about "majority of the year" and the statement "remaining part between the time that you can't recharacterize and the time you have to file taxes" clearly shows that you do not understand the Roth rules. Enough said!