BPickerCPA

Paying off student loans does NOT qualify for the penalty exception for higher education.

First of all, you can contribute $3,000 starting this year, income permitting. That amount is scheduled to increase in future years. Second of all, withdrawals of roth earnings for higher education costs will also be penalty free, but not income tax free. I don't think it's proper for this forum to tell you if you SHOULD do it. Factually, you COULD do it. The decision is yours to make, either alone or in conjunction with your personal financial planner.

If you (or anyone) contributed to a traditional IRA for calendar year 2001 and now decides that you would have preferred to have contributed to a Roth IRA, you can "recharacterize" the contribution along with applicable net income, and the law will treat it as if it had been contributed to the Roth IRA in the first place. Unfortunately, there are still some custodians who are not aware of this, so if someone tells you that you can't, speak to a higher-up.

There are murmurings that the new tables will be issued when the final regs come out, which should be in about a month.

There are no minimum or maximum age restrictions on setting up a Roth IRA. All you need is earned income and total income not over the income limitation. If your son has earned income you can set up a Roth for him. Your income does not come into play for the limitation. Not every custodian will set one up for a minor, so look around.

I also vote with John.

I've seen this done many times, and it usually gets screwed up. The QTiP trust is usually not a good vehicle for an IRA. If the intention is to distribute the IRA outright to the spouse, you have to get a ruling to permit it. One could have just named the spouse as beneficiary and avoided the problem.

Assuming you're talking about Roth IRAs, annual contributions can be withdrawn at any time without tax or penalty.

You legally can. For practical reasons I advise keeping them separate until after all recharacterization deadlines have passed.

Just do it!

Innate intelligence? It's my interpretation of the rules. It's other experts' interpretation of the rules. It's the IRS' interpretation of the rules. Other than that, I have no clue.

What you may be thinking of is the inability to cherry pick the recharacterization, i.e. only move winners while taking advantage of losers, or vice versa.

You can't contribute to a traditional IRA but you could contribute to a Roth IRA if you have earned income and your income is not over the limit.

If you contribute $2,000 to a brand new TIRA, you can then recharacterize that entire account later as a Roth contribution. If you contribute $1,000 each to two TIRAs, you can recharacterize one and not the other. Ditto if you contribute $500 to four accounts. You can do this in reverse, and make the contributions to Roth accounts. For example, if you contribute $500 to a brand new Roth, and it falls to $300, you can recharacterize it to a TIRA and still get a $500 deduction (if you qualify for the deduction). If you contribute $2,000 to a TIRA and it grows to $4,500, you cannot recharacterize $2,500 to a Roth and still keep a $2,000 deduction. If you recharacterized $2,500, you contribution would be reduced ratably (25/45).

April 15, 2002

You cannot recharacterize the conversion if the conversion was proper when made. As for closing the account and deducting losses, see my article on this subject on my web site, www.bpickercpa.com. My guess is that it won't pay to do so.

You have filed form 8606 with your tax return for the year or years that you made non-deductible IRA contributions. When you do the conversion, you will file form 8606 (a different portion of the form) which will make sure (if filled out correctly) that you do not pay tax on the amount of non-deductible IRA.

You thought wrong. Converted money can't be withdrawn for five years or until 59½, whichever first occurs.

Not if you're under 59½ when you take the withdrawal.

The answer is, It HAS to be because that's what the IRS says it is. In the scenarios that I had envisioned back in 1998, the individual would have kept the MRD in the traditional IRA, converted the balance, and then in the following year they would take the MRD. So the MRD was never suppose to be eliminated. The IRS won't change the position because the law will change in 2005 so the MRD won't count towards the $100K AGI conversion limit. Barry

I've heard it's possible that the IRS will issue such a ruling, but if they have, it hasn't yet been published and you have "inside information" (PLRs are published around 3 months after they are issued, so the taxpayer and their atty or CPA know about it before the public does). I would advise people to try to get such a ruling for their own situation.

Why are you asking us? It looks like this is headed for Court, so any conjecture on our part is worthless. What the custodian should do in any case when there is a dispute as to the identity of the beneficiary, is to wait for a settlement or a Court decree. The last thing the custodian needs is to become part of the suit due to an allegation that the account was improperly disbursed. Having said all that, my (worthless) opinion is that the girlfriend should be able to prove the intent of the decedent to name her as the bene. The SS # should clinch it. Barry

How much money is involved? It may to get an IRS private ruling that the invalid recharacterization can be reversed. Otherwise, I agree with TaxWoman.

Corrected. Sorry.

The IRA is taxed to the named beneficiary, not the estate. If the estate has NO income then there is no need to file a tax return.