BPickerCPA

If there is no earned income then there can be no Roth contribution regardless of total income, unless the spouse has earned income and a joint return is filed. Even then the income limitations apply. Even if there is earned income, the income limitation is based on TOTAL income. Where did you see otherwise? It could be a typo. ------------------ Barry Picker, CPA/PFS, CFP New York, NY

The only drawback is the paperwork. You can save yourself some computational headaches by putting the annual roth contribution into a brand new account. When you're sure that it can remain a roth, you can then transfer it to the existing roth. ------------------ Barry Picker, CPA/PFS, CFP New York, NY

She would need earned income. Stock profits are NOT earned income. ------------------ Barry Picker, CPA/PFS, CFP New York, NY

Michael, You do NOT have to wait five years for a penalty free withdrawal for a first time home purchase. You can get that the very first day, as you can get any other penalty exception (medical, disability, death, et al). If you wait five years, you can get earnings tax free for a first time home purchase. Perhaps that was the confusion. ------------------ Barry Picker, CPA/PFS, CFP New York, NY

There is an age basis that allows a dependent to have more than $2750 of income and still be an exemption. It's 19 for a non student and either 23 or 24 for a student (I forget). Assuming you DON'T meet this benefit, you will lose the exemption based upon roth conversion income. ------------------ Barry Picker, CPA/PFS, CFP New York, NY

The IRA beneficiary designation will control. ------------------ Barry Picker, CPA/PFS, CFP New York, NY

You have 60 days to replace the amount. After that you cannot replace it. The 60 day rule applies to any money in the account. Even if you took earnings and replaced it within 60 days, there would be no tax. You can only do this once within 12 months. ------------------ Barry Picker, CPA/PFS, CFP New York, NY

I have an article on this on my web site at www.BPickerCPA.com. (I'd hyperlink if I knew how). ------------------ Barry Picker, CPA/PFS, CFP New York, NY

John, I've never seen a custodian willing to do it. I wouldn't trust them anyway. ------------------ Barry Picker, CPA/PFS, CFP New York, NY

The computation of earnings on excess contributions is governed by law and is stated in code sec 408, I believe subsection (d). So there shouldn't be a range of answers to the question. There should just be one answer. ------------------ Barry Picker, CPA/PFS, CFP New York, NY

Dear Mr. Martin, Put away your $100, no one can give you a legal way to deed the land to the Roth, because there is no legal way. The LAW says specifically that only money can be contributed. That's it, end of discussion. You also COULD NOT put the cash into the roth and then sell the land to the roth, since that is an act of self dealing that is also prohibited BY LAW. As an aside, if you could get the land into the roth, how do you propose to pay the real estate taxes? That money would have to come from the roth itself, and you could not contribute any more since you're limited to $2,000 per year. ------------------ Barry Picker, CPA/PFS, CFP New York, NY

I don't see any problem in what you posted. You put $4K into the Roth, $2K each for '98 and '99. ------------------ Barry Picker, CPA/PFS, CFP New York, NY

It's too late to correct a 1998 contribution. Refile the 1998 return to reflect that the contribution was to a roth IRA, and take it up with the broker. ------------------ Barry Picker, CPA/PFS, CFP New York, NY

You can freely move funds from one roth IRA to another roth IRA, or from one traditional IRA to another traditional IRA with no tax implications. If you do this via a trustee to trustee transfer (as opposed to a 60 day rollover), there is no limit on the number of times you can do it. ------------------ Barry Picker, CPA/PFS, CFP New York, NY

You have two choices. One is to withdraw the excess contribution AND the applicable income. If you do that you will pay tax and 10% early withdrawal tax on the applicable income. Second choice is to recharacterize the excess contribution AND the applicable income into a traditional IRA. This eliminates any immediate tax consequence. In either case you have to compute the applicable income, which is done by a formula described in the regs. You may have to pay a knowledgeable pro to compute it for you. ------------------ Barry Picker, CPA/PFS, CFP New York, NY

In the case of a "conversion", a traditional IRA can now be designated as a roth IRA. I know of no custodian that has not required a new account set up with a new account number, but theoretically a converted roth could be the same account as the traditional IRA. That being said, I suspect (and have no indication that this is the case, so consider this an OPINION) that the new, friendlier IRS will deem the transaction as a transfer to a traditional IRA followed by a conversion of that account to a roth. IN other words, they won't blow up the IRA. ------------------ Barry Picker, CPA/PFS, CFP New York, NY

Basically that's a personal decision. But keep in mind that the law can always be changed to raise either the maximum contribution, the income limits, or both. ------------------ Barry Picker, CPA/PFS, CFP New York, NY

In any year your AGI exceeds the limit, you cannot contribute to the Roth for that year. Each year stands on its own, so if you do NOT exceed the limit in a following year, you can again contribute to the Roth. ------------------ Barry Picker, CPA/PFS, CFP New York, NY

The IRA must be paid to the beneficiary of the IRA. Since that is the trust, the IRA gets paid to the trust. The trust then does what the trust needs to do. ------------------ Barry Picker, CPA/PFS, CFP New York, NY

You can roll it into a traditional IRA and take up to $10K for a qualified first time home purchase, penalty free. You will still pay income tax on the withdrawal. ------------------ Barry Picker, CPA/PFS, CFP New York, NY

You have a certain amount of flexibility, but the area is fraught with danger. If you use one account, you can only include that account in the computation and you can only take the money from that account. But you can move money prior to your starting. Once you start, you must continue taking the distributions until the LATER of age 59½ or five years from the start. If you take either more or less, you destroy that program, in effect, and all distributions previously taken become subject to the 10% early withdrawal tax. See a COMPETENT pro to help you set this up. As an aside, if the money you need is a one shot need, it may pay to just pay the 10% tax and let the rest of the IRA alone. ------------------ Barry Picker, CPA/PFS, CFP New York, NY

The recharacterization of the '98 conversion in '99 does not affect your '99 return and is not reflected on it, EXCEPT that any 1099R's you receive dated '99 should be reflected in line 15a of the '99 form 1040. ------------------ Barry Picker, CPA/PFS, CFP New York, NY

No additional form for the '98 conversion income reported in '99. ------------------ Barry Picker, CPA/PFS, CFP New York, NY

Michael, The withdrawals from the Roth for qualified education expenses will be PENALTY free, but not income tax free if you are under 59½. Barry ------------------ Barry Picker, CPA/PFS, CFP New York, NY

Each state is different, and you did not mention which state you file. Your post indicates you are from MI, which is a state I have no tax knowledge about. You really need to check with a local pro as to how your state handles the tax on Roth conversions. ------------------ Barry Picker, CPA/PFS, CFP New York, NY