JAMES PATRICK

You are correct in that you do not pay taxes on a contribution to a Roth account. And you fill out Part 2 for the conversion and pay taxes on the conversion.

If the T/P closes all Roths than $1300 would be listed as loss on Schedule A subject to 2% of AGI. However since T/P is not eligible to contribute, than AGI would most likely be too high to use the loss.

Just a response to the bit about Money giving out a return and finding that no one got it right. Because they are journalists do you believe "they" knew what the "right" answer was? Or is it that their "expert" never makes mistakes! There is a Tax Court that is needed to settle disputes between the IRS and tax payers. Sometimes the IRS wins , sometimes they lose. Sometimes Courts in different sections of the country come to totally different answers, so the "correct" answer depends on where you live, not who does your taxes.

Assuming the $2000 contribution was made to an account that was opened for the 2001 contrib and no other transactions were added to it you have 2 options: 1. Close the account before 4/15/2002, when your tax return is due, and pay no taxes or penalties. 2. Recharacterize to a non-deductible. Based on income over $160,000 you would not be able to use the $800 loss since it would be way below 2% of AGI, unless you had a lot of misc deductions and then phaseouts may kick in. You can't "pick" as you seem to indicate (wish) karlg3.

What you are suggesting is a recharacterization of each year but the dates to do that have passed, so NO you can't transfer earnings without tax consequences.

Since you are OVER 50 you can contribute $3500 this year. Deductiblity, of course, depends on filing status and AGI.

If an individual inherited a Roth and took it ALL before the account was open 5 years than there would be taxes on the earnings . Once the account is Qualified than NOTHING will be taxed when it is withdrawn.

At a Bank or a Brokerage firm and Insurance co as well.

The fact that you can save a commission on a stock should NOT be a major factor in including it in a Roth. That is penny wise and .......... Besides you could end up with a whole lot of small accounts which could all of a sudden start charging fees not so small in relation to your balances.

File a 5329 for 2000 and pay the 6%, you didn't pull it out by 4/15/2001. Also report the earnings from it on an Amended 2000 tax return. report the 2001 earnings on your 2001 tax return.

You recharacterize $2000. If you withdraw $1200 and close the account and it is the ONLY Roth you have, than you have an $800 loss reportable on Schedule A subject to 2% of AGI. It is the FMV on the day you withdraw NOT 12/31/2001.

Best way to handle this? Do nothing! You now have a $2000 non-deductible IRA. Just send in an 8606 for 1999 listing the $2000 as non-deductible.

My question would be " when you filled out the form to do the transfer did you give TD the account number of your regular taxable account ?"

YES However, there are rules that may reduce the amount eligible for consideration if you have taken ANY withdrawals from your IRA or Roth in the year of the credit AND the TWO years prior AND any withdrawals up to the time your tax return is due. 39 1/2 months.

If your contributions were non-deductible and totaled $20,000 than you aren't missing anything.

YES

I am not sure what it is you are trying to do. First you are right that it is too late to do a conversion for 2001. She is eligible to contribute $2000 to a Roth or Trad IRA this year for 2001. It makes no sense to me to put it in a TIRA and then convert to a Roth, so for the 2001 contribution put $2000 in a Roth. She will have $4000 in a TIRA any part of which she can convert to a Roth this year, as well as contribute $3000 for a Roth for 2002. To summarize, if she has $5000 available to her she can put it all in a Roth on Monday, $2000 for 2001 and $3000 for 2002. She can also convert from her TIRA to a Roth $1k or $2k or $3k or the entire $4k. She would only owe taxes on the conversion amount.

Your wife can CONVERT $3000 of Traditional to Roth (provided your joint AGI is not in excess of $100,000) this year. As you are aware the conversion means she will have to pay taxes on that amount, provided it was a deductible IRA. You said recharacterize $3000 but from your post it appears she made no contribution in 2001 so there is nothing to recharacterize but if there was for 2001 it would be limited to $2000. Since she did not make a contribution for 2001 she is still eligible to contribute $2000 as a Roth contribution for 2001 (up until 4/15/2002) as well as a $3000 Roth for 2002 (until 4/15/2003).

The I in IRA stands for Individual. You can not open a "family" IRA because they don't exist. So if you wish to contribute $6000 to a Roth "as a family" you must do it in an separate account for each of you of $3000. Reminds me of that old saying "The family that saves together......" or am I in the wrong Church?

While I don't know the exact requirements I can tell you that they report contributions to you AND the IRS on form 5498 and they also report distributions to you AND the IRS on form 1099.

If your MAGI is below $150,000 than you can contribute $2000 to either a non-deductible or Roth or in any combination as long as it does not exceed $2000. Your wife can contribute $2000 to a deductible or Roth, or in any combination as long as it does not exceed $2000. If you are between $150k-$160k the amounts for deductible or Roths would be lower.

You can only use $3000 of capital losses to offset ordinary income, which is what a conversion would be.

She is NEVER required to take Minimum required Distributions from HER Roth account. She can continue to contribute to a Roth provided she has earnings from wages, salary,alimony,etc. There is NO age limit for contributions to a Roth.

Provided your MAGI is less than $150,000 AND your wife does not have ANY pension plan these would be the answers: 1. $2000 non-deductible 2. $2000 Roth ( your max to both is $2000 total) 3. $2000 deductible OR $2000 Roth. Next year the amounts for each of you would increase to $3500, depending again on your Magi and whether or not she is an active participant in a pension plan.

I think you mean when is the last day to contribute to a Roth for 2001, and that would be 4/15/2002.