John G

I did a Roth conversion many years ago that involved a depressed stock. At that time, the valuation was supposed to be set as of the date of conversion. Oddly enough, the brokerage screwed this up...in part because the stock did not actually trade on the date they market the conversion. It did trade every day of the week when the conversion request was submitted. At the end of the year, the brokerage posted the price as of the conversion as the year end price. I disputed that and got a conversion date price based upon the last known trade. Hope that helps.

"i would like to know that is investing in stocks is also taxable" Investing where? Here is the short answer: Roth IRA - - investments in a Roth currently do not incur taxes when the assets are sold or when the funds are distributed at retirement time IRA - - investments in a standard IRA are not taxed when sold, however IRA distributions are treated as ordinary income (I am over simplifying this answer) Non-retirement investing - - taxes occur when an asset is sold for a gain, and two different rates apply depending upon if the assets are held for more than 1 year (long term) or less than 1 year (short term - gain is treated as ordinary income)

You need to consult your divorce lawyer.

And...if the kids are listed as secondary beneficiaries, the wife may elect not to take the full amount and pass on some to the kids. Of course, this assumes the guy dies first - something Warren Buffett assumed and two years ago his first wife died. I agree, this is more an estate planning issue than a Roth conversion issue.

Congress may change the tax rules and the no income limit will disappear. I would not do a lot of planning right now based upon the current rules. A very large conversion could push you to a higher tax bracket - probably the single biggest issue. Second concern is can you pay the taxes from non-IRA funds. If not, some of the mathematical benefits disappear. I would expect tax rates will either stay about the same or increase in future years. But that's just my crystal ball...and it often misses unexpected events. You may want to consider a hybrid solution ~ partial conversions often get you a big benefit without maxing the short term tax consequence.

Cross the Rubicon ~ you got the reference correct. It means you have acted or committed and can no longer unravel what you have done. The Rubicon is a river in Italy. The law was designed to protect the current regime...you could not bring your legions into Rome. - - - Getting a written opinion of an attorney or accountant is sometimes only a start. What if they are wrong. Did there opinion give them an "out"...are you covered by errors and omissions insurance? There are a lot of folks that thought an extended warranty by Chrysler was a fine thing. Well, that depends, doesn't it. I have an attorney in town that no longer will set up a settlement based upon assets held by a single bank or insurance companty. He nows takes the total and divides it into 3 or better yet 5 packets. Its a way to manage client risk. Ten years ago he assumed that insurance company ratings and FDIC coverage was all he needed to know. And, he made that change in his practice years before Enron, AIG, Leyhman and Bear Stearns.

401K.....wrong board. This is the Roth/Ira board. I see some differences between a personal contribution type of retirement mechanism and something that is driven off of salaries and may include skyrocketing corporate stock. Witness the recent comments about executive pay being sometimes 300x higher than the average worker - way above historical norms. [And for all that wonderful pay, we get a bunch of execs who endorse business plans like sub-prime bundling that they don't even understand....but don't get me started about folks getting big bucks to make mistakes and walk away.] 300x is likely to direct the scrutiny to the AGI, Bear, Lehmen, World Com, Enron crowd. I don't see the link to Roth IRAs.

Public opinion in deed! Congress can change the rules. Remember, the Roth was and expansion of the IRA concept. However, with the Roth, Congress made a "social contract" with citizens. They explicitly declared that Roth distributions were tax free. To change that would be a huge rip in the social contract. Congressman would lose elections over that one.

Real Estate dealings that involve IRAs or Roths are sort of the black hole of accounting. First, they are extremely rare. Second, most custodians won't let your go anywhere near there because they want easy accounts and want to avoid any exposure to law suits. If you are relying upon accounting, legal and tax advice on real estate transactions in an IRA/Roth from an interenet message board, I think you have crossed the Rubicon. If you can't find an accountant or tax attorney that actually has experience in this area in your home town, then I suggest you don't undertake the transactions. We occasionally get posts about real estate. Most of them seem to have special circumstances or "arrangements" that raise lots of issues with accountants. If all you wanted to achieve was some portfolio diversification, you have other ways to reach that goal thru mutual funds, REITS, etc.

It sounds as if you have a direct connection with a mutual fund company for your Roth. That's clearly one option. Often a fund is part of a "family" of funds and you can open a second fund at the same company. Another fund option is to place your Roth $$ with a Etrade, Schwab, Fidelity or other brokerage. Generally, brokerages give you connections to hundreds if not thousands of mutual funds (their own and others). So, you can have one account but have multiple holdings or portfolio pieces. This can be convient for some, and sometimes you can reduce the annual fees....although most reputable firms have responded to market pressures by keeping fees low.

OK, I have a very good reply given what you have said..... Call for an appointment with the senior rep of Raymond James in this office. Go down and have a wonderful chat with him/her. Tell the senior rep that his office is giving very bad advice concerning the transactions with a Roth IRA - to wit, that they incorrectly imply that taxes are owed on contributions. Since you are bringing this inaccuracy to his attention in a discrete fashion...spring the trap and ask him to waive all the fees for you to close the account. Afterall, you are not charging them for being a "secret shopper" and finding out their training program with regard to Roths is deficient. If that does not work, you might (again, discretely) ask for directions to the downtown office of the newspaper or perhaps the local TV station. Something about having an appointment with the consumer affairs reporter. (it would help to have the persons name in advance) Then suggest that they have been pestering you about information on a story about how former automotive workers are getting the shaft. If you don't overplay your theatrical roll, I think you will find that your account closing fee will be graciously waived. Most business people recognize that a irritated and motivated customer who feels abused has about - 10x the impact of a single pleased customer. A negative experience will be told many times. A good experience is rarely told even once. Like most businesses, RJ has internal data on how much they spend to snare a new customer. Add up the time, postage, printing costs, advertizing, etc. I would not be surprised if they spend $100 to snag a newcustomer. If I were running an RJ office, I would gladly give up your $100 fee to avoid the negative publicity that your could generate by just telling your story. Who wants to open an account at RJ when they don't even know the basic rules of a Roth? - - - - Now if that doesn't work. Try this. Get three friends from your former auto worker days. Make three hand lettered signs of complaint about excess fees, mis-representation of taxes, bum investing advice. Go down to the main office and slowly walk back and forth in front of the RJ office. Wave to everyone. Don't look angry. If a PR type from the RJ office approaches you, say that you are expecting a TV reporter for a sidewalk interview and ask if he would like to stick around and answer questions. Now, if you get your account closed, and the $100 fee waived.....you will owed your buddies a lunch. - - - - From what you have said of your story, you have a great resource right now....TIME. Use it strategically. - - - - Don't assume that FEES are really fixed. They are not. Folks get fees waived all the time. Sometimes just because they ask. Sometimes because they have significant assets. Often it is simply good business to sweeten the pot by making a big deal of something you give away.

I am surprised that there are not other defaults than spouse on an IRA or Roth plan. WARNING to GENERAL READER: This is a good example of what happens when you don't keep beneficiary designations current. Every divorce, death, birth, disowning of a child, college graduation, loss of job, etc. might trigger a circumstance where the IRA owner should reconsider the beneficiaries. What dumb cluck set up this account and did not establish a set of secondary beneficiaries? The second in line only applies if the first tier has died, OR declines to accept all or part of the assets. Yep, declines to accept all or part. In this case, if the wife had survived, she might have passed on some fraction or all of the IRA assets to the secondary beneficiaries. This "toggle" should be well known to every IRA/Roth owner. There are some folks who hate see the government get involved in their personal affairs and yet leave the door wide open by not keep current beneficiaries on IRAs, annuities, pensions, or insurance, don't keep a will current, or fail to pay attention to the actual title ownership of real estate. Well, you can't make the horse drink...but perhaps we can point out the problem.

Direct often means a rollover from one custodian to another at your request, but you never touch the assets or the check. This is the preferred method of rolling funds from one custodian to another. I think here you mean directly moving from an IRA to a Roth. This is not technically a rollover, but rather a conversion. Conversion rules apply. There are income and tax filing limitations. Taxes may be due...but keep an eye on what rules apply in what time periods as the laws change. You can also do a rollover from a Roth to another Roth. Direct here means custodian to custodian and you don't touch the funds. No tax issues here, no penalty. Some custodians may charge fees, but often the new custodian will reimburse you for these if you ask. Also worth noting, you can rollover into an IRA say from a plan. Then do some partial conversions when the tax impact works for you. Its not an all or nothing decision, you can do conversions in steps. However, you must qualify in each year you undertake a conversion.

Gees, I wonder where you have placed these funds and who is giving information. 1. You can withdraw all contributions from a Roth at any time without a tax consequence. There is no 10% penalty as far as the IRS is concerned, nor any taxation on the contributions. You might have to pay tax on the earnings if they exceed your original contributions ~ which probably isn't the case. 2. You can rollover a Roth, directly from one custodian to another, at any time. Often the receipient will reimburse you for any fees that the first custodian wants to stick you with. 3. There may be rules governing the actual investments you own: CD terms, early exit clauses, back end loads on mutual funds. If this is the case, try to appeal to them based upon your circumstances. Many companies will void special fees if customers just ask. Some have exceptions for folks that lose their jobs for example, or change employers. 4. If you close out all of your IRA/Roth accounts (not just cherry pick a few) and can show a net loss, you can claim that loss on your tax returns. Its a little complicated, but if this is your absolutely only IRA/Roth, you may be able to write off a loss if your exit dollars are less than your original contribution. If all of the above fail to address your specific issue, post again. Maybe we missed something unique to your situation. You will find that most public libraries have a range of books for the layperson on how to invest, buy mutual funds, open a Roth, etc. If you read something in three different books, its probably correct. You learn a lot by reading and can avoid the common biases of the marketing side of brokerages, banks and funds. Everyone involved in investing tends to have a "what were you thinking" story. Me too.

The valuation of standard options is pretty easily determined by looking at the last trade price in the options market. Very common options trade every day. But, some options that are far "out of the money" may not trade frequently. If you can't find the last transaction price readily, ask your brokerage to assist. You will have a bigger issue if these are not standard issued options - that is options of a major publicly traded company. I would be surprised that a brokerage would allow you to hold such investments in either an IRA or Roth.

Real estate investing via a Roth presents lots of issue.....do a key word search on real estate on this message board to get more info. Many custodians just won't let you touch this. Some custodians put limits on the extent of international investing they allow. Reasons: part paternal attitude, part realistic marketing to less complicated handling, part concern about regulatory issues and compliance. Also, you say you are a newbie....newbies should not be investing in more complicated investments before they thoroughly understand basic investing. Real estate, commodities, options.....you don't start learning how to invest there. International investing has its own issues: unreliable information, currency exchange swings, government intervention (whoops, we have that here too!), civil strife, etc. It is easier to find info and make decisions on investments in the developed world. India is an emerging company and has lots of upside, but I sure hope you are not putting all your eggs into one basket. Finally....if you insist. You can invest internationally and in real estate, by seeking any of the following: ETFs - exchange traded funds - there are many that focus overseas and or have narrower economic focus such as by sector or industry. You get some diversification. REITs - real estate investment stocks - these trade on the stock market and pass out dividends. They are more diverse than an individual investment. Mutual Funds - you can find international exposure, but you would have to search to find anything that has substantial real estate exposure.

Eric, mea culpa! I should have looked at the reporting procedure before making my suggestion. I stand corrected about the better way to handle this. Now if only someone who knows the software would post!

Some of folks above either did not understand the circumstances or do not understand the Roth rules. The original post talked about withdrawing contributions. Subsequent posts by this original author indicated this was from a ROTH account and did not involve a Roth conversion. Let me refer to IRS Publication 590 on IRAs. Under the Roth topic "Are Distributions Taxable" (page 65 in my 2007 version)... the very first sentence: "You do not include in your gross income qualified distributions or distributions that are a return of your regular contributions from your Roth IRA(s)." So, if your Roth contributions equaled or exceeded 20K, then you can remove 20K without penalty or tax. There is no 5 year rule that applies. There is not age test. There are no penalties. A contribution can withdrawn at any time, for any reason. (ok, let me say "reluctantly withdrawn", because its not easy to put the same funds back in) I unfortunately can not solve your software problem. Check how your custodian treated the removed funds. You could say zero for distributions, then attach a letter to your return indicating that you had a Roth transaction but it was exempt from taxation because it was a withdrawal of contributions....in other words a work around for the software.

Nothing really rotten or insulting, "earned income" is just tax jargon for income related to wages and some kinds of self employment. I find it unfortunate that the IRS code (which is a work of Congress) has a lot of stange distinctions... social security, interest, dividends, capital gains, gifts (a function of size), hedge fund income, long term vs short term, foreign vs domestic, military vs non..... to name just a few. You could start a whole new list for variations in how deductions and exemptions are handled: medical, primary vs secondary home, charitable, taxes paid locally, etc. Hey and lets not forget the business world: per-diam treatment, distinctions by class/weight of vehicle, variations in write-down schedules as a function of what kind of equipment, etc. No legislative/accountant version of George Patton has emerged to do much to simplify the tax code. But, I digress and rant on the issue of tax simplification (which is not the same as being in favor of a flat tax). Roth and regular IRA have the same criteria concerning income that can be used to justify contributions. PS: Unemployment payments also don't count as earned income.

Partial answers: Qualifications to make a Roth contribution is based upon "earned income" which for most people means a paycheck. Part-time or full-time status is irrelevant. Some kinds of self employed income may qualify. You can contribute the lesser of the maximum contribution allowed for that year OR your earned income. Even if you have zero earned income, you can make contributions based upon your spouses earned income. Earned income does not include interest, capital gains, dividends, gifts, and inheritances. You do not have to fund a Roth at the max amount, if you have 4K in earned income you could decided to contribute any amount up to 4K. Note, your children can qualify for a Roth based upon part-time work such as newspaper routes and summer jobs. There is no minimum age rules that govern when a child can have a Roth. Some custodians don't want to handle child Roths, but that's a different issue and I digress..... Don't think of conversions as some magical event that always works in your favor. You have to run the numbers based upon many scenarios. If you have a year with very low income, you might be able to do a Roth conversion and pay very little tax. You provided no information about your current tax bracket or the amount of funds involved. While you can post again and get some feedback, I highly recommend that if significant funds are involved that you talk to your accountant or tax advisor who knows more about you circumstances. The accountants here can respond about tax forms.

In general..... 1. Shop around. Information above may not be current. In prio years, economic pressure forced account fees and custodial fees down. In the 2009 market climate, that might change. 2. ASK ! I found that many institutions will waive fees if you just ask. Retirement funds tend to stay in one account for a long time. Institutions love retirement money and fight to get it. 3. Use you personal leverage - low fees are common when total assets at an institution are significant. While you want to choose a home for retirement accounts where your investment choices meet your needs, I would start shopping at institutions where you already have some kind of relationship. 4. Don't sweat small fees. This can be like focusing on a splinter when you are trying to build a deck. Keep you eye on the overall goals of your retirement plan. Starting early, making your contributions and choosing your investments are far more significant.

Everything MJB said, plus feel free to mention the name of the organization. No financial organization should ignor correspondence or unduly delay responding to a standard request. One possible reason for the delay may be that this company has slashed its administrative personnel and requests may be piling up....that's not an excuse, but might be a factor. You might also consider contacting a consumer advocate - - your local newspaper, the TV station or one of the national magazines like Money or Kiplinger that have columns devoted to consumer problems. The NY Times, Newsweek, and WSJ all have columnists that love to find a great story. In my experience, nothing motivates a company more than shining a bright spotlight on bad practices. Most companies understand that a paragraph of bad press (especially when the facts are solid, and the average consumer would relate to the dispute) can neutralize a millions in advertizing with cute animals, comic household scenes or other Madison Avenue concocted "dramas".

The most restricted set of rules are those developed by your custodian. Note, they may be more restricted than what the IRS might allow, but unless you change custodians, or your custodian modifies their rules, those are the restrictions you live by. Call your custodian and ask for the IRA department. Don't speak to the lowest level clerks that man the counters are are the first folks who answer the phone...they may not be aware of the subtle differences in IRA/Roth policies. The "back office" IRA desk will have handled this question before and can answer your questions. For example, at Schwab, you will probably be talking with someone in San Francisco at their IRA desk. I have been told that some brokerages, such as Etrade, try to keep you from finding out the phone number of their "back office" which if I recall is in St Louis, MO, you have to be persistent.

You can contribute to your Roth (up to maximum for this year) as long as your income equals or exceeds that amount. If you and your wife (in any mix of amounts) contribute to Roths, then your combined contribution must be covered at least by a combined income of that amount. Note, the contributions can be made now even if the income occurs later. Dividends, interest, gifts, etc. are not "earned income" and therefore do not factor into these calculations.

Lots of folks have self directed Roths that involve stocks, bonds and mutual funds. The custodian for these types of funds produces and Dec or Year-end statement that shows the valuation as of the end of the year. Perhaps you are refering to a Roth that has outside investments like hedge funds, thinly or non-traded stocks, or some type of real estate investment. Hedge funds will give you a year end statement of value. Thinly or non-trading stocks present a much tougher problem - you might need an appraisal or perhaps the company has some internal guidance as to their assumptions about the value of the stock. (For example, you leave an employee owned company, and while you still have their stock in your portfolio...ussually you must liquidate or cash in the shares before you leave. Real estate holdings...also very rare in a Roth...may require a third party appraisal. I have never quite figured out why the IRS requires a year end accounting. It seems to be purely a "Census" type figure since I don't see any relationship to taxes. The Federal government does mandate some minimum level of portfolio performance, so there is no problem if the assets go up and then down. Perhaps some of our accountants can comment on why this is part of the tax code. I have three clarifying questions: (1) who is requiring this data by the 15th? (2) what type or class of assets are in the account. (3) do you want year end valuation or the valuation as of Jan 15th (is this related to a divorce?)