Do I have to report a roth IRA contribution?

[Guest iranovice]

Please help...After I had already mailed my 2002 taxes, my dad told me that he made a $3000 contribution to my Roth IRA for me and that I would need to file an ammended tax return to make sure that the contribution is reported. I don't know much about the IRA because he is the one who set it up for me and makes the contributions. I know the contribution won't make any difference in what I owe on the taxes, but my dad says he is afraid that if it's not reported it may cause problems down the road when it's time to withdraw money from the IRA. I really don't want to go through the trouble of filing an ammended return, so I was wondering if anyone could tell me if it's really necessary to report the contribution. I get the impression that you only have to report a contribution if you're also doing a conversion.

[Appleby]

IRA,

Roth IRA contributions are not reported on your income tax return.

However, you should keep a record of your contributions and other Roth IRA transactions so that you can properly account for the Roth IRA balance. This will prove to be invaluable , should you make a Roth conversion or chose to take a distributions from your Roth IRA that does not meet certain requirements

For information on Roth IRA distributions see the post at the following URL http://benefitslink.com/boards/index.php?a...ST&f=18&t=19127

[Guest Therese James]

I am trying to find out if California has passed legislation to be in compliance with the Federal gov't in allowing contributions of $3000.00 per year per individual along with the $500. for people over age 50

[Appleby]

Yes. California is a conforming state- see the URL below

http://www.americanbenefitscouncil.org/doc...update72602.pdf

[txdd]

iranovice,

It's nice for your dad to make that gift, but you should also check to make sure you are eligible.

Did you have at least $3000 EARNED income in 2002? That's W2 wages or net self-employment income.

Was your adjusted gross income less than the Roth IRA limit for your filing status? $95,000 single, $150,000 married filing jointly, $0 married filing sepaately for the full $3000.

Did you contribute to any traditional IRA for 2002? The $3000 limit applies to the total Roth and traditional contributions.

[John G]

Your dad has a gotten you started in the world of investing. The above comments are on target. I will add only that from this day on you need to spend to learn about investing. Sounds like your dad made the first choice which is just fine. But, over time you need to learn how to manage your own funds. A good start is to spend 1 hour each month reading one general investing magazine like Kiplinger, Money or Worth.

Your dad would probably appreciate time spent with you to talk about the investment choice he made. Your local library has some good general guides to investing... maybe you should check one out, read it and leave it on the coffee table for dad to see on Father's Day.