Roth Ira deposits

[Guest D Boyd]

I am over 50 and an active employee. I was told I need to double the amount of my total monies in a new Roth Ira (approx. $2,100) and send it to the IRS by 4/17/07, so the amount would be allowable for sure. Is this true? I thought there was no yearly minimum deposit. Also, can one still put monies into a Roth Ira if they retire early, until they desire to take them out? (after the 5 yr. non-distribution period of course)

[John G]

Whooaa nellie!

Now this is a strange post. Who told you? I sure hope you are not being drawn into some kind of scam. Don't give any money to anyone until you post some clarifications. If you are really talking about a Roth, someone is seriously misleading you.

You never send money to the IRS for a Roth. All funds must be deposited with a custodian, which is a legal entity (such as a bank, mutual fund or brokerage) that can act in a fiduciary capacity for you.

The IRS rules determine if you are eligible and the maximum you can contribute for each year. It is up to you to decide what to contribute. You could be eligible to the max and contribute zero. You can not exceed you annual maximum. You can make one payment, monthly payments or any number of payments as long as you don't exceed your maximum. For example, if you are under the age of 50 and have "earned income" over $4,000 (payroll typically, not interest capital gains or dividends) you can contribute $4,000 for 2006. Since you are over age 50, you can contribute $4,500 for 2006, as Congress gives you a "catch up option". The max amount is the smaller of your earned income or the annual maximum.

You can add to your Roth after you retire only if you have earned income. Same rules apply. So, if you take a part time job (like a summer camp counselor) that would allow you to continue to fund your Roth. There is no five year period associated with contributory Roths, nor are there any mandated distribution formulas.

Do you already have a Roth? Are you single or married? Is this somehow related to a company matching program or a spousal IRA? Does this have something to do with a minimum initial deposit established by a custodian?

You left me scratching my head over what is behind your post. Please post again.

[Guest younger91]

Since you are over age 50, you can contribute $4,500 for 2006, as Congress gives you a "catch up option". The max amount is the smaller of your earned income or the annual maximum.

$5,000 for persons 50 or older for tax years 2006 and 2007

There is no five year period associated with contributory Roths, nor are there any mandated distribution formulas.

I'm guessing he's referring to the rule that he has the Roth for at least 5 years and is 59.5 years old before the gain becomes tax free.