Which IRA–and How Much can I Invest now for 2012
I retired in July 7, 2012. I received lump sum from 1 pension for $16,000, I did not invest or roll this into an IRA, another pension to $468/Month. This extra income, plus Social Security put me in the 25% bracket. What can I do now? How much can I put in an IRA now and which one?
Thank you!
Permalink Submitted by Alan - IRA critic on Tue, 2013-04-09 21:22
Since you apparently participated in a retirement plan in 2012 and are in the 25% bracket, your modified AGI is too high to deduct a traditional IRA contribution and reduce your tax bill. If you were NOT a participant at any time in 2012, nor married to a participant, then you can deduct a max contribution of 6,000.
Permalink Submitted by Beverly Kleptach on Tue, 2013-04-09 21:42
If I roll over $8,000. of my profit sharing distribution into another IRA, will it now be considered as non-taxable income?
Permalink Submitted by Alan - IRA critic on Tue, 2013-04-09 22:57
A rollover must be completed within 60 days of receipt of the distribution. I took it that you received the 16,000 last year and therefore 60 days has passed. Had you rolled over an amount it would have reduced your taxable income.
Permalink Submitted by Beverly Kleptach on Wed, 2013-04-10 01:18
What would you do with the $16000. now?
Permalink Submitted by Alan - IRA critic on Wed, 2013-04-10 02:10
Since you cannot roll it over, if you don’t need it for current living costs, you should invest it in a taxable account.