roth IRA

Submitted by Edward W. Jew Jr. on Mon, 2015-10-05 12:30

Advice for a 56 yr. old man, single and with no pension plan, who has accumulated $60,000.00 in bank and S&L accounts. He now desires to create a Roth IRA. How much of his savings can he place in a Roth beginning this and each year thereafter? Being that his “savings” is after tax money, is there any Federal Tax Income Tax with beginning the Roth IRA?



Submitted by Alan - IRA critic on Mon, 2015-10-05 17:18

  • If he has earned income he can make regular Roth IRA contributions using up to 6,500 of that income. Without earned income by the the of 2015 he cannot contribute anything. There is also a maximum modified AGI (as defined) over which his ability to make the Roth contribution begins to be phased out at 116,000 of modified AGI.
  • There is no tax due for making eligible Roth IRA contributions, but he will not get the deduction he would have by contributing to a traditional IRA. Unless he has other assets than just 60,000 a deductible traditional IRA would be better for him in the long term since he will probably be in a lower tax bracket in retirement.

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