One of the most effective ways to accumulate a large retirement nest egg is to start young. And no age is too young. In fact, the younger the better. Even a one year-old can make an IRA, or better yet, a Roth IRA, contribution as long as they have earned income – perhaps as a model in a Gerber Baby Food commercial. In reality though, most people don’t start contributing to retirement accounts until much later on in life.
Last week I said that some taxpayers may be forced to take funds from their Roth IRA to pay the income tax due on a Roth IRA conversion. Yes, you can take money out of your Roth IRA. Generally there is no income tax due on a distribution, but if you are under age 59 ½ you may owe the 10% early distribution penalty. Here’s the way it works.
We have discussed the importance of an IRA beneficiary form at length. You should always know where a copy is for yourself and make sure your financial advisory team has a copy on hand as well. Also, you must make sure the beneficiary form is current to reflect your financial wishes (who is getting what).
Individuals who did Roth conversions in 2010 and took advantage of the opportunity to spread the income over 2011 and 2012 are now faced with the tax bill for income that must be included on their 2011 tax returns. Many are now having second thoughts or are having difficulty coming up with the funds to pay the tax.
This week's Slott Report Mailbag includes questions about converting an employer-based 401(k) to a Roth IRA, the use of trusteed IRAs and what to do if you want to make an IRA contribution from money you earned at the end of 2011, but didn't receive until 2012.
This is the final part of a two-part article examining six options individuals have for their retirement plan benefits when they leave an employer or become their own boss. In the first part, we covered three options (rolling over to a Traditional IRA, taking a lump sum distribution, leaving it in the plan). We finish our guide with the last three options and provide some closing words of wisdom when considering which choice is best for you.
Some of the trickiest IRA situations involving the Roth IRA 5-year rules. We receive questions about them constantly with each situation just a little bit different than the others. In this week's Slott Report Mailbag, we answer questions on the 5-year rules as well as an inquiry about Roth 401(k) transfer provisions.
It is time to examine six options individuals have for their retirement plan benefits when they leave an employer. At some point in their lives, most workers will find themselves in this situation and they need to be as adequately informed as possible in order to make the best choices for themselves and their families. Click to read more about these options.
IRAs and tax season go hand in hand. Below are a list of the most popular IRA tax-related questions we have been receiving over the last month or so. Make sure you are up to speed on what you can and can't do to get the most out of your tax return, and in turn, your retirement planning.
This week's Slott Report Mailbag includes questions (and our answers) on the Roth IRA conversion limits, Roth recharacterizations and paying tax on a 2010 Roth conversion, and how a spouse should handle an inherited IRA.
