| Author |
Message |
DSF
Guest
|
 Posted:
Mon Oct 24, 2005 8:00 am Post subject:
Roth IRA - Capital Gains and Phase out contributions questio |
|
|
Ok, maybe I am just not seeing something with the way the
IRS has their rules written for a Roth IRA. Lets say you
have contributed $4,000 to your Roth IRA by August 2005 thus
maxing out the contribution for tax year 2005. Then in
December 2005 you had a sale of an investment property
(rental home) and thus have a large capital gain that puts
you over the Roth IRA contribution phase out limits.
According to the IRS the Roth IRA phase out says:
"...The amount you may contribute to a Roth IRA is gradually
reduced if your modified adjusted gross income is between
$95,000 and $110,000 (between $150,000 and $160,000 if you
are married and file a joint return, and between $0 and
$10,000 if you are married, lived with your spouse and file
a separate return)...."
So what happens now? The IRA trustee will send the IRS info
about your contributions and then the IRS could/will see
that your MAGI will be at or above the phase out limits. Do
you have to withdraw the excess contribution(s) before April
15th of next year? I guess maybe the other option is to
just take a penalty if it is not too great a hit on your
investment returns.
Thanks!
<< ======================================================= >>
<< The foregoing is intended for educational purposes only >>
<< and does NOT constitute legal OR professional advice. >>
<< >>
<< The Charter and the Guidelines for submitting >>
<< messages to this newsgroup are at www.asktax.org. >>
<< Copyright (2005) - All rights reserved. >>
<< ======================================================= >>
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David Woods, EA, ChFC, CL
Guest
|
| Posted:
Wed Oct 26, 2005 8:00 am Post subject:
Re: Roth IRA - Capital Gains and Phase out contributions |
|
|
"DSF" <df190765@hotmail.com> wrote:
| Quote: | Ok, maybe I am just not seeing something with the way the
IRS has their rules written for a Roth IRA. Lets say you
have contributed $4,000 to your Roth IRA by August 2005 thus
maxing out the contribution for tax year 2005. Then in
December 2005 you had a sale of an investment property
(rental home) and thus have a large capital gain that puts
you over the Roth IRA contribution phase out limits.
According to the IRS the Roth IRA phase out says:
"...The amount you may contribute to a Roth IRA is gradually
reduced if your modified adjusted gross income is between
$95,000 and $110,000 (between $150,000 and $160,000 if you
are married and file a joint return, and between $0 and
$10,000 if you are married, lived with your spouse and file
a separate return)...."
So what happens now? The IRA trustee will send the IRS info
about your contributions and then the IRS could/will see
that your MAGI will be at or above the phase out limits. Do
you have to withdraw the excess contribution(s) before April
15th of next year?
|
Yes.
| Quote: | I guess maybe the other option is to
just take a penalty if it is not too great a hit on your
investment returns.
|
It isn't a one time penalty. It's a recurring penalty until
you remove the excess contribution.
--
David M. Woods, EA, ChFC, CLU
Woods Financial Services
Norwood, MA 02062
www.woods-financial.com
<< ======================================================= >>
<< The foregoing is intended for educational purposes only >>
<< and does NOT constitute legal OR professional advice. >>
<< >>
<< The Charter and the Guidelines for submitting >>
<< messages to this newsgroup are at www.asktax.org. >>
<< Copyright (2005) - All rights reserved. >>
<< ======================================================= >> |
|
| Back to top |
|
|
Phil Marti
Guest
|
| Posted:
Wed Oct 26, 2005 8:00 am Post subject:
Re: Roth IRA - Capital Gains and Phase out contributions que |
|
|
"DSF" <df190765@hotmail.com> wrote:
| Quote: | Ok, maybe I am just not seeing something with the way the
IRS has their rules written for a Roth IRA. Lets say you
have contributed $4,000 to your Roth IRA by August 2005 thus
maxing out the contribution for tax year 2005. Then in
December 2005 you had a sale of an investment property
(rental home) and thus have a large capital gain that puts
you over the Roth IRA contribution phase out limits.
|
You can either withdraw the excess contribution and the
earnings on it or "recharacterize" it as a traditional IRA
contribution. Details are in IRS Publication 590.
--
Phil Marti
Clarksburg, MD
<< ======================================================= >>
<< The foregoing is intended for educational purposes only >>
<< and does NOT constitute legal OR professional advice. >>
<< >>
<< The Charter and the Guidelines for submitting >>
<< messages to this newsgroup are at www.asktax.org. >>
<< Copyright (2005) - All rights reserved. >>
<< ======================================================= >>
|
|
| Back to top |
|
|
Barry Margolin
Guest
|
| Posted:
Wed Oct 26, 2005 8:00 am Post subject:
Re: Roth IRA - Capital Gains and Phase out contributions que |
|
|
"DSF" <df190765@hotmail.com> wrote:
| Quote: | Ok, maybe I am just not seeing something with the way the
IRS has their rules written for a Roth IRA. Lets say you
have contributed $4,000 to your Roth IRA by August 2005 thus
maxing out the contribution for tax year 2005. Then in
December 2005 you had a sale of an investment property
(rental home) and thus have a large capital gain that puts
you over the Roth IRA contribution phase out limits.
According to the IRS the Roth IRA phase out says:
"...The amount you may contribute to a Roth IRA is gradually
reduced if your modified adjusted gross income is between
$95,000 and $110,000 (between $150,000 and $160,000 if you
are married and file a joint return, and between $0 and
$10,000 if you are married, lived with your spouse and file
a separate return)...."
So what happens now? The IRA trustee will send the IRS info
about your contributions and then the IRS could/will see
that your MAGI will be at or above the phase out limits. Do
you have to withdraw the excess contribution(s) before April
15th of next year? I guess maybe the other option is to
just take a penalty if it is not too great a hit on your
investment returns.
|
You're supposed to withdraw the excess contributions.
--
Barry Margolin, barmar@alum.mit.edu
Arlington, MA
<< ======================================================= >>
<< The foregoing is intended for educational purposes only >>
<< and does NOT constitute legal OR professional advice. >>
<< >>
<< The Charter and the Guidelines for submitting >>
<< messages to this newsgroup are at www.asktax.org. >>
<< Copyright (2005) - All rights reserved. >>
<< ======================================================= >> |
|
| Back to top |
|
|
Phil Marti
Guest
|
| Posted:
Thu Oct 27, 2005 8:00 am Post subject:
Re: Roth IRA - Capital Gains and Phase out contributions que |
|
|
"DSF" <df190765@hotmail.com> wrote:
| Quote: | Ok, maybe I am just not seeing something with the way the
IRS has their rules written for a Roth IRA. Lets say you
have contributed $4,000 to your Roth IRA by August 2005 thus
maxing out the contribution for tax year 2005. Then in
December 2005 you had a sale of an investment property
(rental home) and thus have a large capital gain that puts
you over the Roth IRA contribution phase out limits.
|
You can either withdraw the excess contribution and the
earnings on it or "recharacterize" it as a traditional IRA
contribution. Details are in IRS Publication 590.
--
Phil Marti
Clarksburg, MD
<< ======================================================= >>
<< The foregoing is intended for educational purposes only >>
<< and does NOT constitute legal OR professional advice. >>
<< >>
<< The Charter and the Guidelines for submitting >>
<< messages to this newsgroup are at www.asktax.org. >>
<< Copyright (2005) - All rights reserved. >>
<< ======================================================= >> |
|
| Back to top |
|
|
David Woods, EA, ChFC, CL
Guest
|
| Posted:
Thu Oct 27, 2005 8:00 am Post subject:
Re: Roth IRA - Capital Gains and Phase out contributions |
|
|
"DSF" <df190765@hotmail.com> wrote:
| Quote: | Ok, maybe I am just not seeing something with the way the
IRS has their rules written for a Roth IRA. Lets say you
have contributed $4,000 to your Roth IRA by August 2005 thus
maxing out the contribution for tax year 2005. Then in
December 2005 you had a sale of an investment property
(rental home) and thus have a large capital gain that puts
you over the Roth IRA contribution phase out limits.
According to the IRS the Roth IRA phase out says:
"...The amount you may contribute to a Roth IRA is gradually
reduced if your modified adjusted gross income is between
$95,000 and $110,000 (between $150,000 and $160,000 if you
are married and file a joint return, and between $0 and
$10,000 if you are married, lived with your spouse and file
a separate return)...."
So what happens now? The IRA trustee will send the IRS info
about your contributions and then the IRS could/will see
that your MAGI will be at or above the phase out limits. Do
you have to withdraw the excess contribution(s) before April
15th of next year?
|
Yes.
| Quote: | I guess maybe the other option is to
just take a penalty if it is not too great a hit on your
investment returns.
|
It isn't a one time penalty. It's a recurring penalty until
you remove the excess contribution.
--
David M. Woods, EA, ChFC, CLU
Woods Financial Services
Norwood, MA 02062
www.woods-financial.com
<< ======================================================= >>
<< The foregoing is intended for educational purposes only >>
<< and does NOT constitute legal OR professional advice. >>
<< >>
<< The Charter and the Guidelines for submitting >>
<< messages to this newsgroup are at www.asktax.org. >>
<< Copyright (2005) - All rights reserved. >>
<< ======================================================= >> |
|
| Back to top |
|
|
Barry Margolin
Guest
|
| Posted:
Thu Oct 27, 2005 8:00 am Post subject:
Re: Roth IRA - Capital Gains and Phase out contributions que |
|
|
"DSF" <df190765@hotmail.com> wrote:
| Quote: | Ok, maybe I am just not seeing something with the way the
IRS has their rules written for a Roth IRA. Lets say you
have contributed $4,000 to your Roth IRA by August 2005 thus
maxing out the contribution for tax year 2005. Then in
December 2005 you had a sale of an investment property
(rental home) and thus have a large capital gain that puts
you over the Roth IRA contribution phase out limits.
According to the IRS the Roth IRA phase out says:
"...The amount you may contribute to a Roth IRA is gradually
reduced if your modified adjusted gross income is between
$95,000 and $110,000 (between $150,000 and $160,000 if you
are married and file a joint return, and between $0 and
$10,000 if you are married, lived with your spouse and file
a separate return)...."
So what happens now? The IRA trustee will send the IRS info
about your contributions and then the IRS could/will see
that your MAGI will be at or above the phase out limits. Do
you have to withdraw the excess contribution(s) before April
15th of next year? I guess maybe the other option is to
just take a penalty if it is not too great a hit on your
investment returns.
|
You're supposed to withdraw the excess contributions.
--
Barry Margolin, barmar@alum.mit.edu
Arlington, MA
<< ======================================================= >>
<< The foregoing is intended for educational purposes only >>
<< and does NOT constitute legal OR professional advice. >>
<< >>
<< The Charter and the Guidelines for submitting >>
<< messages to this newsgroup are at www.asktax.org. >>
<< Copyright (2005) - All rights reserved. >>
<< ======================================================= >> |
|
| Back to top |
|
|
DSF
Guest
|
| Posted:
Mon Nov 07, 2005 1:00 am Post subject:
Re: Roth IRA - Capital Gains and Phase out contributions que |
|
|
Thanks for the info! I should have read Pub 590 but did not
realize the IRS had a pub specifically for IRA's.....
<< ======================================================= >>
<< The foregoing is intended for educational purposes only >>
<< and does NOT constitute legal OR professional advice. >>
<< >>
<< The Charter and the Guidelines for submitting >>
<< messages to this newsgroup are at www.asktax.org. >>
<< Copyright (2005) - All rights reserved. >>
<< ======================================================= >> |
|
| Back to top |
|
|
financetaxes5
Joined: 30 Jan 2008
Posts: 1
|
| Posted:
Wed Jan 30, 2008 10:55 am Post subject:
tax planning |
|
|
| By depositing funds in an IRA or contributing to your 401(k) through work you are reducing your taxable income. Be sure you are maximizing your contribution to earn the greatest employer match. The benefits being the income on assets in the IRA or qualified plan are deferred until the withdrawal is made. |
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