FiGuide » IRA Center

What Happens When You Over Contribute to Your Roth IRA?

Jim Blankenship, CFP®, EA — Thu, 29 Jul 2010 19:06:46 +0000

If you intentionally over-fund your Roth IRA, above the amount that you’re allowed to contribute for the tax year. The tax law allows you to remove the excess contribution by October 15 of the year following the year of contribution. If you do not remove the excess contribution (and the gains associated with it) by that point, you will be subject to a 6% excise tax on the excess contribution until the situation is rectified.

Using Capital Gains and Losses With a Roth IRA Conversion

Jim Blankenship, CFP®, EA — Thu, 22 Jul 2010 10:37:37 +0000

Many analyses done with respect to Roth IRA conversions only come out to a positive outcome when the attendant tax on the conversion is paid from non-IRA sources. For many folks this shoots down the entire prospect, as there is no available cash outside of IRAs and other investments to use to pay the tax on the conversion.

Should You Separate Your Rollovers From Your Contributory IRAs?

Jim Blankenship, CFP®, EA — Thu, 08 Jul 2010 11:27:14 +0000

For the most part, it is often recommended to merge all of your IRA money together into a single account, to simplify record-keeping, allocation, and paperwork in general. However, there may be circumstances where it could make very good sense to separate your contributory IRAs from 401(k) plan rollovers – and it pertains to creditor’s rights. If you look at the article Creditor Protection for Retirement Plan Assets, you’ll see that IRAs in general have protection from creditors in the case of bankruptcy, up ...

Avoid the RMD When Rolling Your IRA into a 401(k)

Jim Blankenship, CFP®, EA — Wed, 30 Jun 2010 12:18:38 +0000

In a recent article I pointed out a few additional reasons that might make you want to rollover your old 401(k) plan into an IRA – but there are also good reasons, in particular circumstances, that it might make sense to move your IRA funds into a 401(k) plan. One of those reasons might be [...]

More reasons to keep on rolling (to an IRA, that is)

Jim Blankenship, CFP®, EA — Wed, 23 Jun 2010 12:56:59 +0000

We have discussed in the past that it is usually better to rollover an old 401(k) plan from a former employer to an IRA – more flexibility in investments, (usually) lower costs, more control, etc., are among the chief reasons to do so. However, in some cases your old 401(k) plan may have access to desirable [...]

Why a Roth IRA Conversion May Not Be Right For You

Troy Von Haefen, CFP® — Tue, 08 Jun 2010 22:00:26 +0000

The Roth conversion topic has certainly dominated headlines, articles, and blog posts in 2010, but part of the story may be missing. A Roth conversion may not be the wisest financial move for some. Most of the reports regarding this conversion have touted the benefits, and little has been written about the negative affects to a Roth conversion. Roth Conversion and College Planning An ill-timed Roth conversion can dampen financial aid prospects for some college bound students. The most important year for ...

Over-Contributed to Your IRA? Here’s What You Can Do

Jim Blankenship, CFP®, EA — Fri, 04 Jun 2010 14:39:38 +0000

Even with our “best laid plans”, sometimes we make mistakes. Perhaps you underestimated your income for the year and contributed more to your IRA than could be deductible; maybe you rolled over an amount that was not eligible for rollover; or maybe you made a contribution to an IRA that you were not eligible to contribute to, such as an inherited IRA. Whatever the case, you’ve over-contributed money into an IRA and need to take action, otherwise you can be setting yourself up for ...

Roth Conversion Analysis – Make Sure You Get the Tax Right

Jim Blankenship, CFP®, EA — Sat, 29 May 2010 12:43:46 +0000

There are almost as many ways to perform the analysis on Roth IRA conversions as there are reality TV shows about celebrity brat children these days… The point of this article is to make certain that any calculation you’re doing with regard to a Roth Conversion treats the tax appropriately. In reviewing whether or not a [...]

Beware of this Roth IRA Conversion Tax Wrinkle

Jim Blankenship, CFP®, EA — Mon, 17 May 2010 12:57:35 +0000

Some very clever folks have looked at the 2010 Roth IRA conversion facts, including the ability to spread the tax over tax years 2011 and 2012, and have discovered a unique situation… What would happen if I did the Roth conversion in 2010, elected to be taxed half in 2011 and half in 2012, but [...]

Could a Roth IRA Conversion Affect a Student’s Financial Aid?

Curtis A Smith, CFP® — Fri, 30 Apr 2010 15:30:00 +0000

An underreported story. In 2010, we have a wave of IRA owners converting traditional IRAs to Roths. There are all kinds of compelling reasons to make that move. Yet for some IRA owners, the Roth IRA conversion may have an unintended consequence: it may reduce their son or daughter’s chances for college financial aid.