The Motley Fool Discussion Boards
Financial Planning / Tax Strategies
|Subject: Re: Roth IRA, WHEN?||Date: 1/22/1998 10:52 AM|
|Author: TMFTaxes||Number: 1436 of 125707|
[[Roy, After receiving my W2, I noticed that a military officer is considered (for tax purposes) a
pension plan participant? So I reviewed the Armed Forces IRS Pub and sure enough this is the
case. In June I opended a traditional IRA, and maximized my 97 contribution. 1) Is that
contribution non-deductible because I do not itemize or becuase I am considered to have a pension
It is possible that your regular IRA contribution is non-deductible, but that will be based upon your Adjusted Gross Income level...and nothing else. If you are covered by a pension plan, IRA deductiblity depends upon your AGI. If you are a single person, with AGI greater than $25k, your regular IRA deduction will be limited. If your AGI is greater than $35k, your regular IRA will be completely non-deductible. For additional information on regular IRAs, check out IRS Publication 590 at the IRS web site.
[[ 2) When I phoned the company which handles my IRA about conversion, they stated I would
have to open a Roth under a distinctly separate account, however I could contribute to either
account or both but not to exceed 2K. Your post contridicts this by saying I can only contribute to
one in any tax year. Am I understanding correctly that I can maintain both a traditional and Roth
version and is 98 the only year I can role this a non-roth to a roth?]]
Well, I wasn't there when you called your broker. But I can tell you (and, I believe, the post also notes) that you have only $2k to deal with. It can ALL go to a regular IRA. Or it can ALL go to a Roth IRA. Or it can be split up between a regular IRA and a Roth IRA. The decision is yours regarding annual $2k contributions.
Finally, you can (assuming you otherwise qualify) to rollover your regular IRA to a Roth IRA in any year beginning in 1998. But rollovers that take place in a year AFTER 1998 will not be allowed the special "break" to spread the taxable income over a 4 year period.
SPECIAL NOTE: I try to answer as many questions as I can each week, and I generally select those that have not been asked before. If you don't get a detailed answer to your question, it is probably because my time is so limited during tax season, or because it has already been asked and answered in this folder in the past, or because it has been discussed in the Taxes Frequently Asked Questions area. In order to visit the Taxes FAQ area, go to the Fool's School area (http://www.fool.com/school.htm) and check out "Other Features" in the list box, OR you can jump directly to the Taxes FAQ area (http://www.fool.com/school/taxes/taxes.htm). Additionally, if any references were made to the IRS Web Site, you can get there by pointing your web browser to (http://www.irs.ustreas.gov)
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