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Financial Planning / Tax Strategies


Subject:  Re: true? Date:  7/5/2012  10:29 AM
Author:  TMFPMarti Number:  116397 of 123001

Suppose that I am over 59.5, I have earned income and make an allowable contribution to my Roth. Moreover, the Roth has been in existence for over 5 years. Now, I can have make qualified distributions from Roth.

Let's ignore the contribution, which muddies the qualified distribution issue. Once you're 59 1/2 and it's more than 5 tax years since your first Roth contribution to any account, all disributions from any Roth account are qualified. For life.

OK. Now suppose that I make one of these contributions to my Roth. I use those funds to buy 100 shares of XYZ. But within a matter of months (or maybe 2 or 3 years), I sell the 100 shares of XYZ and have the proceeds sent to me. Wouldn't that count as a qualified distribution?

Yes, but again, all the who shot John about what you did within the Roth is totally irrelevant.

Here's my personal money laundering experience from a couple of years ago. At the time I was over 59 1/2 and my Roth was more than 5 years old. Since I was not covered by a retirement plan at work, traditional IRA contributions were deductible at any income level. After I prepared my 2009 return in March 2010 I found, to my distress, that I was $5,900 and change over the top of the 15% bracket. I noted that I had--just barely--$6,000 of earned income for 2009. I had $6,000 in my savings account, but I was going to need it during the year. So...

Monday: Did an electronic $6,000 2009 contribution from my savings account to my traditional IRA.