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Author: babyfrog Big red star, 1000 posts Old School Fool Home Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75654  
Subject: Re: Roth IRA question. Date: 4/27/2004 6:34 PM
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Belgoboy,

When you add money to or take money out of an IRA, it has to be cash. So when that day comes, you might have to sell a stock or a bond to make a withdrawl, or you might have enough cash from dividends or interest payments to make those withdrawls without having to sell.

As for who or what keeps you from making excess contributions to an IRA, its our good old friends at the Internal Revenue Service. Your IRA was opened under your social security number. Every year, the brokers are required to report IRA contributions and withdrawls to the IRS. Those reports are linked to an investor's social security number. If an investor contributes too much to an IRA, and if the IRS catches it from those reports, the IRS will send a bill for the "Excess Contribution" tax.

-Chuck
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