Message Font: Serif | Sans-Serif
 
UnThreaded | Threaded | Whole Thread (7) | Ignore Thread Prev Thread | Next Thread
Author: Pogona Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121219  
Subject: IRA question Date: 4/16/2001 10:12 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 1
I found out very late that I do not qualify for a Roth IRA even though I funded it early in the year never imagining I would go over the limits. Limits alow only $240 in my situation. What is the best way to get the rest out of the Roth assuming I will not break any limits this year. Is applying it to 2001 the best ? I filed an extension, and ran out today to fund a traditional IRA for 2000. All done in haste since I discovered the Roth problem yesterday. I think I've got a mess. Any ideas would be appreciated.
Print the post Back To Top
Author: pmarti Big funky green star, 20000 posts Home Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 50383 of 121219
Subject: Re: IRA question Date: 4/16/2001 10:25 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 4
I found out very late that I do not qualify for a Roth IRA even though I funded it early in the year never imagining I would go over the limits. Limits alow only $240 in my situation. What is the best way to get the rest out of the Roth assuming I will not break any limits this year. Is applying it to 2001 the best ? I filed an extension, and ran out today to fund a traditional IRA for 2000. All done in haste since I discovered the Roth problem yesterday. I think I've got a mess.

Made worse by acting in haste. Maybe you'll start dealing with your taxes on April 13 next year?

You've made $4,000 of year 2000 IRA contributions, when your limit is $2,000. Here's what I recommend:

1. See if you can change the contribution made today to a year 2001 contribution. This depends on the good graces of your custodian. I suggest going in person, pleading stupidity, and moving up the food chain until you find someone who'll do it for you.

Step two will depend on the outcome of step 1. Let us know how that turns out, and we can then advise of your options with respect to the Roth. Any damage has been done and won't be made worse by taking your time to fix things calmly.

Phil Marti
VITA Volunteer

Print the post Back To Top
Author: Pogona Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 50390 of 121219
Subject: Re: IRA question Date: 4/17/2001 10:52 AM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 1
Message received ! However, don't I still HAVE to move out that 2000 Roth which will leave no 2000 contributions ?

Print the post Back To Top
Author: Charlie48K Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 50393 of 121219
Subject: Re: IRA question Date: 4/17/2001 12:27 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 1
Actually, I don't think you have as bad a problem as you might think. Excess contributions can be withdrawn by the due date of the return, including extentions, without penalties. Except your trustee might charge you a fee. See Publication 590 p33 Excess Contributions Withdrawn by Due Date. Make shure the interest is withdrawn.

The Roth IRA can by recharacterized to a non-deductable IRA, again it needs to be done by the due date including extentions. Pub 590 p 41 shows you how to do that.

At least that's how I read the rules.

Print the post Back To Top
Author: pmarti Big funky green star, 20000 posts Home Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 50394 of 121219
Subject: Re: IRA question Date: 4/17/2001 12:44 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 9
However, don't I still HAVE to move out that 2000 Roth which will leave no 2000 contributions

No. That misconception is what got you into the mess that you're in.

I'm going to put this as gently as I know how. I'm not the one who messed things up, and I haven't the time, patience, or energy to be second guessed. Take my advice or don't, but I'm done explaining until I have something new to tell you. Most everything I'll tell you can be confirmed in Publication 590.

I'll repeat. Go see if you can get the contribution you made yesterday treated as a year 2001 contribution. The success or failure of that determines what your options are with respect to the Roth.

Phil Marti

Print the post Back To Top
Author: Pogona Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 50431 of 121219
Subject: Re: IRA question Date: 4/19/2001 12:30 AM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
Actually, I don't think you have as bad a problem as you might think. Excess contributions can be withdrawn by the due date of the return, including extentions, without penalties. Except your trustee might charge you a fee. See Publication 590 p33 Excess Contributions Withdrawn by Due Date. Make shure the interest is withdrawn.

The Roth IRA can by recharacterized to a non-deductable IRA, again it needs to be done by the due date including extentions. Pub 590 p 41 shows you how to do that.

At least that's how I read the rules



I decided to seek the professional advice of a CPA. She advised exactly as above since the Roth excess contribution needed to be withdrawn.

Thanks to Charlie48K and pmarti for your advice.

Print the post Back To Top
Author: pmarti Big funky green star, 20000 posts Home Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 50432 of 121219
Subject: Re: IRA question Date: 4/19/2001 1:56 AM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 1
I decided to seek the professional advice of a CPA. She advised [recharacterization] since the Roth excess contribution needed to be withdrawn.

What about the traditional IRA contribution that you made Monday? That still needs to be resolved somehow, or you have a $2,000 excess contribution.

Phil Marti



Print the post Back To Top
UnThreaded | Threaded | Whole Thread (7) | Ignore Thread Prev Thread | Next Thread
Advertisement