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Author: KATinChicagoland Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75776  
Subject: Re: Roth IRA Date: 6/2/1998 5:11 PM
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<<If I'm wrong in that reasoning, I'm sure KAT in Chicagoland will set the record straight.>>

Golly, am I really all that picky??

I don't have any corrections but a couple of added comments.

One is that if the idea of contributing and then rolling was to get a $4,000 deduction in 1998 and spread the income over four years, the withdrawal will cause all the income to be taxable in 1998, nullifying the deduction.

And the other is that if the earnings are negligible, it might be better to simply pull everything out of the IRA under the rule in technical corrections that lets you take money out (with any earnings) by the return due date and treat it as if it hadn't been contributed. Why do this? For one thing, you may be able to preserve the right to make a 1998 IRA contribution again later in the year (or early 1999) if cash becomes available after the closing on the house. For another, it preserves the $10,000 lifetime cap on amounts that can be taken out of an IRA for first-time homebuyers. Maybe you'll never need it, but you never know. It's a thought anyway, but I won't be sure it works until we see tech corrections. Note, though, if there are earnings, going this route will mean a 10% penalty on that part of the withdrawal.

Kaye Thomas, author
Fairmark Press Tax Guide for Investors
http://www.fairmark.com
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