UnThreaded | Threaded | Whole Thread (2) | Ignore Thread Prev Thread | Prev | Next | Next Thread
Author: Respectable Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75383  
Subject: More IRA questions Date: 2/3/1998 9:42 AM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
My understanding
of the taxes on converting the traditional IRA into a Roth IRA is that
one pays taxes on the increase in value of the investment, not what the
person contributed, so it seems to me it would make a difference whether one opens and deductible traditional IRA and then converts it to a Roth or opens a Roth to begin with. Say I
contribute $2K to a tradional IRA this year and take the tax break next
April for this (putting about $560 in my pocket, while still having $2K
in my IRA, saying it neither increases nor decreases in value). Then,
say in May, I convert it to a Roth IRA...my understanding is that if
there has been no dividends paid or capital gains made in the
investment, you owe the IRS nothing for doing this, and if there is an
increase in value, you owe taxes only on this increase, not the original
$2K invested. Perhaps I am understanding something incorrectly?
Has anyone ever heard that a minor can make an IRA (not education IRA, but
a Roth IRA or traditional IRA) contribution of up to $2K of their earned
income (income earned outside of the home)? I read this is a Dec. 1997
magazine and again yesterday in a Neuberger IRA packet, but when I asked a broker at a seminar a couple weeks ago, he pointed
out that the kid would need a W2 to prove his income (which one doesn't
get by running a lemonade stand and doing chores for neighbors) and that
in MD, it is illegal for a child to sign a legal document, so they
legally can't open an IRA, and both points seemed to make sense to me.
Plus, I had never heard of anyone under 18 being able to contribute to
an IRA prior to this Dec. magazine, so I wondered if it might have been
a new change made at the same time as the Roth and Education IRA were
passed.
All for now. Thanks again so much for your help!
Cordially,
Respectable
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (2) | Ignore Thread Prev Thread | Prev | Next | Next Thread

Announcements

The Retire Early Home Page
Discussion on accelerating retirement day.
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement