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Author: RBMunkin Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 294  
Subject: Roth 401K contribution limits Date: 3/11/2006 1:28 PM
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Hi
I'm having a hell of a time finding a simple straight forward article on the Roth 401K. Does anyone know where to simply find out the maximum contribution limits? I know $15K is the max for 2006 but does that have to be based on income? Is it limited to one's total income or can one contribute $15K even if they have litte or no income?
Any one?
Thanks,
RB
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Author: TurkeyBreath Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 180 of 294
Subject: Re: Roth 401K contribution limits Date: 3/11/2006 7:39 PM
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I'm having a hell of a time finding a simple straight forward article on the Roth 401K. Does anyone know where to simply find out the maximum contribution limits? I know $15K is the max for 2006 but does that have to be based on income? Is it limited to one's total income or can one contribute $15K even if they have litte or no income?

Your Roth-401k must come from earned income as defined by our IRS. It cannot come from savings, dividends, capital gains, etc. More importantly, in order to contribute into any 401k your employer must set it up with an approved custodian. I suppose, if you are self-employed you can be it's administrator and set it up with an approved custodian.

If I can copy a recent article from AAII, I shall forward it via TMF e-mail to your e-mail. You may want to check your personal e-mail this week end.

Good luck,

TB



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Author: TurkeyBreath Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 181 of 294
Subject: Re: Roth 401K contribution limits Date: 3/11/2006 7:56 PM
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...If I can copy a recent article from AAII, I shall forward it via TMF e-mail to your e-mail. You may want to check your personal e-mail this week end...

Sorry, it's copyright material. I shall respect that. However, TMF did a TAKE article on it not too long ago.

Good hunting,

TB


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Author: RBMunkin Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 182 of 294
Subject: Re: Roth 401K contribution limits Date: 3/11/2006 7:58 PM
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Thanks TB. I appreciate it. I assumed it had to come from earned income but I thought I saw something to the contrary. But I can't remember where I saw that. I think I misread it.
Thanks,
RB

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Author: TurkeyBreath Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 183 of 294
Subject: Re: Roth 401K contribution limits Date: 3/12/2006 3:01 PM
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RB,

You may want to down load free from www.irs.gov Publications 525 and 560. Here's a short take from our IRS.

What's New for 2006
Qualified Roth Contribution Program. For tax years beginning after December 31, 2005, your 401(k) plan may allow you to contribute to a qualified Roth contribution program. Under this program, you can designate all or a portion of your elective deferrals as after-tax Roth contributions. Elective deferrals designated as Roth contributions must be maintained in a separate Roth account. However, unlike other elective deferrals, designated Roth contributions are not excluded from your gross income but qualified distributions from a Roth account are excluded from your gross income. Elective deferrals. Under a Roth contribution program, the amount of elective deferrals that you may designate as a Roth contribution is limited to the maximum amount of your elective deferrals excludable from gross income for the year ($15,000 for 2006, $20,000 if age 50 or over) less the total amount of your elective deferrals not designated as a Roth contribution. Qualified distributions. A qualified distribution is a distribution that is made after the nonexclusion period and:

When you are 59 1/2 or over,

Because you are disabled, or

On or after your death.

The nonexclusion period is the 5-tax-year period beginning with the earlier of the following tax years.

The first tax year in which you made a designated Roth contribution to any designated Roth account under the same plan.

If a rollover contribution was made to your designated Roth account from a designated Roth account previously established for you under another plan, then the first tax year you made a designated Roth contribution to your previously established account.

Rollovers. A distribution from your designated Roth account can only be rolled over to another designated Roth account of yours or a Roth IRA of yours. Rollover amounts do not apply toward the annual deferral limit.


Good hunting,

TB



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