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My husband and I are recently retired, and each of us has an IRA. It's too late in our lives to be worth changing those to a Roth. But, we are now selling lots off our farm, and wonder if we may invest some of that money in a Roth, if it's unearned income. We don't anticipate needing the money for several more years.
Thanks for any knowledgeable assistance,
beckj
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Beckj asks:

My husband and I are recently retired, and each of us has an IRA. It's too late in our lives to be worth changing those to a Roth. But, we are now selling lots off our farm, and wonder if we may invest some of that money in a Roth, if it's unearned income. We don't anticipate needing the money for several more years.

Sorry, but the short answer is "No." Unless you have earned income (i.e., salary, wages, commissions, self-emploment income, alimony or separate maintenance payments), then the income you derive from the sale of farm lots is ineligible for use as the basis for a contribution to any type of IRA. The only time you could use it would be if you were engaged full time in the sale or purchase of real estate for profit. For details, see IRS Publication 590, Individual Retirement Arrangements, available for download at http://www.irs.gov/formspubs/lists/0,,id=97819,00.html

Hope that helps.

Regards...Pixy
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I will celebrate birthday 66 this month. I retired four years ago.
My principal sources of retirement income are a life annuity [paid for by my employer of forty years] and social security. I have no present need to draw from my traditional IRA which is invested in aggressive growth stock mutual funds as a hedge against inflation which will reduce the value of the life annuity.

I have been on a program of converting some of my traditional IRA balances to Roth IRA balances each year. This is because I may be around for another twenty or thirty years so I think it is a good idea to pay the "ordinary income" taxes now in the hope that the "never taxed" accumulated earnings on the Roth investments are significant by the time I need to spend them.

Roth funds do NOT count for the "minimum distribution" rules applicable to people older than 70.5 years with "traditional" IRAs. The earnings between the time I pay the taxes on the converted funds until I draw them are NEVER taxed [under present law which of course the greedy [expletives deleted] in Congress can change any time.
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Author: johnb1662 Date: 11/14/03 2:51 PM Number: 37833
I have been on a program of converting some of my traditional IRA balances to Roth IRA balances each year.

How have you been doing this?

I thought that you had to convert the entire Traditional IRA to a Roth IRA all at one time or not at all.

Russ
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rkmacdonald:

johnb1662: <<<<I have been on a program of converting some of my traditional IRA balances to Roth IRA balances each year.>>>>

"How have you been doing this?

I thought that you had to convert the entire Traditional IRA to a Roth IRA all at one time or not at all."


I have never been aware of any such requirement.

Regards, JAFO

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