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Posted by Tom on November 25, 2007, 8:21 pm
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> Tom wrote:
>> Hi, I hope I can get some answers to some investment/tax questions.
>>
>> I'm a Federal employee in my early sixties, Civil Service Retirement
>> System. Several years ago, I opened an IRA account with after tax dollars
>> and all money deposited into that account was after tax dollars. (I was
>> told as a Federal employee w/ CSR I had to set up an IRA using after tax
>> dollars) A couple of years later the ROTH became available and I opened a
>> ROTH account. I use Turbo Tax Deluxe to calculate my federal and state
>> income taxes, unfortunately Turbo Tax was no help instructing me how to
>> report deposits into the IRA I created w/ after tax dollars so I
>> contacted my broker and a local investment company but each gave me
>> different information. After tax season I went to the local IRS office
>> for advice but the advice was to read a couple of IRS booklets which
>> didn't address my situation.
>>
>> I want to convert some of my CDs to mutual fund investments and minimize
>> my yearly investment tax liability if that's a smart thing to do in my
>> case.( I may need the money from some of the investments within a few
>> years so I don't want to add anymore to my ROTH) If I open another
>> after tax IRA how do I report after tax deposits on my annual tax
>> return?
>> Why can't I open a pretax IRA (I also have a Federal TSP retirement
>> account)
>>
>> My original after tax IRA has been dormant for years because I didn't
>> want to make any deposits because of not knowing how report the deposits
>> to the IRS. There's not much left in this account because most of it was
>> wiped out during the dot.com bust.
>>
>> Hope you can read this one
>
> Sure can. (My wife is retired CSR and I have many clients like you.)
>
> First a definition. Don't confuse the TYPE of investments (cd, mutual
> funds, ) with the two IRAs. Each IRA may use different types of
> investments as funding mechanisms. For example I started my IRA with
> cd's, but rolled them over to mutual fund accounts when I saw the light.
The CDs are in a regular savings account and I want to traansfer them to an
IRA.
If I want to add cash to an IR do I add it has pretax money or post tax
money?
>
> So then, you simply find the right mutual fund for you and roll over that
> regular type IRA into it. then open another mutual fund ROTH and roll
> over what's in your present ROTH account.
>
> How's that for simplicity?
Pretty darn good but I'm a dunce. Do you know anything about pre tax and
post tax IRAs?
Do I need to use post tax money or can I use pre tax money to deposit to an
IRA?
When I opened my IRAs and ROTH nobody really seemed to know the rules for
CSR Federal employees.
>
> As for what's in your two IRA's, like Las Vegas, what happens in the
> account(s) stays in the accounts, iow, you don't report anything with you
> annual tax returns unless and until you start withdrawls.
OK, but I didn't use pretax money for the IRA so they're going to tax me
again on the deposits.
When I start a new IRA with my CDs then buy mutual funds they're going to
tax me on the deposits as well when I wthdraw the principal. correct?
>
> Now then, when you do accomplish these rollovers, make sure it will be
> from trustee to trustee and there will be no 1099R form to worry about.
I don't think that'll apply to me because the IRAs will be new account with
fresh deposits.
>
> ChEAr$,
> Harlan Lunsford, EA n LA
>
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