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Posted by Katie on April 4, 2008, 1:10 am
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> > > Hello All,
>
> > > I am trying to figure out the Roth IRA for tax purpose. Is there
> > > anyone who can give me understanding for a 1040 tax return. I found
> > > that non deductible contributions and deductible contributions make a
> > > difference with Roth IRA contributions,
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> > "Deductible contributions" and "non-deductible contributions"
> > are terms pertaining to TRADITIONAL IRAs, not Roth IRAs.
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> > You do not report the Roth IRA contributions you make.
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> > --
> > Rich Carreiro rlc-n...@rlcarr.com
>
> > --
> > << ------------------------------------------------------- >>
> > << The foregoing was not intended or written to be used, >>
> > << nor can it used, for the purpose of avoiding penalties >>
> > << that may be imposed upon the taxpayer. >>
> > << >>
> > << The Charter and the Guidelines for submitting posts >>
> > << to this newsgroup as well as our anti-spamming policy >>
> > << are atwww.asktax.org. >>
> > << Copyright (2007) - All rights reserved. >>
> > << ------------------------------------------------------- >>
>
> Thanks to all,
> In Addition:
>
> Strange I used to work for a brokerage firm, I should know a little.
> Besides is it safe to assume that the IRS assumes that all Roth IRA
> contributions are pre-taxed or am I in a galaxy far far away? How are
> Roth IRA contributions made? Where does the contributions have to come
> from (are there regulations) and are the contributions ever taxed on a
> Roth Ira(if so when and how in basis)?
>
> Traditional IRA's, is the contributions taxed twice if you contribute
> income from your net income (job)? I need better understandings of
> these things I will appreciate any one's help again, thanks in
> advance.
>
Zigball, these are the general principles:
Contributions to a traditional IRA are deductible in arriving at
adjusted gross income in the year in which the contribution is made --
i.e., they come from pre-tax income. The amount that may be
contributed and deducted is limited, and an individual who is covered
by an employer retirement plan or has income above a certain level may
not contribute to a traditional IRA. When you withdraw funds from a
traditional IRA, usually every dollar you withdraw is taxable as
ordinary income. After the taxpayer reaches age 70-1/2, a specified
minimum amount (the "required minimum distribution," or RMD) must be
withdrawn and included in taxable income each year. Any balance
remaining in an IRA at the taxpayer's death is taxable income ("income
in respect of the decedent") to the heirs.
A Roth IRA is a special kind of IRA that can receive nondeductible
contributions and, if certain conditions are met, all distributions
from a Roth IRA are tax-free. There are no RMDs, so funds may be left
in a Roth IRA and the taxpayer's heirs may inherit the account without
recognizing taxable income.
You can convert a traditional IRA to a Roth IRA by rolling the funds
over. The amount rolled into the Roth account is taxable income;
however, the income and tax liability may be spread over 4 years (it
will be 2 years after 2011).
These are just the general principles. There are a lot of details.
Consult a professional tax adviser before deciding whether you can or
should contribute to a traditional or Roth IRA, or whether you should
roll a traditional into a Roth.
Katie in San Diego
--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>
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