Roth and Traditional

Question 1

Traditional IRA

Answer 1

Contribution $5500
Catch Up $1000 >50

Phaseouts
MFJ $98000-$118000
S $61000-$71000

Compensation:
wages, salaries, tips, professional fees, BOD fees, bonuses, alimony, separate maintenance payments.

Under 70 1/2

Deductibility
if neither spouse is active participant or single person not active participant then contributions are deductible.

One spouse active
AGI $184000-$194,000

All qualified plans, Simple, SEP, TSA, Union Plans…not 457

Question 2

Spousal IRA

Answer 2

not working or low income

Can contribute as long as working spouse has income in excess of both contributions

Question 3

Distribution prior 59 1/2

Answer 3

Taxable and 10% penalty unless:

death
disability
SEPP
first home 10K
qualified education
medical ins premium after separation
   -subject to 10% agi floor unless been receiving unemployment for 12 weeks and withdrawal made in year of unemployment or year following.

NO LOANS..NO Pledges
could lose IRA status

Question 4

Roth IRA

Answer 4

Phaseouts
S $117,000-$132,000
MFJ $184,000-$194,000

can contribute after 701/2 if have earned income
not affected buy participation in qualified plan

$5500 or 100% comp
No mandatory distributions at 701/2

Regular contributions are always tax free

Question 5

Conversions

Answer 5

all taxpayers can convert to ROTH from qualified plans, SEP, Simple, 403B 457 traditional.

conversion does not satisfy a RMD

NON-Spouse Inherited qualified plan - can convert to Roth
Non- Spouse inherited IRA - no Roth Conversion

Question 6

5 Year Holding Period

Answer 6

Assets must be held for 5 years in Roth plan

If not:
no income tax but, 10% early withdrawal penalty unless
death
disability
SEPP
first home 10K
qualified education
medical ins premium after separation

Question 7

Roth Distributions

Answer 7

Contributions
Conversions
Earnings

Question 8

Roth rules at death

Answer 8

• Distributed with in 5 years of death or
• life expectancy of bene (need to start by year end following year of death)
• Sole heir is surviving spouse may delay until 701/2 or roll into their Roth(no distributions required)

Question 9

Roth Recharacterization

Answer 9

undo a Roth conversion
WHY?
-value of investments have declined
-income was higher than expected or Roth pushed them into higher marginal tax bracket
-taxable income will be much lower in retirement
-lacks money to pay taxes

Oct 15 (including extension)

to convert again must wait later of
30 days after last re characterization or
the year following the year of the rollover conversion

Question 10

Roth 401K/403B 457b

Answer 10

Contributions are included in gross income
All employer contributions go to traditional 401K account
5 year ageing applies
NO Exception for first time home purchases

5 year aging
59 1/2
or disabled

Question 11

ABLE

Answer 11

529 disabled
14k annually
distributions for qualified disability expenses not included in income
Exempt from medicare and medicaid rules

Blind or disabled before 26