Roth IRAs Test Your Knowledge
Below is a MRR and PLR article in category Finance -> subcategory Wealth Building.
Roth IRAs: Test Your Knowledge
Summary
How well do you know Roth IRAs? Here are five challenging questions to test your understanding.1. Can I Set Up a Roth IRA at 72?
Absolutely! Unlike traditional IRAs, Roth IRAs have no age limitations. As long as you have compensation, you can continue contributing to your Roth IRA, even at 72.
2. Can I Open a Roth IRA with a Traditional IRA and a 401(k)?
If you're married, 57, and filing jointly with a $65,000 income, you may wonder about Roth contributions. You've already contributed $5,000 to your traditional IRA, reaching the regular limit of $4,000 and a $1,000 catch-up contribution. You've maxed out your IRA contributions for the year. To contribute to a Roth, reduce your traditional IRA input and contribute the remainder.
3. Can I Contribute to My Roth IRA with a $115,000 Income?
If you're single with a modified adjusted gross income of $115,000 in 2006, you can't contribute to a Roth IRA?"you've exceeded the income limit. For 2006, full contributions were allowed for incomes below $95,000. A phased-out contribution was possible between $95,000 and $110,000. For married couples filing jointly, these limits were $150,000 and $160,000. Note that income limits are indexed and may be higher in subsequent years.
4. Can I Roll Over a Traditional IRA to a Roth IRA?
Yes, under certain conditions. Prior to 2010, you couldn't convert if your adjusted gross income exceeded $100,000, or if you were married filing separately. After 2009, these limits were removed, allowing you to convert, with the option to spread any tax over 2011 and 2012.
5. Are Withdrawals from My Roth IRA Taxable?
At 55, with a Roth IRA held for three years, you may face financial needs due to disability. Your contributions can be withdrawn tax-free. For earnings to be tax-free, withdrawals must be "qualified distributions," meaning made after five taxable years. If you withdraw earnings before age 59½, they face a 10% penalty unless you qualify for exceptions such as disability, which you do, exempting you from the penalty.
For personalized advice, always consult a qualified tax professional before making any IRA withdrawals.
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