March 18, 2012 |
Question: I had an unusual year in 2011, and my income exceeded the eligibility limit for a Roth IRA. But I had already put $5,000 into my Roth account, and my tax software says I owe a penalty for having the Roth. Do I have any option other than paying a penalty? -Jay Answer: You might still be able to have a Roth IRA and avoid paying a penalty if you are willing to take a circuitous route. Contact the brokerage firm or mutual-fund company where you have the Roth and say you want to turn your Roth into a taxable IRA instead.
August 23, 2012
DEAR HARRY: For a number of reasons, I chose not to go to college. I have had a few jobs since I was graduated from high school five years ago. My latest one is just made for me. I'm doing what I love, and my bosses like me. There's even a promotion that I should get at the end of the year when my immediate supervisor retires. Meantime, my salary for this year will be $30,000. Since I am single, my father has been urging me to use some of my savings to get an IRA. Is it better for me to get a Roth IRA or a regular IRA?
April 25, 2011
Dear Harry: For a long while, I was putting money into an IRA, which I did not deduct from my income on the 1040s. I made no contributions that I deducted. In 2008, I decided to convert my IRA to a Roth IRA. I did not receive a 1099 from the custodian, so I naturally assumed that the conversion was not taxable. I also figured that because no deductions were made, there would be no tax. Today, I got a note from dear Uncle Sam that a tax is due for some of the rollover. The explanation was not at all clear.
January 5, 2000 |
As your credit card bills arrive, you may be getting a powerful reminder that you spent more for Christmas than you should have. Are Christmas Club savings plans still available to take some of the financial sting out of the holidays? Yes, but you may have to take the initiative in seeking them out as many banks no longer market them very aggressively. These days, payments can be deducted automatically at a predetermined rate from a paycheck or a checking account. The accounts still carry a nominal penalty to discourage early withdrawals until a check or a transfer of the full amount of the account is released just as the holiday shopping season begins.
April 18, 2016 |
Here's a little-known way your choice of retirement residence can lead to huge tax deductions. First, you move into a continuing-care retirement community (CCRC). Let's say it has an entry fee of $200,000 and a monthly fee of $5,000. Depending on where it's located, you can deduct $50,000 to $200,000 of the entry fee in the year you move in, and $3,000 or more of your monthly fees every year afterward. You'll need some serious paperwork, in particular, a financial statement from your CCRC advising you of the portions of fees that accrue for medical care.
June 26, 2013
D EAR HARRY: I have been convinced for some time that tax rates will have to go up, even for those at middle-income levels. As a result, I rolled over my IRA to a Roth IRA last December. I had to do a lot of soul-searching before I did it, because there was a stiff tax to pay. I filed my return electronically, and it was accepted by the IRS. At this late date, I received a notice from my IRA custodian (a large mutual-fund company) that $394 was added to the value of my new IRA a few days after I made the rollover.
January 12, 2015 |
Not everyone who puts off retirement saving can make a success of playing catch-up. But for a lot of people, it is doable, with the right advice and a realistic plan. Here are some suggestions. "The odds are not insurmountable" for a person in their 40s or 50s who has done little or no retirement planning to rally and assemble a livable retirement plan, according to this post at Investopedia.com. Writer Glenn Curtis lists "late-stage retirement catch-up tactic" that include funding retirement savings accounts "to the hilt.
April 15, 2007 |
At this stage, we procrastinators need help getting the taxes done. Luckily, a fluke in the calendar gives us until Tuesday to file. Here are some last-minute Web sites, mostly straight from the Internal Revenue Service. IRA deposit. Last-minute filers need to consider the typically enormous benefits of rushing money into an IRA, or individual retirement account. Deposits made by Tuesday night can be applied to 2006, and, in the case of regular IRAs - but not Roth IRAs - are deductible.
August 11, 2010
Dear Harry: Almost every day, I see reasons for converting a regular IRA to a Roth IRA, but only rarely is there an argument for holding onto a regular IRA. I am 74 and my wife is 64. I figured out the tax aspects of the conversion, and it looks good on paper, but I want to be sure I've covered all the bases before I do it. My computations in favor of the move are not the only consideration. Give me some reasons for holding back. What Harry says: Conversions are not a slam-dunk.
November 1, 2012
DEAR HARRY: I have 11 percent of my pay going into my employer's 401(k) plan. It is spread out roughly evenly in three high-risk, high-reward funds. Over the last 10 years, the return has been about 10 percent. I'm 46 years old, and I'll be eligible to retire in 2022 with a full pension. Realistically, I probably will work until 2026. My 401(k) balance is about $165,000. I now am able to open a Roth IRA and also to transfer my 401(k) to a Roth. I am married with four boys (ages 22, 13, 11 and 8)