dmrktrading

numi Wrote:
-------------------------------------------------------
> mo34 Wrote:
> --------------------------------------------------
> -----
> > Related question to the tax experts:
> >
> > Can you have both a Roth and a regular IRA and
> put
> > the max in both ?
>
> No, under current tax code there's a max total for
> both
>
> > I understand that the max for a
> > Roth is 16500 this year and about 6000 for an
> IRA,
> > can we have both deducted ?
>
> $16,500 is the max for Roth 401(k) and elective
> deferral cap. That's different from a Roth IRA.


Oh yeah .. right .. so the max for 401(k) is 16500 ( that's pre-tax). Anything else you can add to this (pre-tax) ?

needhelp1700

^HSA contributions are tax deductible. That is another 2,650 for single or 6,100 for family I believe.

Rasec

In pretty much every case it makes sense to convert to a Roth IF you can afford the tax liability. If you would have done it last year, you could have spread out the expense over two years. I believe this year you have to pay the whole thing come April.

And, one of those things that's so obvious people forget...you get taxed on the whole amount. I have a couple buddies that were so used to thinking in terms of cap gains they were surprised when they were on the hook for the entire amount.

iteracom

If you are younger than 54.5 years old (10% penalty on distribution if converted account is held less than 5 years) and you can afford to pay the tax liability with funds outside of your IRA, it's worth it. Paying the tax liability by tapping into the IRA is just dumb.

Also, here are no RMD's with a Roth, so your children/grandchildren may greately benefit from it as well.

eoin

Thanks for the thoughts guys. Sweep the Leg, thanks for the reminder. Realizing this is the general rule, are there certain states that don't charge you state tax when rolling over to Roth IRA or do you have to pay taxes wherever you live?



Edited 1 time(s). Last edit at Wednesday, July 13, 2011 at 05:38PM by numi.

pawn

This is on a federal level.

lunarfollies

What about rolling a Roth 401k into a Roth IRA? Are there any limits? And is the cap on this raised if you're leaving your employer and thus basically forced to roll-over?