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Question

Can my wife rollover her inherited IRA into my TSP?

My father-in-law just passed and my wife will inherit 50% of his IRA. The company managing his IRA tells us that she will get an inherited IRA for about $18,000. I am a DoD FERS civilian, age 62. I am not maxed out on my TSP contributions and have a TSP loan of abt $11,000. I like the TSP a lot and would like to rollover my wife's entire inherited IRA into my TSP, tax deferred.
Asked 1 year, 2 months ago
by IvanBates
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0out of 0found this question helpful.
1 answer
Answers
answer 1
I’m afraid not.

While I understand your affinity for the TSP (it really is a nice retirement program), you won’t be able to roll your wife’s inherited IRA into your plan. The IRS doesn’t permit it. In IRS Publication 590 under the heading of “What if You Inherit an IRA?”, the IRS states the following about IRAs inherited from someone other than your spouse:

“If you inherit a traditional IRA from anyone other than your deceased spouse, you cannot treat the inherited IRA as your own. This means that you cannot make any contributions to the IRA. It also means you cannot roll over any amounts into or out of the inherited IRA.”

Further complicating matters in your situation is the fact that the Inherited IRA is in your wife’s name, not yours. This creates an additional obstacle because the IRS does not permit individual retirement accounts of living individuals to be transferred to someone else (other than sometimes through court-ordered divorce proceedings but that’s not the issue here). So in the end, I’m afraid you’ll have to keep the two accounts separate.

Thanks so much for your question. I realize my answer didn’t give you what you were seeking but I hope it’s helpful nonetheless.

Scott
answered 1 year, 2 months ago
by Roth Conversion
+1point
1out of 1found this answer helpful.
Question

ROTH IRA without earned income

Could I open a Roth IRA without earned income? I am single, not employee, and living on disability benefits from the veteran administration (VA). Would like to contribute annually to an IRA.
Asked 2 years, 8 months ago
by Lolamento
0points
0out of 0found this question helpful.
1 answer
Answers
answer 1
Thank you for your question and for your service to our country! Unfortunately, the IRS requires you to have earned income (wages, salary, tips, commissions, etc.) in order to contribute to an IRA. “Passive” income such as rental income, dividends, interest, pension, and disability income do not qualify for IRA contribution ability.

Other non-retirement savings and investment options exist for you, but I would need more information from you in order to make a recommendation. Why not give one of our salaried Financial Advisors a call at 800-771-9960? They will gather the necessary information from you in order to make a recommendation as to how you can best achieve your goals and objectives.

Thanks again for your question and best of luck to you!
answered 2 years, 8 months ago
by akasafac
0points
0out of 0found this answer helpful.
Question

I have a simple IRA

I just join usaa and i have a simple IRA that i let the intrest rollover it is from my last employer. It was before tax account i think . can i roll that into a roth IRA account ? Here are the four funds i have
1 American mutual fund-c
2 washington mutual investors fund-c
3 the income fund of american -c
4 american balanced fund-c
can you help me out
 | Navy
Separated
 | 
spring hill , fl
Asked 2 years, 8 months ago
by darkside
spring hill , fl
0points
0out of 0found this question helpful.
1 answer
Answers
answer 1
I’m glad to hear that you set aside some funds for retirement in your previous employer’s SIMPLE IRA. Unlike most employer retirement accounts, there are IRS limitations regarding what you can do with these accounts prior to retirement.

Current IRS rules (see page 11 of IRS Publication 560) state that tax free rollovers can be made from one SIMPLE IRA into another SIMPLE IRA at any time. However, a rollover from a SIMPLE IRA to a non-SIMPLE IRA can be made tax free only after a 2-year participation in the SIMPLE IRA plan.

As far as how the account should be invested, this will depend upon things like your time horizon, risk tolerance, overall goals and objectives, as well as other investments you currently own. Our salaried Financial Advisors are available to assist you with these decisions and can be reached at 800-771-9960.

Finally, if you have been in the plan for at least two years, rolling it over to a Roth IRA is an option. However, as is the case with other Roth Conversion options, moving money from a Traditional IRA (such as a SIMPLE IRA) into a Roth IRA is generally a taxable event. I would recommend that you consult with your CPA or Tax Advisor to see what makes the most sense for you.

Thanks for your question and best of luck to you!
answered 2 years, 8 months ago
by akasafac
0points
0out of 0found this answer helpful.
Question

IRA

I transferred from one IRA to an IRA with USAA. When I did, I took $ to pay some debt. I should have taken more. Can I take some at this point and if so, what additional penality am I facing?
 | Army
Spouse
 | 
Mississippi
Asked 2 years, 8 months ago
by Proud2bAGrand
Mississippi
0points
0out of 0found this question helpful.
1 answer
Answers
answer 1
Assuming that your IRA is a deductible Traditional IRA, any withdrawals before age 59½ will be subject to income taxes and a possible 10% IRS penalty. Certain exceptions exist for avoiding the 10% penalty, and they are listed in IRS Publication 590. It is always a good idea to run this by your CPA or Tax Advisor as special circumstances may exist in your case.

Have you exhausted all other options for obtaining funds? I hate to see premature withdrawals from retirement accounts except as a last resort. If you haven’t already done so, be sure you have a solid budget in place that you follow as your roadmap and don’t forget to have an emergency fund in place with 3-6 months worth of expenses in it. These financial planning tenets will help you avoid untimely withdrawals from places like your retirement accounts.

Thanks for your question and best of luck to you!
answered 2 years, 8 months ago
by akasafac
0points
0out of 0found this answer helpful.
Question

Should we open a Roth IRA for me or a Spousal Traditional IRA for my wife?

Husband makes over 200k and makes max pre-tax contributions to the company sponsered IRA. The wife does not have any income or a retirement account. We are in our late 40's now. We expect to make over 100k a year income during retirement from our current investments.
We are looking to make some more investments and not sure what to do. Is it better to open a spousal traditional ira for the wife, or open a Roth for one or both of us? If we have enough to open more than one account, should we do that or just put it all into one account.
Asked 2 years, 8 months ago
by Kiperclan
KS
0points
0out of 0found this question helpful.
1 answer
Answers
answer 1
This is a great question and a nice problem to have. I’m glad to see you looking for ways to maximize your retirement savings. Let’s begin by reviewing the various contribution rules that surround employer plans, Spousal IRAs and Roth IRAs.

For 2011, most employer-sponsored plans such as 401(k)s and TSPs allow for employee deferrals of up to $16,500 for those under age 50 and $22,000 for those ages 50 and older. We generally recommend that you first take advantage of these plans at least up to the amount of any employer matching.

Compensation limits are in place for spouses who are not covered by their own employer-sponsored plan, yet file a joint tax return with a spouse who is covered by an employer-sponsored plan. The phase-out range for contributing to a deductible Traditional IRA for the spouse is $169,000 - $179,000. Therefore, since you indicated that your income is over $200,000, your wife would not be eligible to contribute to a deductible Traditional IRA.

Regarding your ability to contribute to a Roth IRA, compensation limits exist here as well. For those married filing jointly, the phase-out range for your ability to contribute to a Roth IRA is also $169,000 - $179,000. Unfortunately, neither of you are eligible to make a Roth contribution for the year.

Besides maxing out your employer plan, the only other basic retirement option is a non-deductible Traditional IRA contribution. Each of you would be able to contribute up to $5,000 per year if under age 50 (or $6,000 if age 50 or older).

As you can see, there are many rules that come into play here. I strongly recommend that you seek the advice of your CPA or Tax Advisor as special circumstances in your case may exist. In addition to some of the options I discussed above, other non-traditional strategies exist which may benefit you. Your CPA can steer you in the right direction here, based upon your specific situation and goals.

Thanks for your question and best of luck to you.
answered 2 years, 7 months ago
by akasafac
0points
0out of 0found this answer helpful.
Question

Hi Scott, What is the tax rate to withdraw from an IRA prior to age 70 vs 70 & above?

Asked 2 years, 8 months ago
by CJWC
0points
0out of 0found this question helpful.
1 answer
Answers
answer 1
Assuming that your IRA is a Traditional tax-deductible version, there is actually no difference as to how withdrawals are taxed based upon your age. Any and all withdrawals – at any age – are taxed as ordinary income to you at the tax rate you happen to be in during that year.

The age of 70½ becomes important to you as it is the age when you must begin Required Minimum Distributions (RMD) from any and all Traditional IRAs and Employer-sponsored plans. Roth IRAs and Roth 401(k) plans do not require RMDs.

The other key age for IRAs is 59½. This is the age when a person can withdraw funds without the additional 10% penalty to the IRS. This penalty, if applicable, is in addition to your ordinary income taxes that will be due for the year you withdraw.

As always, we recommend that you check with your CPA or Tax Advisor when dealing with IRAs and retirement plans, as special circumstances may warrant a different approach in your situation.

Thank you for your question and best of luck to you!
answered 2 years, 7 months ago
by akasafac
0points
0out of 0found this answer helpful.
Question

401k past 60 days

My husband did not roll over his 401k when his company swithched owerners. It is now past 60 days and he still has the check. Can we still roll it over or should we just cash it out at this point?? I have read that after 60 days the irs already conciders it a cash out.
Asked 2 years, 8 months ago
by Meli2727
0points
0out of 0found this question helpful.
1 answer
Answers
answer 1
Uh-oh, it sounds like it may indeed be too late and you missed the window for what the IRS deems a 60-day rollover.

There are several potential negatives to this situation of which you should be aware. Probably one of the biggest though is that if your husband is not yet age 59 ½, or if there is no IRS acceptable reason for an exception, you will have to pay income taxes on the amount of the distribution as well as a 10% penalty for early distribution.

At this point, I would encourage you to contact a qualified income tax advisor about your situation to determine your best course of action. Depending on the dollar amount of the check, this could lead to other tax issues or it may not be that big of a deal – but you certainly should speak with a tax professional about this just to be sure.

I hope this helps and I thank you for your question. Best of luck to you both!

Scott
answered 2 years, 8 months ago
by Roth Conversion
0points
0out of 0found this answer helpful.
Question

how should inherited Ira BENEFICIARY BE TITLED

Asked 2 years, 8 months ago
by Magaret
0points
0out of 0found this question helpful.
1 answer
Answers
answer 1
The answer to this question is a very important piece of making sure an inherited (or beneficiary) IRA reaps all of the benefits associated with it, so thank you for asking this.

While specific titling methodologies and details will vary from firm to firm, the one item that must be consistent according to IRS Publication 590 is the account must be titled in the name of the deceased IRA owner for the benefit of you as beneficiary. Fortunately, the exact titling is not something with which you as the beneficiary will need to be concerned. You should simply have to inform the current IRA trustee that you wish to treat the IRA as an inherited IRA and they will provide the appropriate paperwork and subsequent titling change.

If the account is with USAA, please call our team of salaried Financial Advisors at 800-771-9960 for assistance in getting the account established correctly as well as getting the investments allocated appropriately for your situation.

I hope this is helpful and I thank you once again for the question!

Scott
answered 2 years, 7 months ago
by Roth Conversion
+1point
1out of 1found this answer helpful.
Question

what is the taxable circumstance if I put my wife on my ROTH IRA account as a TOD

 | Coast Guard
Separated
 | 
detroit MI
Asked 2 years, 7 months ago
by LEANDER
detroit MI
0points
0out of 0found this question helpful.
1 answer
Answers
answer 1
Thank you for your question. It seems as though you might have a bit of confusion on Roth IRA accounts so I’m glad you asked.

All IRA accounts (Roth, Traditional, SEP, and SIMPLE) have to be established only in the name of a single individual. But that won’t interfere with what sounds like your desire to have your wife take ownership of the account at your passing – and you don’t have to use a Transfer On Death (TOD) designation to make it happen. Instead, all IRA accounts offer the account owner the ability to designate a beneficiary of the account. So in your case, you would simply need to make sure your wife is listed as the beneficiary of your Roth.

As for the tax implications of naming her as the beneficiary – there aren’t any at the time you set up the designation. Taxes only become an issue with IRAs when funds are withdrawn; and with a Roth IRA, she will have the opportunity to avoid taxes altogether just as you would. For more information on her options for handling the account at your passing (and the associated tax implications), I encourage you to review the Roth IRA section of IRS Publication 590 under the heading “Distributions After Owner’s Death.” This particular section outlines the options available to Roth IRA beneficiaries.

Finally, while this should give you a general understanding of the beneficiary aspects of Roth IRAs, it is typically best to speak with a qualified tax advisor who is knowledgeable about your situation regarding questions of this nature. Sometimes these issues can get a bit complicated and you don’t want to make a mistake today and pay for it later.

Thanks again for your question and best of luck to you!

Scott
answered 2 years, 7 months ago
by Roth Conversion
0points
0out of 0found this answer helpful.
Question

I have a good sum of money in my IRA. My question is, can I take the money and put it in a ROTH IRA? I am retired and ocassionaly I need to take some

monies out for bill, etc. Each time I do that it increased my annual income and I have to always pay taxes at the end of the year. I figure by putting it in a Roth IRA, they take out taxes then, and if I need monies later, I can take it out without being taxed, is this feasible? Plus can I put money into the Roth IRA and not be taxed on that?
Asked 2 years, 7 months ago
by Donnie Lee
0points
0out of 0found this question helpful.
1 answer
Answers
answer 1
Thanks for the question. I’m happy to help clear this up for you! The answer is kind of a good news, bad news story.

On your question of whether or not you can move money from your Traditional IRA to a Roth IRA, the answer is yes, you can. That’s the good news. This is accomplished through a transaction known as a Roth IRA conversion and it is now available to anyone, regardless of income.

As to your question of taxes, I’m afraid that’s where the bad news comes in. Specifically, when you do a conversion from a Traditional IRA to a Roth IRA any previously untaxed amount that is converted will be taxable in the year of conversion as ordinary income. For example, if you have a $50,000 Traditional IRA that contains only pre-tax dollars and you convert all of it to a Roth IRA, it will be as though you earned an extra $50,000 that year. The good news is, if you meet certain criteria, you are correct that future withdrawals will be tax-free. The bad news is, you will have a pretty substantial tax bill up front and that sometimes makes the conversion not so attractive.

So, what should you do? It’s hard to say without knowing more details about you. In either case, I recommend that you speak with a CPA or other qualified tax advisor about your specific situation. Since we are talking about potentially significant tax bills here, you’ll want to make sure you get this right if you decide to convert.

Thanks again for your question and best of luck to you!

Scott
answered 2 years, 7 months ago
by Roth Conversion
0points
0out of 0found this answer helpful.