IRA Articles

Can you contribute to IRA while working in a foreign country?

I came across an interesting article on a website forum. Someone was wondering what alternatives there were to a 401k. This individual was changing employers and was now required to work oversees. Since the employer was not U.S.-based, they obviously don’t offer a 401k, so the person was wondering if they were able to make contributions to their IRA while living oversees.

First, you have to keep in mind that your IRA contribution is limited to taxable income. If you only have $3,000 in taxable income, you can only contribute $3,000 to your IRA. Second, if you are a U.S. citizen, foreign income received is subject to income taxes in the United States. Whether you live in the United States or abroad, you are still be required to file your taxes.

Please keep in mind that you can also take advantage of various tax laws to help minimize the tax damage from foreign income.… Read More »

Tax Treatment of Roth IRA Distributions

The Roth IRA was created by the Taxpayer Relief Act of 1997, pioneered by the late Senator William V. Roth, Jr. and was made effective on January 1st, 1998. Before 1998, investors who wanted to contribute towards an IRA would either make a deductible or non-deductible contribution to a Traditional IRA. Distributions taken from a traditional IRA were taxed as normal income, and early withdrawals before the age of 59 and a 1/2 were subject to a 10% early withdrawal penalty. The Roth IRA allows investors to take tax-free qualified distributions from their Roth IRAs without having to pay the 10% penalty. Here’s how it works.

Qualified Roth IRA Distributions?

Non-qualified Roth IRA distributions will be subject to normal income tax and a 10% early withdrawal penalty. A qualified distribution on the other hand must meet these criteria:

i) The distribution occurs at least 5 years after the investor established and funded his Roth IRA account.… Read More »

Roth IRA: Advantages/Disadvantages, Contribution Limits, Eligibility, and Income Limits

The purpose of this article is to give you an in depth view of the Roth IRA with its advantages and disadvantages, income limits & eligibility. Named after its founder Senator William Roth of Delaware, the Roth IRA (Individual Retirement Account) was established in 1998 under the Public Law 105-34. While Traditional IRA may only be limited to where your corporation invests in, a Roth IRA gives you a wide array of investment choices; ranging from common stocks, mutual funds, commodities & futures, certificates of deposit as well as real estate). Here are the contribution limits of the Roth IRA.

49 Years or Less 50 Years and Above
1998 – 2001 $2000 $2000
2002 – 2004 $3000 $3500
2005 $4000 $4500
2006 – 2007 $4000 $5000
2008 $5000 $6000
2009 $5000 $6000
2010 $5000 $6000
2011 $5000 $6000
2012 $5000 $6000


– If money was converted from a Traditional IRA to a Roth IRA, the investor can withdraw up to the total amount of the converted amount so long as the money has stayed in the Roth IRA for atleast 5 years.… Read More »

Roth IRA Contribution Limits, Deadlines, Income Phaseout Ranges

The April 15th deadline for filing taxes to the IRS is also the deadline for investors to make their final Roth IRA & Traditional IRA contributions for that tax year. For instance, April 15th, 2009 will be the deadline for making contributions towards the 2008 tax year. After this date, any contributions made will be applied towards your 2009 tax year (for which the deadline will be April 15th, 2010). This differs from 401(k) plans that have December 31st, as the deadline for making 401(k) contributions. The IRS considers these deadlines to be ‘do or die’ cases where if investors miss the contribution deadlines, they forfeit their priviledge to make 401k or Roth IRA contributions for that tax year. If you have already filed your taxes before the April 15th deadline and have not made Roth IRA contributions, you can do so and file an amended tax return using Form 1040 (U.S.Read More »

Roth IRA Retirement Plan – Contribution Limits and Advantages/Disadvantages

Studies indicate that many people do not save for retirement because they do not understand all the 401k gibberish. First there’s the traditional 401k, then there’s the Roth 401k, annuities, ROTH IRA, Individual Retirement Accounts (IRAs) and your savings account at your local bank. Out of all these options, the Roth IRA has come out to be the best and the most popular option. Why? Because its tax-free growth and flexibility of making withdrawals cannot be competed against! Studiessuggest that compared to traditional 401k or 403b plans, a retiree who saves in a Roth IRA will have more savings upon retirement. Total Roth IRA assets in the United States totalled $178 billion as of December 2006 (Source: Investment Company Institute).

The Roth IRA was introduced under the Taxpayer Relief Act of 1997, pioneered by the late Senator William V. Roth, Jr. Under a Roth IRA, an individual can invest in all types of investment vehicles including common stocks, mutual funds, futures & options, certificates of deposit, as well as real estate.… Read More »