Roth IRA

1. Questioner: Matt
   
   Question: My wife and I invest in Roth IRAs through a financial planner. He has my wife invested in American Funds and he has split my investments between American Funds and Columbia Funds (not sure why). I just recently became aware of how much we are paying for a load- this came to my attention because the they no longer offer B shares and our new investments have been switched to A shares at at front end load of 5%. This seems like a lot to pay and I was looking into investing with a no-load or low-load company such as Vanguard or Fidelity. My question is whether we are able to open a second Roth for my wife and just leave the first one alone. It seems like it would be foolish to transfer the money we already paid a load on, but I don't want to continue investing in these funds at such a high load. I asked the advisor, but he told me that these companies offer no guidance in investing. However, I'm sure it benefits him to say that. Thanks in advance for any advice you can offer. View Answer

2. Questioner: Harvey

   Question: I understand that a roth ira can be established for calendar 2008 if 2009 tax return was not yet filed an on extension. If 2008 return filed can it be amended for purposes of establishing roth ira? If roth can be established for 2008 can subsequent rollover of funds from existing ira to that account (if allowed or is separate roth ira needed?) obtain the original date of initial roth ira for 5 year period needed to establish tax free distributions? I am age 58 (59 next week) View Answer

3. Questioner: Chris Marchetti

   Question: My parents, 71, need to start to take their RMD on their qualified IRA. They want to take the after-tax distribution and put into either a ROTH IRA or a non-qualified IRA. Which would you suggest? View Answer

4. Questioner: Chris

   Question: Thanks for taking your valuable time to answer my question.

   I have a roth IRA account for 5 years and used to make my contribution around the April 15th of every year. But this year my ROTH IRA contribution check got bounced on April 14th 2009 (because I wrote check from a wrong account which did not have enough funds) and I came to know about it only on April 17th. So, I failed to make a contribution for the year 2008.

   But, In my 2008 tax return to IRS, I've mentioned $5000 against the 2008 ROTH IRA contribution (anticipating that I would be able to make that before the April 15 deadline - as i used to do before). Now, since I failed to make that contribution, do I have to do anything to inform IRS about it ? OR is it like IRS does not care since its after tax money ?

   Also, is there anyway I can make a 2008 contribution NOW (I do have the letter from the bank about the bounced check). The broker (scottrade) told me they cannot do anything. View Answer

5. Questioner: Nikki

   Question: I want to open a Roth IRA to save for retirement. I want to know: 1) Where should I open the Roth IRA account? I don't have $ to go to a financial planner and I only have a small amount of money to get it started (about $100). I called Wells Fargo bank and they only had an interest rate of 1.1%. Is that all I can expect? View Answer

6. Questioner: Michael
   
   Question: My wife and I each have a traditional IRA that we want to convert to Roth in 2010. We each also have separate IRA accounts made of pre-tax dollars from previous employer plans which will increase our tax burden on the conversion. In order to avoid this, I want to roll these latter IRAs back into employer plans. I have a current 401k who will accept the funds and my wife has a 401a plan who will accept the funds though she is no longer employed. Will this work?? When I read form 8606 instructions, it seems to me money in a 401 plan does not count toward IRA assets (though I'm not sure if it matters if it is a current employer or not). Thanks. View Answer
   
   
7. Questioner: Alex
   
   Question: Can I married couple filing jointly earning more than the maximum allowable income for a Roth IRA, be able to convert this year to a Roth IRA and contribute new money in the future? My understanding is that we can only convert to a Roth IRA but we’re unsure if we’re able to contribute new money going forward.
   Can we for example, open a traditional IRA with $5,000 maximum, convert this year to a Roth IRA and therefore allow to have this money grow tax-free going forward? If we’re not allowed to contribute to this fund any more, are we then stuck with a portfolio where we contributed a maximum of $5,000?... Both my spouse and I could at least open 2 separate ones and have a couple of Roth IRAs that add up to $10,000. (This could grow to approximately $50,000 in 20 years time, assuming an 8% return).
   We are currently saving in our 401K and have some money in a Savings 529 plan.
   A Roth IRA would give us great flexibility, it could be used for our children’s education or it could be used as retirement funds for us as well. View Answer
   

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