Year End IRA
(Individual Retirement Account) Statements
(March 11th, 2008)
If you own a Traditional IRA or a Roth IRA,
your IRA Administrator must mail you atleast one year end statement
every year. The deadline for this statement is usually January
31st, of the following year. Some of the year end statements you should
receive include:
Fair Market Value (FMV) Statement
The Fair Market Value Statement, as the name
implies, will tell you the fair market value balance of your IRA assets
as of December 31st, of the previous year. The Fair Market Value
Statement will also calculate your Minimum Required IRA Distributions
(RMD) that you must take out. This statement will also include a note
that the fair market value of your investments will be reported to the
IRS for tax purposes.
Required Minimum Distribution Notice
If at any year you reach the age of 70 and
1/2 and above, you will receive a Minimum Required IRA Distributions notice
from your IRA Administrator. For example, if you turned 70 and
1/2 in the year 2004, you will receive this notice by a maximum date of
January 31st, 2004. This notice will tell you exactly how much of required
distributions you must take out.
IRS Form 1099-R
IRS Form 1099-R reports any distributions over
$10 from any pension plans, Individual Retirement Account (IRAs), 403b
plans, annuities, etc. Any IRA Re-Characterizations (change from
a Roth IRA back to a Traditional IRA) will also be reported on this form.
All the above IRA year end statements are for
your record keeping purposes only and should not be attached to your tax
return.
IRS Form 1099-Q
IRS Form 1099-Q is used to inform you of all
distributions taken out from Coverdell Education Savings Programs and
other qualified tuition programs. Form 1099-Q is also used to
inform of the Fair Market Value of the Education Saving Program.
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Roth IRA Contribution Limits |
| Year |
Regular Contributions |
Catch Up Contributions |
| 2001 |
$2000 |
$0 |
| 2002 |
$3000 |
$500 |
| 2003 |
$3000 |
$500 |
| 2004 |
$3000 |
$500 |
| 2005 |
$4000 |
$500 |
| 2006 |
$4000 |
$1000 |
| 2007 |
$4000 |
$1000 |
| 2008 |
$5000 |
$1000 |
| 2009 |
$5500 |
$1000 |
|
Modified Adjusted Gross Income Limits
|
| Year |
Filing as Single |
Filing as Joint |
| 2001 |
$33,000 - $43,000 |
$53,000 - $63,000 |
| 2002 |
$34,000 - $44,000 |
$54,000 - $64,000 |
| 2003 |
$40,000 - $50,000 |
$60,000 - $70,000 |
| 2004 |
$45,000 - $55,000 |
$65,000 - $75,000 |
| 2005 |
$50,000 - $60,000 |
$70,000 - $80,000 |
| 2006 |
$50,000 - $60,000 |
$75,000 - $85,000 |
| 2007 |
$50,000 - $60,000 |
$80,000 - $100,000 |
|
Roth IRA Facts |
In Traditional IRA, the contributions you make towards the account
are not taxed. Whatever capital gains & earnings you make on
your IRA are also not taxed up until retirement, when you withdraw
money from your account. For example, imagine you made $50,000 this
year and contributed $5000 to a traditional IRA. You will be taxed
on $50,000 - $5000 = $45,000. Furthermore, your $5000 contribution
will grow tax-deferred for many years, until you retire and decide
to withdraw it.
Any 'qualified distributions'
you take from a Roth IRA will NOT be included in your taxable income,
hence making you exempt from paying taxes. You won't have to pay
taxes on the original principal you contributed nor any taxes on
capital gains & earnings you have accumulated. In order for
the distribution to be classified as 'qualified', it must be taken
under 1 of the following circumstances:
- the Roth IRA
investor must be 59 and 1/2 years or older at the time of the distribution
- the Roth IRA investor becomes disabled at the time of taking the
distributions
- the Roth IRA investor dies and his/her beneficiary receives the
assets contained in the plan
- the distributions taken from the Roth IRA will be used in the
purchase or building of a new home for the Roth IRA holder or qualified
family member. This is limited to $10,000 per person per lifetime.
Qualified family members include:
--> the Roth IRA investor
--> the Roth IRA investor's spouse
--> children of the Roth IRA investor
--> grandchildren of the Roth IRA investor
--> parent or ancestor of the Roth IRA investor
The law states that if your adjusted gross
income (AGI) is greater than $100,000, you cannot convert from a
traditional IRA to a Roth IRA. This law applies to both singles,
married filing joint & head of household filers. Note that if
you are filing a married-filing-separate tax return, you are not
eligible to convert a traditional IRA to a Roth IRA at all, no matter
what your adjusted gross income is. |
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