Commonly Asked Questions About Roth IRAs

Last month, the Wall Street Journal published an article about how the Internal Revenue Service is looking for mistakes that people make when taking required withdrawals and making “excess” contributions.  In 2006 and 2007, the government failed to collect approximately $286 million in penalties associated with these mistakes. 

Readers have asked several questions in response to that article.  Wall Street Journal lists four of the most commonly asked questions and answers them.  Four of those questions are:

1. Is there a loophole for people who exceed the income limit to contribute to a regular IRA and then convert it to a Roth?

2.  What is the procedure for making withdrawals from an inherited Roth IRA?

3.  For inherited IRAs, what are the rules in case of multiple beneficiaries?

4. Do you need a special ruling to set up a trust agreement that dissolves after a certain number of years so the assets go to a beneficiary?

For the answers to these four questions, please click here.