Roth
IRA, withdraw the excess
contributions from your IRA by the due date of your individual income tax
return (including extensions); and
withdraw any income earned on the excess contribution.
A Roth IRA is an IRA very
similar to a traditional IRA with a few exceptions. To be a Roth IRA, the account or annuity must be
designated as a Roth IRA when it is set up. Amongst other
things, you cannot deduct contributions to a Roth IRA but if you satisfy the
requirements, qualified distributions can be tax-free. In addition, you can
leave amounts in your Roth IRA as long as you live. Contrary to traditional
IRAs, you can continue to make contributions to a Roth IRA even after you
reach age 70 1/2.
A Roth IRA is a tax favored account or annuity set up in the
United States solely for your benefit or the benefit of your
beneficiaries. You can contribute to a Roth IRA if you have
taxable compensation and your modified AGI is within certain
limits. Additionally, you may be able to roll over amounts from
a qualified retirement plan to a Roth IRA. Furthermore, a Roth IRA differs
from a traditional IRA in that contributions are not deductible and
qualified distributions are not included in income. Regardless of the amount
of your AGI, you may be able to
convert amounts from either a traditional, SEP, or SIMPLE
IRA into a Roth IRA.
Pensions and Annuities
If you receive retirement benefits in the form of
pension or annuity payments from a qualified employer retirement plan, all
or some portion of the amounts you receive may be taxable.The pension or annuity payments that
you receive are fully taxable if you have no investment in the contract
because you did not contribute anything or are not
considered to have contributed anything for the pension or annuity,
your employer did not withhold
contributions from your salary, or you received all of
your contributions (your investment in the contract) tax free in prior years.
If you contributed after-tax dollars
to your pension or annuity, your pension payments are partially taxable. You
will not pay tax on the part of the payment that represents a return of the
after-tax amount you paid. This amount is your investment in the contract,
and includes the amounts your employer contributed that were taxable to you
when contributed. Partly taxable pensions are taxed under either the General
Rule or the Simplified Method. If the starting date of your pension or
annuity payments is after November 18, 1996, you generally must use the
Simplified Method to determine how much of your annuity payments is taxable
and how much is tax free.
If you receive pension or annuity payments before
age 59½, you may be subject to an additional 10% tax on early distributions
unless the distribution qualifies for an exception. The additional tax does
not apply to any part of a distribution that is tax-free or to
distributions made as a part of a
series of substantially equal periodic payments from a qualified plan that
begins after your separation from service,
distributions made because you are totally
and permanently disabled,
distributions made on or after the death of the plan participant or contract
holder, anddistributions
made from a qualified retirement plan after your separation from service and
in or after the year you reached age 55.
The taxable part of your pension or annuity
payments is generally subject to federal income tax withholding.You may be able to choose not to
have income tax withheld from your pension or annuity payments (unless they
are eligible rollover distributions) or want to specify how much tax is
withheld. If
