Roth IRA question?

Question

For Tax Year 2006, does AGI needs to below $150K to qualify for Roth IRA contribution or is it based on income after all deductions.

What if you have already invested in Roth IRA for 2006 and no longer meet the critiera for the contribution? Can it be converted to regular IRA without penalty.

Answer 1

If your AGI goes above the limit and you have a Roth IRA, your investments will be moved into a Traditional IRA. You won't pay any taxes on them, but when you begin withdrawing after age 59 1/2, you will pay taxes on capital gains and any part of your contributions you made tax deductible. The contributions you made in your Roth IRA will not be taxed when you withdraw it after age 59 1/2 since they are not tax deductible anyway.

In 2010, this issue will be gone and anyone can open a Roth IRA. If your AGI is above a certain limit, well then, its only 3 more years until you can move your Traditional IRA back into a Roth IRA, without penalty.

Answer 2

To contribute the max, the AGI has to be below $150K, then after $150K there are reductions on how much you can contribute, after $160K you cannot make nay contributions. These limits are for a married couple. There is a 6% excise tax for excessive contributions. You can take your contributions out before taxes are due and are therefore not considered contributions to the ROTH IRA, so you can withdraw from the Roth and put them in the regular IRA. Take a look at Publication 590.00.

Answer 3

Go to irs.gov and get Publication 17.

Answer 4

income before not after deductions
should be converted no penalty, i don't think

Answer 5

You need to contact your investment company, they will let you know for sure.