1)Social Security payments 2)ROTH contribution limits?

Question

1) I was just curious about this: When someone like Bill Gates gets to social security age will he collect anything or does his benefit go away because of his income?

2) I heard somewhere that the personal income limit that disallows ROTH contributions when you exceed it was going away. Is that true? It was either that or the income limit that you have to be under to do a conversion from traditional to ROTH. Can anyone verify which one of those is changing?

Thanks

Answer 1

I'm not sure about #1. But I can answer #2.

Roth contribution limits are not going away. But the income limit for converting traditional IRA's to Roth IRA's is disappearing in 2010. So if you are currently above the limit you can currently contribute to a traditional or nondeductible IRA... And then convert it to a Roth in 2010. This is one heck of a gift and needs to be taken advantage of.

Answer 2

A person is eligible to collect a pension through Social Security when he reaches retirement age and has been covered by Social Security for a minimum of forty quarters. It has nothing to do with how much or how little money he has. this applies to Bill Gates and everyone else.

For the second question the current income limits for a Roth IRA are listed below.

Roth IRA Income Limits
You can contribute to a Roth IRA if your adjusted gross income is below these limits:

These are the cu rent income limits for a Roth IRA

" Full $2,000 contribution Reduced contribution
Single/Head of household Up to $95,000 $95,001-109,999
Married filing jointly Up to $150,000 $150,001-$159,999 "

There is a bill that might become a law called at this time the Tax Reconciliation Bill that , if passed in its present form and signed by the President would "eliminate the income limits on Roth IRA conversions starting in 2010, while leaving the income limits on Roth IRA contributions in law."

That means that people could convert their non traditional IRAs without limit to a Roth IRA thus being able through a two step process to in effect have unlimited conversion without any income limits.

Answer 3

I don't have an answer to your first question.

Regarding #2 -- that only applies to conversions from other types of IRAs to Roth IRAs. The limit goes away in 2010 and is currently only scheduled to change for that one year.

Answer 4

As to Bill Gates, if he turned retirement age under today's rules he'd be eligible to collect social security benefits assuming that he's paid into the system for 40 quarters. He would then have to pay income tax on 85% of his benefits.

Answer 5

Social Security Disability Information : http://DisabilityHelp.siopu.com/?KCi

Answer 6

1 - it depends if Dems or Republicans are in charge. The law will almost certainly change in some way by the time he gets that old. Currently, I believe he would get benefits, but he would be taxed on them, or at least some of them.

2 - Can't sorry, but fool.com and bankrate.com stay on top of this stuff.

With Dems in WH & Congress, expect tax favorable legislation to start reversing.