Will I get in trouble with the IRS If I open an ROTH IRA?

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Mbrown
Posts: 12
Joined: Thu Dec 20, 2007 9:59 pm

Will I get in trouble with the IRS If I open an ROTH IRA?

Post by Mbrown »

I don't have reported income for the year 2007. If I plan to open an ROTH account, will i get in trouble with the IRS?

I'm trying to become an real estate agent and I don't know when will I get my first check. But i do want a head start on the ROTH IRA


edit: i heard some people can obtain ROTH IRA for their children?!
DickBenson
Posts: 809
Joined: Sun Apr 08, 2007 7:27 pm

Re: Will I get in trouble with the IRS If I open an ROTH IRA

Post by DickBenson »

Mbrown wrote: i heard some people can obtain ROTH IRA for their children?!
If your children have reported income, I believe they could open a ROTH IRA, using funds that you gift to them.

However, I do not believe you can open a ROTH IRA for yourself if you do not have reported income for the year.

Dick
sport
Posts: 9634
Joined: Tue Feb 27, 2007 3:26 pm
Location: Cleveland, OH

Post by sport »

To put money into an IRA, you must have EARNED INCOME. Dividends, rents, interest and capital gains do not count for this. Earned income is normally wages, commissions, salaries, or profit from running a business. IRA contributions cannot exceed your earned income for the calender year. (There are also limits on how much you can contribute, and other limits on contributions.) However, you have until April 15 of the next year to make any contributions for the previous year. So, if you have some earned income before the end of the year, you can make your 2007 IRA contributions any time up until April 15, 2008. If you do not have earned income this year, you cannot open an IRA for 2007. If you want the details, get the IRS publication on IRAs. I believe it is Publication 590.

Similarly, to open an IRA for a child, the child must have EARNED INCOME.

Disclaimer: I am not an accountant. Verify these things for yourself.

Best wishes,
Jeff
JasonR
Posts: 567
Joined: Mon Nov 26, 2007 5:06 pm

non or low earning spouses can contribute to IRAs

Post by JasonR »

Mbrown,

Are you married filing jointly? I believe non- or low-earning spouses can "borrow" funds from wage-earning spouses to contribute to their own IRAs. Check this with your accountant.

Jason
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