Individual Retirement Arrangements (IRAs):
Distributions, Early Withdrawals, 10% Additional Tax
This is archived information that pertains only to the 2005 Tax Year. If you
are looking for information for the current tax year, go to the Tax Prep Help Area.
How do I calculate the minimum amount that must be withdrawn from
my IRA after age 70 1/2?
You will need to refer to chapter 1 of Publication 590, Individual
Retirement Arrangements (IRAs) to find out this amount. Generally the
minimum distribution is computed using one of three tables found in Publication
590. Table I is used by beneficiaries. Table II is for use by owners who have
spouses who are more than 10 years younger. Table III is generally for use
by unmarried owners and owners who have spouses who are not more than 10 years
younger.
How long do I have to roll over a distribution from a retirement
plan to an IRA account?
You must complete the rollover by the 60th day following the day on which
you receive the distribution. (This 60-day period is extended for the period
during which the distribution is in a frozen deposit in a financial institution.)
The IRS may waive the 60 day requirement in certain situations, such as in
the event of a casualty, disaster, or other event beyond your reasonable control.
To obtain a waiver, a request for a ruling must be made including the applicable
user fee. Refer to Tax
Regs in English to get the Internal Revenue Procedure for requesting a
ruling. A written explanation of rollover must be given to you by the issuer
making the distribution. For information on distributions which qualify for
rollover treatment, refer to Tax Topic 413, Rollovers from Retirement
Plans . For information on the Direct Rollover Option, refer to chapter
1 of Publication 590 Individual Retirement Arrangements
(IRAs).
If I can't withdraw funds penalty free from my 401(k) plan to purchase
my first home, can I roll it over into an IRA and then withdraw that money
to use as my down payment?
Yes, if you are receiving a distribution from a 401(k) that is eligible
to roll over into a IRA and you meet all of the qualifications for an IRA
distribution for a first-time homebuyer. Your plan administrator is required
to notify you before making a distribution from your 401(k) plan whether that
distribution is eligible to be rolled over into an IRA. To see if you qualify
for a distribution to be used as a first-time homebuyer, refer to chapter
1 of Publication 590, Individual Retirement Arrangements (IRAs) .
Do I report my nondeductible Roth IRA contributions on Form 8606?
There are no forms to report a Roth contribution. The financial institution,
which is the trustee of your Roth IRA, will send you information on the amount
in your Roth IRA. They will also send the information to the Internal Revenue
Service. Use Form 8606 (PDF), Nondeductible
IRAs, if you made a nondeductible contribution to a traditional IRA;
converted from a traditional IRA, a SEP, or Simple IRA to a Roth IRA, received
a distribution from a traditional IRA, a SEP, or a Simple IRA and made nondeductible
contributions to a traditional IRA, or received a distribution from a Roth
or traditional IRA.
Can a person make a contribution to a SEP-IRA and a Roth IRA, too?
Yes, you can make a contribution to a SEP-IRA and a Roth IRA. See chapter
2 Publication 590, Individual Retirement Arrangements
(IRAs), for the requirements to contribute to a SEP and a Roth IRA. However,
your SEP IRA contribution and Roth IRA contribution can not be made to the
same IRA.
I want to establish a traditional individual retirement arrangement
(IRA) for my spouse, and I need additional information. What is the most I
can contribute to a spousal IRA during the tax year?
If both you and your spouse work and both have taxable compensation, each
of you can contribute to a separate traditional IRA. The amount that you can
contribute to each IRA is subject to a limit. Refer to chapter 1 of Publication
590 for more information on these limits. Contributions can be made even if
one spouse has little or no compensation, if you file a joint return. You
can make a contribution to a separate IRA for your nonworking spouse if you
file a joint return. Your total contribution to both your IRA and the spousal
IRA for this year is limited by certain factors such as your taxable compensation,
contributions to a traditional or Roth IRA and your age.
For additional information, refer to Tax Topic 451, Individual
Retirement Arrangements (IRAs), or Publication 590, Individual
Retirement Arrangements (IRAs) .
Can I take an IRA deduction for the amount I contributed to a 401(k)
plan last year?
No. A 401(k) plan is not an IRA. However, the amount you contributed is
not included as income in box 1 of your W-2 form so you don't pay tax on it
in the year you make the contribution. For more information, refer to Tax Topic 424, 401(k) Plans, Publication 575, Pension and Annuity
Income, or Publication 560, Retirement Plans for Small Business.
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