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The IRS gets a little grumpy if you contribute to a Roth IRA without what it calls earned income. That usually means that you need a paying jobworking for either someone else or your own businessto make Roth IRA contributions.
Contributions for all types of IRAsRoth, traditional, SEP, and SIMPLEare reported on Form 5498.
Excess contributions are taxed at 6% per year for each year the excess amounts remain in the IRA. The tax cant be more than 6% of the combined value of all your IRAs as of the end of the tax year.
Back in 1999, the Roth IRA contribution limit was only $2,000. For those looking to diversify their retirement income sources, a Roth IRA is now a good vehicle.
IRA contributions will be reported on Form 5498: IRA contribution information is reported for each person for whom any IRA was maintained, including SEP or SIMPLE IRAs. An IRA includes all investments under one IRA plan. The institution maintaining the IRA files this form.
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Contributions to a Roth IRA arent deductible (and you dont report the contributions on your tax return), but qualified distributions or distributions that are a return of contributions arent subject to tax.
Contribution Limits: In general, if your only IRA is a Roth IRA, the maximum 2001 contribution limit is the lesser of $2,000 or your taxable compensation. This limit will be $3,000 for 2002 through 2004, and will be $3,500 for those age 50 or over.
Your modified adjusted gross income must be less than: $160,000 Married Filing Jointly. $10,000 Married Filing Separately (and you lived with your spouse at any time during the year). $110,000 Single, Head of Household, or Married Filing Separately (and you did not live with your spouse during the year).
In general, if your only IRA is a Roth IRA, the maximum 2002 contribution limit is the lesser of your taxable compensation or $3,000 ($3,500 for those age 50 or over).
Traditional and Roth IRA contributions are reported on Form 5498, IRA Contributions Information. Your IRA trustee or issuernot youis required to file this form with the IRS, usually by May 31. You wont find this form in TurboTax, nor do you file it with your tax return.

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