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previous page Previous Page: Publication 17 - Your Federal Income Tax - Individual Retirement Arrangements (IRAs)
next page Next Page: Publication 17 - Your Federal Income Tax - Alimony
 Use previous pagenext page to find additional occurrences of topic items.Index for this Publication
taxmap/pub17/p17-093.htm#en_us_publink100033700

Roth IRAs(p127)


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previous topic occurrence Roth IRA next topic occurrence

Regardless of your age, you may be able to establish and make nondeductible contributions to a retirement plan called a Roth IRA.
taxmap/pub17/p17-093.htm#en_us_publink100033701

Contributions not reported.(p127)


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Contributions not reported.

You do not report Roth IRA contributions on your return.
taxmap/pub17/p17-093.htm#en_us_publink100033702

What Is a Roth IRA?(p127)


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previous topic occurrence Roth IRA next topic occurrence

A Roth IRA is an individual retirement plan that, except as explained in this chapter, is subject to the rules that apply to a traditional IRA (defined earlier). It can be either an account or an annuity. Individual retirement accounts and annuities are described in Publication 590.
To be a Roth IRA, the account or annuity must be designated as a Roth IRA when it is set up. A deemed IRA can be a Roth IRA, but neither a SEP IRA nor a SIMPLE IRA can be designated as a Roth IRA.
Unlike a traditional IRA, you cannot deduct contributions to a Roth IRA. But, if you satisfy the requirements, qualified distributions (discussed later) are tax free. Contributions can be made to your Roth IRA after you reach age 701/2 and you can leave amounts in your Roth IRA as long as you live.
taxmap/pub17/p17-093.htm#en_us_publink100033703

When Can a Roth IRA Be Set Up?(p128)


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You can set up a Roth IRA at any time. However, the time for making contributions for any year is limited. See When Can You Make Contributions, later under Can You Contribute to a Roth IRA?
taxmap/pub17/p17-093.htm#en_us_publink100033704

Can You Contribute to a Roth IRA?(p128)


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previous topic occurrence Can You Contribute to a Roth IRA? next topic occurrence

Generally, you can contribute to a Roth IRA if you have taxable compensation (defined later) and your modified AGI (defined later) is less than:
Deposit
You may be eligible to claim a credit for contributions to your Roth IRA. For more information, see chapter 37.
taxmap/pub17/p17-093.htm#en_us_publink100033706

Is there an age limit for contributions?(p128)


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Is there an age limit for contributions?

Contributions can be made to your Roth IRA regardless of your age.
taxmap/pub17/p17-093.htm#en_us_publink100033707

Can you contribute to a Roth IRA for your spouse?(p128)


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previous topic occurrence Can you contribute to a Roth IRA for your spouse? next topic occurrence

You can contribute to a Roth IRA for your spouse provided the contributions satisfy the spousal IRA limit (discussed in How Much Can Be Contributed under Traditional IRAs), you file jointly, and your modified AGI is less than $169,000.
taxmap/pub17/p17-093.htm#en_us_publink100033708

Compensation.(p128)


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previous topic occurrence Compensation, Wage, Salary next topic occurrence

Compensation includes wages, salaries, tips, professional fees, bonuses, and other amounts received for providing personal services. It also includes commissions, self-employment income, nontaxable combat pay, and taxable alimony and separate maintenance payments.
taxmap/pub17/p17-093.htm#en_us_publink100033709

Modified AGI.(p128)


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previous topic occurrence Modified adjusted gross income (MAGI). next topic occurrence

Your modified AGI for Roth IRA purposes is your adjusted gross income (AGI) as shown on your return modified as follows.
  1. Subtract the following.
    1. Roth IRA conversions included on Form 1040, line 15b; or Form 1040A, line 11b.
    2. Roth IRA rollovers from qualified retirement plans included on Form 1040, line 16b; or Form 1040A, line 12b.
    3. Minimum required distributions from IRAs (for conversions and rollovers from qualified retirement plans only).
  2. Add the following deductions and exclusions:
    1. Traditional IRA deduction,
    2. Student loan interest deduction,
    3. Tuition and fees deduction,
    4. Domestic production activities deduction,
    5. Foreign earned income exclusion,
    6. Foreign housing exclusion or deduction,
    7. Exclusion of qualified savings bond interest shown on Form 8815, and
    8. Exclusion of employer-provided adoption benefits shown on Form 8839.
You can use Worksheet 17-2 to figure your modified AGI.
taxmap/pub17/p17-093.htm#w15160x11
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Worksheet 17-2. Modified Adjusted Gross Income for Roth IRA Purposes

Use this worksheet to figure your modified adjusted gross income for Roth IRA purposes.

1. Enter your adjusted gross income from Form 1040, line 38; or Form 1040A, line 221.            
2. Enter any income resulting from the conversion of an IRA
(other than a Roth IRA) to a Roth IRA, a rollover from a qualified retirement plan to a Roth IRA, and a minimum required distribution from an IRA (for conversions and rollovers from qualified retirement plans only)
2.            
3. Subtract line 2 from line 13.            
4. Enter any traditional IRA deduction from Form 1040, line 32; or Form 1040A, line 174.            
5. Enter any student loan interest deduction from Form 1040, line 33; or Form 1040A, line 185.            
6. Enter any tuition and fees deduction from Form 1040, line 34; or Form 1040A, line 196.            
 7. Enter any domestic production activities deduction from Form 1040, line 357.            
8. Enter any foreign earned income and/or housing exclusion from Form 2555, line 45; or Form 2555-EZ, line 188.            
9.  Enter any foreign housing deduction from Form 2555, line 509.            
10. Enter any excludable savings bond interest from Form 8815, line 1410.            
11. Enter any excluded employer-provided adoption benefits from Form 8839, line 3011.            
12. Add the amounts on lines 3 through 1112.            
13. Enter:
 • $169,000 if married filing jointly or qualifying widow(er)
 • $10,000 if married filing separately and you lived with your
   spouse at any time during the year
 • $116,000 for all others
13.            
If yes,
 If no,
Is the amount on line 12 more than the amount on line 13?
then see the Note below.
then the amount on line 12 is your modified AGI for Roth IRA purposes.
 
  Note. If the amount on line 12 is more than the amount on line 13 and you have other income or loss items, such as social security income or passive activity losses, that are subject to AGI-based phaseouts, you can refigure your AGI solely for the purpose of figuring your modified AGI for Roth IRA purposes. When figuring your modified AGI for conversion purposes, refigure your AGI without taking into account any income from conversions or minimum required distributions from IRAs. (If you receive social security benefits, use Worksheet 1 in Appendix B of Publication 590 to refigure your AGI.) Then go to list item (2) under Modified AGI or line 3 above in Worksheet 17-2 to refigure your modified AGI. If you do not have other income or loss items subject to AGI-based phaseouts, your modified AGI for Roth IRA purposes is the amount on line 12.
taxmap/pub17/p17-093.htm#en_us_publink100033710

How Much Can Be Contributed?(p128)


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The contribution limit for Roth IRAs generally depends on whether contributions are made only to Roth IRAs or to both traditional IRAs and Roth IRAs.
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Roth IRAs only.(p128)


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Roth IRAs only.

If contributions are made only to Roth IRAs, your contribution limit generally is the lesser of the following amounts. However, if your modified AGI is above a certain amount, your contribution limit may be reduced, as explained later under Contribution limit reduced.
taxmap/pub17/p17-093.htm#en_us_publink100033712

Roth IRAs and traditional IRAs.(p129)


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Roth IRAs and traditional IRAs.

If contributions are made to both Roth IRAs and traditional IRAs established for your benefit, your contribution limit for Roth IRAs generally is the same as your limit would be if contributions were made only to Roth IRAs, but then reduced by all contributions for the year to all IRAs other than Roth IRAs. Employer contributions under a SEP or SIMPLE IRA plan do not affect this limit.
This means that your contribution limit is the lesser of the following amounts. However, if your modified AGI is above a certain amount, your contribution limit may be reduced, as explained later under Contribution limit reduced.
taxmap/pub17/p17-093.htm#en_us_publink100033713

Catch-up contributions in certain employer bankruptcies.(p129)


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previous topic occurrence Catch-up contributions in certain employer bankruptcies. next topic occurrence

If you participated in a 401(k) plan and the employer who maintained the plan went into bankruptcy, you may be able to contribute an additional $3,000 to your IRA. See Publication 590 to see if you qualify to make these additional contributions. If you qualify and choose to make these catch-up contributions, the higher contribution and deduction limits for individuals who are age 50 or older do not apply. The most that you can contribute to your Roth IRA is $8,000.
taxmap/pub17/p17-093.htm#en_us_publink100033714

Contribution limit reduced.(p129)


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Contribution limit reduced.

If your modified AGI is above a certain amount, your contribution limit is gradually reduced. Use Table 17-3 to determine if this reduction applies to you.
taxmap/pub17/p17-093.htm#f15160x04

Table 17-3. Effect of Modified AGI on Roth IRA Contribution

This table shows whether your contribution to a Roth IRA is affected by the amount of your modified adjusted gross income (modified AGI).

IF you have taxable compensation and your filing status is... AND your modified
AGI is...
 THEN...
married filing jointly, or
qualifying widow(er)
 less than $159,000 you can contribute up to $5,000 ($6,000 if you are 50 or older in 2008).
 at least $159,000
but less than $169,000
 the amount you can contribute is reduced as explained under Contribution limit reduced in Publication 590.
 $169,000 or more you cannot contribute to a Roth IRA.
married filing separately and you lived with your spouse at any time during the year  zero (-0-) you can contribute up to $5,000 ($6,000 if you are 50 or older in 2008).
 more than zero (-0-)
but less than $10,000
 the amount you can contribute is reduced as explained under Contribution limit reduced in Publication 590.
 $10,000 or more you cannot contribute to a Roth IRA.
single,
head of household, or married filing separately and you did not live with your spouse at any time during the year
 less than $101,000 you can contribute up to $5,000 ($6,000 if you are 50 or older in 2008).
 at least $101,000
but less than $116,000
 the amount you can contribute is reduced as explained under Contribution limit reduced in Publication 590.
 $116,000 or more you cannot contribute to a Roth IRA.
taxmap/pub17/p17-093.htm#en_us_publink100033715

Figuring the reduction.(p129)
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If the amount you can contribute to your Roth IRA is reduced, see Publication 590 for how to figure the reduction.
taxmap/pub17/p17-093.htm#en_us_publink100033716

When Can You Make Contributions?(p129)


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previous topic occurrence When Can You Make Contributions? next topic occurrence

You can make contributions to a Roth IRA for a year at any time during the year or by the due date of your return for that year (not including extensions).
Deposit
You can make contributions for 2008 by the due date (not including extensions) for filing your 2008 tax return.
taxmap/pub17/p17-093.htm#en_us_publink100033718

What if You Contribute Too Much?(p129)


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previous topic occurrence What If You Contribute Too Much? next topic occurrence

A 6% excise tax applies to any excess contribution to a Roth IRA.
taxmap/pub17/p17-093.htm#en_us_publink100033719

Excess contributions.(p129)


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previous topic occurrence Excess Contributions next topic occurrence

These are the contributions to your Roth IRAs for a year that equal the total of:
  1. Amounts contributed for the tax year to your Roth IRAs (other than amounts properly and timely rolled over from a Roth IRA or properly converted from a traditional IRA or rolled over from a qualified retirement plan, as described later) that are more than your contribution limit for the year, plus
  2. Any excess contributions for the preceding year, reduced by the total of:
    1. Any distributions out of your Roth IRAs for the year, plus
    2. Your contribution limit for the year minus your contributions to all your IRAs for the year.
taxmap/pub17/p17-093.htm#en_us_publink100033720

Withdrawal of excess contributions.(p129)
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For purposes of determining excess contributions, any contribution that is withdrawn on or before the due date (including extensions) for filing your tax return for the year is treated as an amount not contributed. This treatment applies only if any earnings on the contributions are also withdrawn. The earnings are considered to have been earned and received in the year the excess contribution was made.
taxmap/pub17/p17-093.htm#en_us_publink100033721

Applying excess contributions.(p129)


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Applying excess contributions.

If contributions to your Roth IRA for a year were more than the limit, you can apply the excess contribution in one year to a later year if the contributions for that later year are less than the maximum allowed for that year.
taxmap/pub17/p17-093.htm#en_us_publink100033722

Can You Move Amounts Into a Roth IRA?(p129)


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previous topic occurrence Can You Move Amounts Into a Roth IRA? next topic occurrence

You may be able to convert amounts from either a traditional, SEP, or SIMPLE IRA into a Roth IRA. You may be able to roll amounts over from a qualified retirement plan to a Roth IRA. You may be able to recharacterize contributions made to one IRA as having been made directly to a different IRA. You can roll amounts over from a designated Roth account or from one Roth IRA to another Roth IRA.
taxmap/pub17/p17-093.htm#en_us_publink100033723

Conversions(p129)


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previous topic occurrence Conversions next topic occurrence

You can convert a traditional IRA to a Roth IRA. The conversion is treated as a rollover, regardless of the conversion method used. Most of the rules for rollovers, described earlier under Rollover From One IRA Into Another under Traditional IRAs, apply to these rollovers. However, the 1-year waiting period does not apply.
taxmap/pub17/p17-093.htm#en_us_publink100033724

Conversion methods.(p129)


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Conversion methods.

You can convert amounts from a traditional IRA to a Roth IRA in any of the following ways.
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Same trustee.(p129)
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Conversions made with the same trustee can be made by redesignating the traditional IRA as a Roth IRA, rather than opening a new account or issuing a new contract.
taxmap/pub17/p17-093.htm#en_us_publink100093006

Rollover from an employer's plan into a Roth IRA.(p129)


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Rollover from an employer's plan into a Roth IRA.

Prior to 2008, you could only roll over (convert) amounts from either a traditional, SEP, or SIMPLE IRA into a Roth IRA. Beginning in 2008, you can roll over into a Roth IRA all or part of an eligible rollover distribution you receive from your (or your deceased spouse's): Any amount rolled over is subject to the same rules for converting a traditional IRA into a Roth IRA. Also, the rollover contribution must meet the rollover requirements that apply to the specific type of retirement plan.
taxmap/pub17/p17-093.htm#en_us_publink100093007

Income.(p130)
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You must include in your gross income distributions from a qualified retirement plan that you would have had to include in income if you had not rolled them over into a Roth IRA. You do not include in gross income any part of a distribution from a qualified retirement plan that is a return of contributions (after-tax contributions) to the plan that were taxable to you when paid.
EIC
If you must include any amount in your gross income, you may have to increase your withholding or make estimated tax payments. See Publication 505, Tax Withholding and Estimated Tax.
For more information, see Rollover From Employer's Plan Into a Roth IRA in chapter 2 of Publication 590.
taxmap/pub17/p17-093.htm#en_us_publink100033726

Converting from a SIMPLE IRA.(p130)


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Converting from a SIMPLE IRA.

Generally, you can convert an amount in your SIMPLE IRA to a Roth IRA under the same rules explained earlier under Converting From Any Traditional IRA to a Roth IRA.
However, you cannot convert any amount distributed from the SIMPLE IRA during the 2-year period beginning on the date you first participated in any SIMPLE IRA plan maintained by your employer.
taxmap/pub17/p17-093.htm#en_us_publink100033727

More information.(p130)


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For more detailed information on conversions, see Publication 590.
taxmap/pub17/p17-093.htm#en_us_publink100033728

Failed Conversions and Rollovers(p130)


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previous topic occurrence Failed Conversions and Rollovers next topic occurrence

If, when you converted amounts from a traditional IRA or SIMPLE IRA into a Roth IRA or when you rolled over amounts from a qualified retirement plan into a Roth IRA, you expected to have modified AGI of less than $100,000 and a filing status other than married filing separately, but your expectations did not come true, you have made a failed conversion or failed rollover.
taxmap/pub17/p17-093.htm#en_us_publink100033729

Results of failed conversions and failed rollovers.(p130)


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Results of failed conversions and failed rollovers.

If the converted or rolled over amount (contribution) is not recharacterized (explained earlier), the contribution will be treated as a regular contribution to the Roth IRA and subject to the following tax consequences.
taxmap/pub17/p17-093.htm#en_us_publink100033730

How to avoid.(p130)
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You must move the amount converted or rolled over (including all earnings from the date of conversion or roll over) into a traditional IRA by the due date (including extensions) for your tax return for the year during which you made the conversion or roll over to the Roth IRA. You do not have to include this distribution (withdrawal) in income. See Recharacterizations, earlier, for more information.
taxmap/pub17/p17-093.htm#en_us_publink100033731

Rollover From a Roth IRA(p130)


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You can withdraw, tax free, all or part of the assets from one Roth IRA if you contribute them within 60 days to another Roth IRA. Most of the rules for rollovers, explained earlier under Rollover From One IRA Into Another under Traditional IRAs, apply to these rollovers.
taxmap/pub17/p17-093.htm#en_us_publink100033733

Rollover from designated Roth account.(p130)


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Rollover from designated Roth account.

A rollover from a designated Roth account can only be made to another designated Roth account or to a Roth IRA.
taxmap/pub17/p17-093.htm#en_us_publink100033732

Are Distributions Taxable?(p130)


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previous topic occurrence Taxable Distributions next topic occurrence

You do not include in your gross income qualified distributions or distributions that are a return of your regular contributions from your Roth IRA(s). You also do not include distributions from your Roth IRA that you roll over tax free into another Roth IRA. You may have to include part of other distributions in your income. See Ordering rules for distributions, later.
taxmap/pub17/p17-093.htm#en_us_publink100033734

What are qualified distributions?(p130)


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What are qualified distributions?

A qualified distribution is any payment or distribution from your Roth IRA that meets the following requirements.
  1. It is made after the 5-year period beginning with the first taxable year for which a contribution was made to a Roth IRA set up for your benefit, and
  2. The payment or distribution is:
    1. Made on or after the date you reach age 591/2,
    2. Made because you are disabled,
    3. Made to a beneficiary or to your estate after your death, or
    4. To pay up to $10,000 (lifetime limit) of certain qualified first-time homebuyer amounts. See Publication 590 for more information.
taxmap/pub17/p17-093.htm#en_us_publink100033735

Additional tax on distributions of conversion and certain rollover contributions within 5-year period.(p130)


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Additional tax on distributions of conversion and certain rollover contributions within 5-year period.

If, within the 5-year period starting with the first day of your tax year in which you convert an amount from a traditional IRA or rollover an amount from a qualified retirement plan to a Roth IRA, you take a distribution from a Roth IRA, you may have to pay the 10% additional tax on early distributions. You generally must pay the 10% additional tax on any amount attributable to the part of the amount converted or rolled over (the conversion or rollover contribution) that you had to include in income. A separate 5-year period applies to each conversion and rollover. See Ordering rules for distributions, later, to determine the amount, if any, of the distribution that is attributable to the part of the conversion or rollover contribution that you had to include in income.
taxmap/pub17/p17-093.htm#en_us_publink100033736

Additional tax on other early distributions.(p130)


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previous topic occurrence Additional tax on other early distributions. next topic occurrence

Unless an exception applies, you must pay the 10% additional tax on the taxable part of any distributions that are not qualified distributions. See Publication 590 for more information.
taxmap/pub17/p17-093.htm#en_us_publink100033737

Ordering rules for distributions.(p130)


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previous topic occurrence Ordering Rules for Distributions next topic occurrence

If you receive a distribution from your Roth IRA that is not a qualified distribution, part of it may be taxable. There is a set order in which contributions (including conversion contributions and rollover contributions from qualified retirement plans) and earnings are considered to be distributed from your Roth IRA. Regular contributions are distributed first. See Publication 590 for more information.
taxmap/pub17/p17-093.htm#en_us_publink100033738

Must you withdraw or use Roth IRA assets?(p130)


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previous topic occurrence IRA Withdrawal next topic occurrence

You are not required to take distributions from your Roth IRA at any age. The minimum distribution rules that apply to traditional IRAs do not apply to Roth IRAs while the owner is alive. However, after the death of a Roth IRA owner, certain of the minimum distribution rules that apply to traditional IRAs also apply to Roth IRAs.
taxmap/pub17/p17-093.htm#en_us_publink100033739

More information.(p130)


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For more detailed information on Roth IRAs, see Publication 590.
previous pagePrevious Page: Publication 17 - Your Federal Income Tax - Individual Retirement Arrangements (IRAs)
next pageNext Page: Publication 17 - Your Federal Income Tax - Alimony
 Use previous pagenext page to find additional occurrences of topic items.Index for this Publication