Roth IRA questions..
 

Hey guys, I'm thinking about putting money into a Roth IRA account, I know I can't take out the money until I'm 60, and I can only put a max of 4,000 dollars. Is that a max of 4000 a year? And every year I can put in 4k? Also, does the money that I contribute have to come from a job and the moeny is already taxed? Thanks. How many percent yield does the Roth IRA give? I keep hearing "if you put in 4k now, you can have a million in 50 years " (granted a million in 50 years probably won't be as much because of inflation). DOes this statement mean people put in 4k in their Roth IRA and let it sit and grow without putitng more in?

Re: Roth IRA questions..
 

You need to put 4k in everyyear. roth IRA is AFTER tax money. This also means you wont have to pay tax on it when you withdraw. Also I THINK you can withdraw whatever you put in whenever you want... you just cant withdraw the gains. But i recomend to just keep it all in their. As it is a good opprotunity to compound tax free.

Re: Roth IRA questions..
 

You cannot deposit money that you have made from poker, correct?

Re: Roth IRA questions..
 

Money deposited in a roth IRA needs to be "earned income." Gambling winnings, lottery winnings, capital gains, amongst other things, are not "earned income."

Re: Roth IRA questions..
 

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You cannot deposit money that you have made from poker, correct?

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Yes you can. As long as you pay taxes on it.

Re: Roth IRA questions..
 

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You cannot deposit money that you have made from poker, correct?

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Yes you can. As long as you pay taxes on it.

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You're right, you can deposit money even if you have $0 earned income, but you will be penalized heavily. I believe something like 6%.

Re: Roth IRA questions..
 

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I know I can't take out the money until I'm 60, and I keep hearing "if you put in 4k now, you can have a million in 50 years "

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Wrong. You can take out Roth IRA CONTRIBUTIONS at any time, for any reason, tax and penalty-free. You just can't take out the gains without paying fees.

Also, I don't know how old you are, but if you are around 20 and put $4K in every year for the next 4 years, and never touch it again, you should easily have $1M by your early sixties.

Re: Roth IRA questions..
 

yes i am exactly 20, and thanks a lot for the help prohorn and everyone who responded, i really appreciate it. I will definitely put some of my assets into a Roth IRA, I talked to a friend of mine who is in an investing mind set and he suggests, since I'm pretty young anyways, I should put in 40% of my assets into an aggressive investment and 20 into a semi aggressive and 20 into a long term investment. Although I don't have a lot of money as of right now since I'm a losing player, I will get some money from summer jobs and such. I'll put in like 40 percent into stocks and if i get big baller enough think of a way to do real estate, and 20 percent into money market/etf's and 20 into IRA's.

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Why do you think aggressive and long term are different?

I would recommend using primarily index funds to invest.

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Well, I think it's basically just the risk factor/return you know? yeah you can put all your eggs in one basket but I want to diversify because isn't that important? I don't know, I'm new at this.

Re: Roth IRA questions..
 

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You cannot deposit money that you have made from poker, correct?

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Yes you can. As long as you pay taxes on it.

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You're right, you can deposit money even if you have $0 earned income, but you will be penalized heavily. I believe something like 6%.

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Wait, could someone elaborate on this? I always thought you couldn't put any money in a Roth if you had no earned income. Would it then be worthwhile for someone like me (I have zero earned income for 2006, but I will be paying taxes on my poker winnings) to put $4k in a Roth?

Re: Roth IRA questions..
 

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if you are around 20 and put $4K in every year for the next 4 years, and never touch it again, you should easily have $1M by your early sixties.

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Which will be about $250k in today's dollars (and not enough to retire).

Re: Roth IRA questions..
 

Is the deadline Dec 31 to put money in or do you get some time in 07 for the 06 contributions?

Re: Roth IRA questions..
 

So it looks like I have until tax day to contribute for 06, correct? One thing I haven't found out is how easy is it to move from one type of investment to another? Say I don't have the time at the moment to check out stock/mutual fund options and just open a Roth IRA CD at my credit union. When it matures in 6 months how easy is it to move that money to say Ameritrade or some other online investment place? I'm guessing I don't have to keep it in my bank forever. Is there a good place with answers to these types of questions? I've been reading up today but there are a million sites with Roth info and I've only read a couple so far.

Re: Roth IRA questions..
 

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You cannot deposit money that you have made from poker, correct?

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Yes you can. As long as you pay taxes on it.

[/ QUOTE ]

You're right, you can deposit money even if you have $0 earned income, but you will be penalized heavily. I believe something like 6%.

[/ QUOTE ]

Wait, could someone elaborate on this? I always thought you couldn't put any money in a Roth if you had no earned income. Would it then be worthwhile for someone like me (I have zero earned income for 2006, but I will be paying taxes on my poker winnings) to put $4k in a Roth?

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Please somebody elaborate on this. I make no money outside of poker, but plenty more than 4k a year after taxes that I can put in my roth IRA.

Should I be putting my taxed poker winnings in my IRA or not?

Re: Roth IRA questions..
 

Roth IRA is for earned income. I think poker is earned. Its not passive.

Re: Roth IRA questions..
 

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Roth IRA is for earned income. I think poker is earned. Its not passive.

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What income is allowed?

This amount is defined in section 219(f)(1) to include wages, commissions, professional fees, tips, and other amounts received for personal services, as well as taxable alimony and separate maintenance payments received under a decree of divorce or separate maintenance. Compensation also includes earned income as defined in section 401(c)(2), but does not include any amount received as a pension or annuity or as deferred compensation. In addition, under section 219(c), a married individual filing a joint return is permitted to make an IRA contribution by treating his or her spouse's higher compensation as his or her own, but only to the extent that the spouse's compensation is not being used for purposes of the spouse making a contribution to a Roth IRA or a deductible contribution to a traditional IRA.

In other words, gambling winnings unless you file as a professional gambler are not allowed to be used.

Don't forget the income limits:

$160,000 for married filing jointly or qualifying widow(er),

$10,000 for married filing separately and you lived with your spouse at any time during the year, or

$110,000 for single, head of household, or married filing separately and you did not live with your spouse at any time during the year.

Re: Roth IRA questions..
 

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So it looks like I have until tax day to contribute for 06, correct?

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Yes.

Re: Roth IRA questions..
 

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Is the deadline Dec 31 to put money in or do you get some time in 07 for the 06 contributions?

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You have until Tax Day of 2007 (Apr. 15th) to get your 2006 contribution maxed out. So you got time.

Re: Roth IRA questions..
 

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if you are around 20 and put $4K in every year for the next 4 years, and never touch it again, you should easily have $1M by your early sixties.

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Which will be about $250k in today's dollars (and not enough to retire).

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I think that sounds about right, after factoring in inflation. I was just responding to OP's specific question about how easy it is to get a million dollars. I never meant to imply that it is enough to retire on.

Re: Roth IRA questions..
 

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Don't forget the income limits:

$160,000 for married filing jointly or qualifying widow(er),

$10,000 for married filing separately and you lived with your spouse at any time during the year, or

$110,000 for single, head of household, or married filing separately and you did not live with your spouse at any time during the year.

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Could somebody explain what income limits are for me?

thank you

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People, people.

Unless you're filing as a professional player, poker income is not earned income. Neither is investment income. Please see a CPA, it's worth it.

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Still, 250k is a lot. Turning 16k into 250k is a great investment, even though it takes that long. I'm not going to invest and try to retire on it, I'm goign to try and ivnest and live off it. I'm still looking through the MANY MANY maaaaaaaaaaaaannnnnnnnnnny different investment strategies and such. You guys are great, thanks so much for helping!

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Say I've contributed 10k to my roth over the next few years and need to take 5k out for something. I know I can take contributions out without a penalty but can I repay the 5k 6 months later to get my fund back up to speed? I haven't been able to find any specific info about paying back withdrawls so any links would be much appreciated.

Re: Roth IRA questions..
 

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People, people.

Unless you're filing as a professional player, poker income is not earned income. Neither is investment income. Please see a CPA, it's worth it.


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obv, I plan on it.

my 2 questions are, though:
1) Is it worth it for me to file as a professional poker player and then put that money into my roth ira

2) what are "income limits"

thank you!

Re: Roth IRA questions..
 

Another question, if I already maxed 2006 but have another 4k ready to deposit in my Roth IRA for year 2007, can I do it on Jan. 1-2 of 2007? Or do I need to wait until I technically 'earn' another 4k after taxes for 2007?

Re: Roth IRA questions..
 

[ QUOTE ]
Another question, if I already maxed 2006 but have another 4k ready to deposit in my Roth IRA for year 2007, can I do it on Jan. 1-2 of 2007? Or do I need to wait until I technically 'earn' another 4k after taxes for 2007?

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You can deposit on Jan 1. If you end up with less earned income, or if you earn too much income to qualify, you can undo your contributions (plus/minus investment returns) to fix it.

-Tom

Re: Roth IRA questions..
 

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Another question, if I already maxed 2006 but have another 4k ready to deposit in my Roth IRA for year 2007, can I do it on Jan. 1-2 of 2007? Or do I need to wait until I technically 'earn' another 4k after taxes for 2007?

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You can deposit on Jan 1. If you end up with less earned income, or if you earn too much income to qualify, you can undo your contributions (plus/minus investment returns) to fix it.

-Tom

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And in fact, this is a super smart move that not many people take advantage of.

I try to contribute Jan 1 of every year.

Re: Roth IRA questions..
 

I've got a question on eligibility:
What I've read says that your Modified Adjusted Gross Income (MAGI) must be less than $110k (single, head of household). Do you net gambling winnings get added to your MAGI? In other words do you need to be under $110k before deducting gambling losses?

Re: Roth IRA questions..
 

[ QUOTE ]
I've got a question on eligibility:
What I've read says that your Modified Adjusted Gross Income (MAGI) must be less than $110k (single, head of household). Do you net gambling winnings get added to your MAGI? In other words do you need to be under $110k before deducting gambling losses?

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To answer my own question, it looks like your deductions do not get subrtacted from your MAGI.

"Adjusted gross income ("AGI") represents your total income reduced by certain deductions known as "adjustments," but before you take your itemized deduction or standard deduction, and before you take the deduction for personal exemptions."

After that there's a few deductions to your AGI that get added back in. Linky

Feel free to set me straight if you have more knowledge (i.e. any) on the subject.

Re: Roth IRA questions..
 

OK I have a question,

They're supposed to raise the max. contribution limit in 2008 to $5000 and, according to Wachovia: ,"Plus inflation adjustment in $500 increments beginning in 2009."

Does this mean the max. contributions increase by $500 per year every year after 2009?

Re: Roth IRA questions..
 

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"Plus inflation adjustment in $500 increments beginning in 2009."

Does this mean the max. contributions increase by $500 per year every year after 2009?

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It means that when they DO adjust it, it will be in $500 increments. It may be 0, it may be $500, it may be $1000. It won't be $347.53.

Re: Roth IRA questions..
 

bump, I have another question. I think, I'm not sure since my parents don't tell them this stuff, that I'm still under their tax filing, like they claim me as a dependent. Does that mean I can't do IRA or can I still contribute to an IRA? I don't know how much exemption they get, do you guys know how much parents get each filing season for having kids? Anyways, I ask because I want to put in my earned income from my part time job which isn't a lot, but still some money, and I was wondering if I had to file my own taxes in order for me to do that?