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Two Tax Time IRA Questions

Friday, April 06, 2012  1 comment

Here are two questions that come up a lot at tax time.

Q. Can I do a conversion now for 2011?
A. No. In order to have a 2011 conversion, the funds must leave the IRA account in 2011. They don’t have to be in the Roth IRA in 2011 since you can take a withdrawal in December, 2011 and have 60 days to complete a rollover to the Roth IRA in January or February, 2012. But they must leave the traditional IRA account by December 31, 2011.

Q. Joe died last year. He had earned income. Can we make a contribution to his IRA or Roth IRA account for last year?
A. No. You can only make a contribution for someone who is alive. The theory behind this is that if someone dies during the tax year, they no longer have a need to save for retirement. You just can’t argue with that logic!!!

-By Beverly DeVeny and Jared Trexler

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Consumers: Send in Your Questions to [email protected]

Q:
Can I transfer money from my IRA to my husband's Roth IRA? I am 35, and he is 36.

Thank you!

Gail Clements

A:
No. The only way your IRA funds can be transferred to your husband’s IRA is in a divorce or after your death. Even then, it would have to be transferred to a similar IRA, for example an IRA to IRA or a Roth IRA to another Roth IRA. In this case, you cannot transfer your IRA into your husband’s Roth IRA.

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