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  • Answer count
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    March 8, 2013
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    September 12, 2014
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can i pull money from my Rollover IRA for tuition

My daughter is going away to collage in Aug and we have to pay for her tuition. Can I pull money from my Rollover IRA with out penalty? does that qualify for hardship withdrawl? If so, and I have the funds sent to me electronically how do I state thats what the money is for?
Hi Sarah,

Yes, you can take a distribution from your IRA for use in covering qualified education expenses. The distribution will still count as income in the year it is taken, but because the IRS would regard this as “an immediate and heavy financial need” you can avoid the 10% early distribution penalty. Qualifying expenses include tuition, fees, books, supplies, and equipment required for enrollment or attendance at an eligible educational institution.

If the expenses are equal to or greater than the amount of the distribution, then usually no additional tax or penalty is due. Usually you will have to file Form 5329 (found here http://www.irs.gov/pub/irs-pdf/f532... ) to show how much, if any, of your early distribution is subject to the 10% additional tax.

Having said that, I would caution you to not draw too heavily on your retirement savings for your daughter’s education. Even though retirement is still a few years away for you, the money you withdraw will no longer be working for you, and will be hard to replace. Also, a distribution from an IRA will be counted as income and could reduce the amount of financial aid your daughter might have received. Finally, remember that your daughter likely has more years to pay back loans than you do to save for retirement.

Ken
1 week, 1 day ago
by
AskKen
 

Is there such a thing as a "Joint IRA?"

Okay, I have a good memory. Back in 1973 during career day, we had a financial advisor talk to us. Back then the contribution limit was $2000. But he said a married couple could each have an IRA and a joint IRA, so you could save $6000 a year. (3 x $2000)

Is there such a thing as a joint IRA?

(Not to be confused with having multiple IRAs)
Hi Elvis,

No, there is no such thing as a joint IRA. All IRAs are required by the IRS to be registered to a single owner who can then name beneficiaries. IRA owners must have qualifying income in excess of the amount that they contribute to an IRA, but in the case of a non-working spouse, a working spouse’s income can qualify the non-working spouse to make annual IRA contributions. By the way, the contribution limits per person for 2014 are $5,500 if you are under 50, and $6,500 if you are 50 or older.

Ken
1 week, 1 day ago
by
AskKen
 

IRA for foreign nationals

I'm a foreign national working in the US and have a 401k account with my employer. If I leave US for my home country permanently, can I roll the 401k into an IRA to be managed at Fidelity, or does Fidelity require the IRA account owner to be living in the US?
Thanks for this question. Yes, you can roll the 401(k) into a Fidelity IRA if you choose and there will be no tax implications, assuming you plan to roll a Traditional 401(k) into a Traditional IRA or a Roth 401(k) into a Roth IRA. You won’t, however, be able to make further contributions into the new IRA unless you have qualifying U.S. taxable income. Page 8 of IRS publication 590 has information on what constitutes income for the purposes of contributing to an IRA: http://www.irs.gov/pub/irs-pdf/p590....

Ken
1 week, 1 day ago
by
AskKen
 

What is the minimum required to open a Roth IRA? Grandson interested.

Thanks for the question, Drew.

There is no minimum amount to open a Roth IRA but there are minimums associated with some of the investment options within the account. One way to get around the minimum investment amount, which is usually $2,500 for Fidelity funds, is to have your grandson enroll in automatic investments when he opens the account. This would mean that money was automatically withdrawn from his bank account on a regular basis and deposited into his retirement account. For more about automatic investments go to https://www.fidelity.com/cash-manag....

By committing to regular IRA contributions your grandson can start taking advantage of growth opportunities right away and he’ll be setting up good habits for his retirement savings future.

Ken
1 week, 1 day ago
by
AskKen
 

How do I make a partial MRD for he curren year?

Thank you for your question about options for taking a partial minimum required distribution (MRD).

I suggest that you visit our online Retirement Distribution Center (RDC) at Fidelity.com to see an MRD for each of your accounts at Fidelity. Your MRDs are automatically recalculated on January 1st each year. The RDC also tracks all your distributions from those accounts and the federal and state tax withholding, too.

You will see a section called “Two Ways to Get Your Money” with links to take one or more withdrawals, or to sign up for automatic withdrawals. Both of these give you the option of taking partial distributions throughout the year to make sure you’ve taken your entire MRD.

So if you take a withdrawal, then that amount will show up on the year-to-date distributions from your account in the upper-left part of the RDC, as well as in the account details section.

The RDC is available at www.fidelity.com/RDC

Hope this helps you.

Ken
2 weeks, 3 days ago
by
AskKen
 

If I contributed to a 401k plan part of the year and terminated employment and went to work for another employer with no employer plan

can I contribute to a deductible IRA? I assume not because I participated in a qualified plan the first half of the year; however can I do a non-deductible IRA
Thanks for your question. Your ability to make tax-deductible IRA contributions depends on a couple of factors: first, whether or not you are covered by an employer-sponsored plan, and second, your income level.
For someone who is not covered by a company retirement plan, all IRA contributions are tax-deductible. But in your case, since you were contributing to a company 401(k) plan for part of the year, you are considered by the IRS to be covered for the whole year.

Because you are considered to be covered, you can only make tax-deductible IRA contributions if your income falls within the 2014 deductibility range. If your Modified Adjusted Gross Income is less than $60,000 if single, or $96,000 if married and filing jointly, you can make a fully deductible IRA contribution of up to $5,500 if you are under age 50 or $6,500 if you are age 50 or older. You can make a partially deductible IRA contribution if you make between $60,000 and $70,000 if single, or between $96,000 and $116,000 if married and filing jointly.

No matter what your income level, you can always make a non-deductible IRA contribution to make sure that you keep your retirement savings on track.

To find out how much, if any, of your contribution is deductible you can use our IRA calculator at https://scs.fidelity.com/products/m...

I hope this information is helpful.

Ken
1 month ago
by
AskKen
 

What is the max. I can put in my Roth IRA a year(I'm married). What is the max. on my 4O1K also?

Hi Lisa,

Thanks for your questions. Since you are under age 50, the maximum you can contribute to a Roth IRA or any IRA in 2014 is $5,500. Individuals who are age 50 and over can contribute an additional $1,000 for a total of $6,500. The maximum you can contribute to an employer-sponsored 401(k) plan in 2014 is $17,500, with an additional $5,500 allowed for those age 50 and over.

Ken
1 month ago
by
AskKen
 

On an existing SEP-IRA, what is the deadline for making a 2013 SEP-IRA contribution? The return is on extension until October 15th.

Thanks for inquiring about making a contribution your company’s SEP-IRA. Employer contributions to a SEP-IRA are due no later than the employer’s tax filing deadline, including extensions. If you have an extension to file your business 2013 tax return until Oct 15, that would be the deadline to make your SEP-IRA contribution.

Ken
1 month, 2 weeks ago
by
AskKen
 

Can I take more than the minimun Required Distribution

I will turn 70 1/2 in November and was wanting to know if I can withdraw more than the minimum? Also is it correct that on the first withdrawal I can wait until the following year? If so, and I take some money out in the first part of the year will I have to take more out by December? by the way this is my rollover IRA brokerage account that I'm talking about.
Thanks for your question about minimum required distributions (MRDs). The IRS requires you to begin taking MRDs from your IRA in the year you turn 70½. But yes, you can always take more than the required amount. Just keep in mind that distributions from an IRA are generally taxable as income in the year of the distribution. The deadline to take your first MRD is April 1 of the year following the year you turn 70½. So, if you are turning 70½ this November, you must take your first distribution no later than April 1, 2015. The April 1 deadline, however, applies only to the first MRD, and the deadline to take your MRD for all subsequent years is December 31. If you delay your 2014 MRD and take it during the first part of the 2015 calendar year, you would still need to take your 2015 MRD no later than December 31, 2015.

It might be helpful to review this page about the Retirement Distribution Center for more details on your MRD: https://www.fidelity.com/retirement...

Ken
1 month, 2 weeks ago
by
AskKen
 

what is my MRD % for 2014???

Thank you for your question about determining your minimum required distribution (MRD).

You can find your MRDs by visiting the Retirement Distribution Center (RDC) at Fidelity.com/RDC. There is an estimated MRD for each account calculated for you, starting the first year you reach age 70½. As long as Fidelity has the correct date of birth for you and your spouse (if you are married), the year end balances are correct, and the beneficiary information is correct, then those estimated MRDs are correct. Every year on January 1st or soon thereafter, the RDC will calculate your MRD for that year and track the distributions you take.

We have a great general article about how MRDs are calculated: https://www.fidelity.com/retirement...

We also have a series of frequently asked questions about MRDs: https://www.fidelity.com/retirement...

Please contact us if you have additional questions about your MRDs.

I hope this helps.

Ken
1 month, 4 weeks ago
by
AskKen