Word: taxingly
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Dates: during 1990-1999
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Created two years ago, the Roth IRA eliminates many of the headaches in dealing with retirement savings in your retirement years. There are no mandatory distributions, and because the Roth is funded with after-tax dollars, there is no tax upon withdrawal. It's all yours--even the part that grew tax-free. Not everyone qualifies for a Roth. You must have an annual household income under $100,000 to convert an old IRA to a Roth, and under $160,000 ($110,000 for singles) to start one with new money...
...have until Dec. 31 to undo it. The deadline was recently extended to allow those who converted without knowing whether they qualified for the Roth the opportunity to correct their error. Many rushed to convert in 1998 because of a one-time grant to spread the resulting tax over four years. The effect, though, was to extend the period in which you can unconvert and then reconvert to the Roth. You'd want to do that if your IRA's value is much lower now than when you originally converted. It can save a bundle in taxes. You lose...
...have until April 15, or the date you file your return, to open a tax-advantaged IRA, assuming you qualify. But it's increasingly likely that you'll qualify for a Keogh, which must be established by year-end. A Keogh is a tax-deferred savings vehicle, like a 401(k), for the self-employed. If you have left your job and now derive income from consulting or serving as a board member, for example, you are eligible to open a Keogh by contributing, on a pretax basis, 25% of your earnings up to $30,000. Once the account...
...general, you should max out on any tax-deferred savings opportunity. This has been especially true since Congress two years ago rolled back a punishing 15% excise tax on withdrawals from retirement accounts deemed, through a complicated formula, to be too large. Be careful, though, if your tax bracket will rise in retirement. Withdrawals from tax-deferred accounts get taxed as income. If you'll be retiring soon, new contributions might not have enough time to grow tax-deferred. You might be better served putting new savings into a tax-efficient mutual fund, like an index fund. When you cash...
According to tribal police and federal authorities, the smuggling took off several years ago when Canada lowered its cigarette tax. Until then much of the reservation's cash came from buying cheap cigarettes in the States and selling them illegally in Canada. "You could make 600% on a case of cigarettes," says Mohawk Charlie Little Tree. "When that ended, people became the easiest commodity." Little Tree is now facing charges for smuggling aliens; his son is already serving time for the same offense...