Roth IRAs
- § 6.01 Overview of Taxation of Participants in Roth IRAs
- —–[1] Nontaxable Qualified Distributions
- —–[2] Taxable Nonqualified Distributions
- —–[3] Transfers from Traditional IRAs and Certain Other Plans
- —–[4] TQR Contributions by Beneficiaries
- —–[5] Nontaxable Transfers between Roth IRAs
- —–[6] Nontaxable Rollovers of Certain Military Death Payments
- —–[7] Surviving Spouse Election to Become Owner
- —–[8] Transfers Incident to Divorce or Legal Separation
- —–[9] Income Tax Withholding
- § 6.02 Contributions to a Roth IRA
- —–[1] Types of Contributions to Fund a Roth IRA
- —–[2] Roth Conversions
- ———-[a] Taxation of Roth Conversions
- —————[i] Taxation of Roth Conversions Generally
- —————[ii] Passing a Roth Convesion from a Qualified Plan through IRAs
- —————[iii] Relative Timing of an IRA Roth Conversion and Qualified Plan Rollover
- —————[iv] Roth Conversion from Qualified Plan with Personal Retention of Investment
- —————[v] Tracing Funds from a Qualified Plan through an IRA to a Roth IRA
- —————[vi] Special Treatment of Distributions of Employee Contributions
- —————[vii] Multiple Rollovers from a Single Distribution by a Qualified Plan
- —————[viii] Applicability of Substance-Over-Form Doctrines to Roth Conversions
- ——————–[A] The Substance-Over-Form Doctrine
- ——————–[B] Step Transactions Not Applicable to Roth Conversions Using IRA as Conduit
- ——————–[C] Combining Direct and Indirect Roth Conversions
- ——————–[D] Roth Conversions in Different Tax Years
- ——————–[E] Lack of Intent to Complete Non-Simultaneous Steps
- ——————–[F] Step Transactions and the Passage of Time
- —————[ix] Income Tax Withholding and Penalty for Premature Distribution
- ———-[b] Eligibility to Make Roth Conversions
- ———-[c] Methods for Making Roth Conversions
- —————[i] Choice of Roth Conversion Methods
- —————[ii] Requirements for an Indirect Rollover
- ———-[d] Recharacterization of Roth Conversions
- —————[i] Recharacterizations of Pre-2018 Roth Contributions and Roth Conversions
- ——————–[A] Recharacterizations of Pre-2018 Roth Conversions Generally
- ——————–[B] Recharacterization of a Failed Roth Conversion Still Available
- ——————–[C] Recharacterizations of Regular Contributions to IRAs Still Available
- —————[ii] Grant of Additional Time for Recharacterization
- ——————–[A] Requirements for Grant of Additional Time for Recharacterization
- ——————–[B] Failure to Recharacterize Not Discovered
- ——————–[C] Intervening Events beyond Taxpayer’s Control
- ——————–[D] Unaware of Need for Recharacterization Despite Reasonable Diligence
- ——————–[E] Reliance on Qualified Tax Professional
- —————[iii] Denial of Additional Time for Recharacterization
- ———-[e] Roth Conversions by Surviving Spouses and Other Beneficiaries
- ———-[f] Failure to meet Roth Conversion Conditions and Potential Mitigation
- —————[i] Must Meet Conditions for a Roth Conversion for the Year of Distribution
- —————[ii] Eliminating Excess Contributions by Making Corrective Distributions
- —————[iii] Eliminating Excess Contributions by Making Ordinary Distributions
- —————[iv] Eliminating an Excess Contribution by Absorption
- —————[v] Eliminating Excess Contributions by Recharacterization
- —–[3] Rollovers from Designated Roth Accounts
- —–[4] Rollover Contributions Between Roth IRAs
- ———-[a] Choice of Indirect Rollover or Trustee-to-Trustee Transfer
- ———-[b] Requirements for an Indirect Rollover
- ———-[c] Only One Rollover per Year
- ———-[d] Rollover Available to Beneficiary Who is Surviving Spouse
- —–[5] Nontaxable Rollovers of Certain Military Death Payments
- —–[6] After-Tax Contributions from a Qualifying Military Reservist
- § 6.03 Tax-Free Qualified Distributions from Roth IRAs
- —–[1] Qualified Distribution Defined
- —–[2] Excess Contributions
- —–[3] No Carryover of Five-Year Period from a Designated Roth Account
- § 6.04 Taxation of Nonqualified Distributions from Roth IRAs
- —–[1] Nonqualified Distributions in General
- —–[2] Classification and Taxation of Components of Nonqualified Distributions
- —–[3] The Ten Percent Penalty on Early Distributions
- ———-[a] Exceptions to the Penalty Common to IRAs and Roth IRAs
- ———-[b] Special Exception for Previously Taxed Components
- —–[4] Examples Illustrating the Taxation of Nonqualified Distributions
- § 6.05 Illustrations of Long-Term Tax Savings Afforded by Roth IRAs
- —–[1] Long-Term Tax Savings Due to Tax Rate Differential
- —–[2] Long-Term Tax Savings Due to Transfer of High Income Assets
- —–[3] Transfers to Roth IRAs When Funds Not Needed in Retirement
- —–[4] Retention of Funds in Both Traditional IRAs and Roth IRAs
- —–[5] Potential Collateral Benefits of TQR Contributions
- § 6.06 Transfers of Roth IRAs Incident to Divorce or Legal Separation
- § 6.07 Surviving Spouse’s Election to Become the Owner of a Roth IRA
- § 6.08 Inherited Roth IRAs
- § 6.09 Personal Borrowing While Maintaining a Roth IRA
- § 6.10 Retiree’s Payment of Roth IRA Expenses
- § 6.11 Tax-Free Restorative Payments
- § 6.12 Enhancement of an Annuity Contract on Demutualization of the Issuer
- § 6.13 Applicability of Community Property Laws to Roth IRAs
- § 6.14 Arrangements Improperly Shifting Value to a Roth IRA from Related Entities
- —–[1] Value Shifts to a Roth IRA Generally
- —–[2] Roth Value Shifts Attacked as Prohibited Transactions
- —–[3] Roth Value Shifts Attacked by Reallocating Income and Deductions
- —–[4] Roth Value Shifts Attacked Under the Substance-Over-Form Doctrine
- ———-[a] IRS Initially Experienced Mixed Results Applying the Doctrine
- ———-[b] A Serious But Problematic Setback for the IRS in Applying the Doctrine
- —————[i] The Sixth Circuit Allowed Use of a DISC to Avoid Roth IRA Limits
- —————[ii] The Summa Court Appeared to Overlook a Significant Fact
- —————[iii] The Gregory Case Indicates a Lack of Substance in Summa
- —————[iv] The Summa Decision Reinforced by Two Subsequent Circuit Court Cases
- ———-[c] The Tax Court Distinguishes the Summa Case
- § 6.15 Tax Withholding from Distributions Made by Roth IRAs
- —–[1] Withholding Tax on Nonqualified Distributions from Roth IRAs
- —–[2] Election to Eliminate Withholding Tax for Nonqualified Distributions
- —–[3] Roth Conversions
- § 6.16 Tax on Net Investment Income Not Applicable
-
- § 6.17 Estate or Gift Tax Imposed on Roth IRA Benefits
- § 6.18 Roth IRA Contributions by Retirees Working Part-Time
- § 6.17 Estate or Gift Tax Imposed on Roth IRA Benefits