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401(k)

Q&A: Roth IRA

October 13, 2014 By Liz Weston

Dear Liz: I have a 401(k) that has a required annual distribution because I am over 71 1/2 years old. Can I use this distribution as qualified income to invest in a Roth IRA? I have no W-2 earnings, although I do have other income sources that are reported on 1099 forms.

Answer: To contribute to a Roth or other individual retirement account, you must have taxable compensation, which the IRS defines as wages, salaries, commissions, tips, bonuses or net income from self-employment. The IRS also includes taxable alimony and separate maintenance payments as compensation for IRA purposes.

So if the money reported on one of those 1099 forms is from self-employment income, then you can contribute to a Roth IRA. If the form is reporting interest and dividends or other income that doesn’t meet the IRS definition of taxable compensation, then you’re out of luck.
If you don’t have income that meets the IRS definition of taxable compensation, but your spouse does, you may still qualify for IRA contributions, provided you file a joint return that meets the required income thresholds.

Filed Under: Investing, Q&A, Retirement Tagged With: 401(k), q&a, Retirement, Roth IRA

Thursday’s need-to-know money news

October 2, 2014 By Liz Weston

download (1)Today’s top story: How to boost your credit score by rearranging your debt. Also in the news: Why borrowing from your 401(k) is a bad idea, how long you need to keep your tax records, and you still have time to cut this year’s tax bill.

Can Rearranging My Debt Boost My Credit Score?
Playing the credit card shuffle.

Borrowing from 401(k) can cost more than you think
Your monthly retirement income could be reduced by hundreds.

How Long Should I Keep My Tax Records?
This time, being a pack rat can pay off.

You may still be able to cut last year’s tax bill
But you better act fast.

What Twenty-Somethings Need To Know About Retirement And Social Security
The sooner you start saving, the better off you’ll be.

Filed Under: Liz's Blog Tagged With: 401(k), Credit Cards, Credit Score, tax paperwork, Taxes

Thursday’s need-to-know money news

September 18, 2014 By Liz Weston

Image9Today’s top story: The must-have personal finance apps. Also in the news: The financial implications of caring for a loved one, how to stay safe in the cloud, and what really happens after your credit card is stolen.

6 must-have personal finance apps
Apps to put on that shiny new toy of yours.

The Financial Implications of Being a Caregiver
How to handle the financial implications that come with caring for an elderly parent or relative.

Staying Safe in the Cloud
There are ways around having to give your personal information.

What Really Happens After Your Credit Card Is Stolen
Besides causing you stress.

5 ways to make your lousy 401(k) plan stellar
Give your retirement plan a boost.

Filed Under: Liz's Blog Tagged With: 401(k), caregiving, cloud, credit card theft, Identity Theft, personal finance apps

Tuesday’s need-to-know money news

August 26, 2014 By Liz Weston

imagesToday’s top story: The secret weapon you should use to build a bigger 401(k). Also in the news: Avoiding the deferred interest credit card trap, talking to your kids about money before they leave for college, and why some borrowers with older student loans could see their payments reduced.

The Secret To Building A Bigger 401(k)
A financial adviser could be the secret weapon.

When 0% Interest Isn’t 0%: Credit Card Tricks You Must Know
Avoiding the deferred interest trap.

How to talk money before they go off to college
One of the most important conversations you’ll have before they leave.

Help is on the way for some with student loans
Those with older loans could see some relief.

The Most Expensive Mortgage Mistakes You Can Make
Avoid these at all costs.

Filed Under: Liz's Blog Tagged With: 401(k), college students and money, Credit Cards, financial aid, kids and money, mortgages, Retirement

Wednesday’s need-to-know money news

August 20, 2014 By Liz Weston

130709154122-overdue-bill-debt-collection-620xaToday’s top story: Learn how to fight back against debt collectors. Also in the news: Finding the perfect retirement location, protecting your 401(k) from a market drop, and the best American cities to raise your family in.

How One Man Learned to Fight Back Against Debt Collectors
Don’t be afraid to push back.

How to pick the perfect retirement location
Getting the most for your retirement savings.

Here’s How to Protect Your 401(k) from the Next Big Market Drop
Avoiding damage from the next big downturn.

The Best Cities For Working Parents
Choosing the best place to raise your family.

Which States Give You More for Your Money?
A hundred dollars isn’t always worth a hundred dollars.

Filed Under: Liz's Blog, Liz's Books Tagged With: 401(k), city rankings, debt, debt collectors, market drops, Retirement

Friday’s need-to-know money news

August 15, 2014 By Liz Weston

download (1)Today’s top story: How to tell when credit card rewards are actually worth it. Also in the news: Big changes ahead for your 401(k), using your job hunting expenses as tax deductions, and how to determine if a charity is worth your hard earned money.

5 Times Credit Card Rewards Are Worth It
When credit cards rewards truly pay off.

5 Future 401(k) Changes You Need to Keep an Eye On
Big changes are ahead.

Writing Off Your Job Hunting Expenses
Your job search expenses could be tax deductible.

How to Pick a Charity
Making sure your money goes where its needed.

5 Unconventional Ways To Use Your Accounts
Could your 401(k) be used to purchase your new home?

Filed Under: Liz's Blog Tagged With: 401(k), bank accounts, charities, Credit Cards, job hunting, tax deductions

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