Roth IRA
Frequently Asked Questions
These frequently asked questions and answers are provided for general
information only and should not be cited as any type of legal authority.
They are designed to provide the user with information required to respond
to general inquiries. Due to the uniqueness and complexities of Federal
tax law, it is imperative to ensure a full understanding of the specific
question presented, and to perform the requisite research to ensure a
correct response is provided.
For more specific questions, e-mail us at info@MidasFunds.com or
contact Midas Funds Shareholder Services at 1-800-400-MIDAS
(6432),
8 a.m.-6 p.m. Eastern Time.
What
is a Roth IRA?
If
I have a Traditional, SEP or SIMPLE IRA, can I move
money
into a Roth IRA?
How
long do I have to wait before I can convert my IRA
to a Roth
IRA?
What
is the process to convert my IRA to a Roth IRA?
What
is the deadline for making a Roth IRA Conversion?
How
do I know if I qualify for a Roth Conversion?
I
contributed too much money to my Roth IRA.
What can I do
if the tax year deadline has lapsed?
I
have two Roth IRAs, can I combine them?
I
am over 70-½ and need to take a Required Minimum
Distribution (RMD)
from my IRA. Can I convert my assets to a Roth IRA
before the deadline?
What
is a Roth IRA?
The
Roth IRA is an alternative to the Traditional IRA.
Unlike a
Traditional IRA, Roth IRA account holders must meet certain
income requirements to qualify; accountholders must have earned
Income and an AGI (Adjusted
Gross Income) below $116,000 if single or $169,000 if married,
filing jointly.
Roth IRA contributions are made with after-tax
dollars but funds invested can grow tax-deferred when certain
conditions are met.
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If
I have a Traditional, SEP or SIMPLE IRA, can I move money
into a Roth IRA?
Yes, you can 'convert' your
Traditional, SEP or SIMPLE IRA into a Roth IRA if you meet
the requirements for a Roth IRA.
Previously, if you wanted
to move your assets from a qualified plan to a Roth IRA,
you had to roll over the assets to a Rollover IRA, then convert the
Rollover IRA to a Roth IRA.
Starting in 2008, funds from your employer retirement plan can be rolled directly to a Roth IRA - with, however, federal income tax due on pre-tax contributions and earnings. Once money has been moved to a Roth IRA, additional earnings accumulate tax-free.
The Pension Protection Act also eliminates the Roth rollover ceiling starting in 2010, which prevented a person earning over $100,000 in modified adjusted gross income from converting to a Roth. Starting in 2010, anyone - regardless of income - can convert funds from a 401(k) plan to a Traditional or Roth IRA.
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How long do I have to wait before I can convert my IRA to a Roth
IRA?
Contributory IRAs, Rollover
IRAs and SEP-IRAs can be converted directly to a Roth IRA
at any time.
SIMPLE IRAs can be directly converted to a
Roth IRA two years after the date of your initial contribution
into the SIMPLE IRA maintained by your employer.
The two-year
holding requirement for SIMPLE IRAs applies regardless
of your age.
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What
is the process to convert my IRA to a Roth IRA?
If your IRA is not held
at Midas Fund, you can convert a Traditional, SEP or SIMPLE
IRA (after a two-year holding period is met) at another
institution to a Midas Fund Roth IRA using either:
 Transfer your IRA to an identical IRA at Midas Fund. When the transfer is complete, you can initiate the conversion to a Roth IRA.
Convert your Traditional, SEP or SIMPLE IRA to a Roth IRA while custodied at your other institution. When the conversion is complete, you will need to initiate the transfer of your Roth IRA to a Midas Fund Roth IRA.
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What
is the deadline for making a Roth IRA Conversion?
You must complete your Roth IRA Conversion no later than December 31 of the tax year. To ensure that your account is converted by year end, it is recommended that you submit your paperwork no later than December 15.
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How
do I know if I qualify for a Roth Conversion?
To be eligible, you must
have MAGI (Modified Adjusted Gross Income) not exceeding
$100,000 if filing single or jointly. For this purpose,
MAGI does not include the amount of the conversion, and
beginning in 2005 clients over 70-½ do not include
the amount of their Required Minimum Distribution (RMD).
Married
individuals filing separately are not eligible to convert
from a Traditional IRA to a Roth IRA.
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I
contributed too much money to my Roth IRA. What can I do
if the tax year deadline has lapsed?
You can remove the excess funds after the tax filing deadline, including extensions, but a 6% penalty will be charged.
Note: The IRS has not addressed the issue regarding whether earnings must be removed after the tax filing deadline for excess Roth IRA contributions. It is recommended that you check with your tax advisor to determine the best solution for your individual situation.
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I
have two Roth IRAs, can I combine them?
Yes, you can combine
your Roth IRAs.
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I
am over 70-½ and need to take a Required Minimum Distribution
(RMD) from my IRA.
Can I convert my assets to a Roth
IRA before the deadline?
If you want to convert your Traditional, SEP and/or SIMPLE IRA to a Roth IRA and are required to take the RMD from your non-Roth IRA, the RMD must be removed before the conversion can occur. The RMD cannot be converted and cannot be left in the Traditional IRA at the time of conversion. The first amounts removed from the Traditional IRA represent the RMD.
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