Dakar Delices

How well do you know Roth IRAs? Here are five tough questions. Let’s see how you do…

1. I am 72 years young and still working. Can I set up a Roth IRA?

Yes. Unlike a traditional IRA, which does not allow contributions past age 70 1/2, Roth IRAs have no age limitations. You can continue to contribute to your Roth as long as you have compensation.

2. I am married, age 57, file a joint tax return and make $65,000. I am a participant in a 401(k) plan at work and put $5,000 into my own traditional IRA. Can I set up a Roth IRA?

Not in the tax year in question. You already put your regular contribution limit ($4,000) into your traditional IRA along with another $1,000 catch-up contribution which is allowed because you are over age 50. In your case, you have made the maximum IRA contribution. If you put less into your traditional IRA, you could put the difference, up to $5,000, into a Roth IRA.

3. I am single and my modified adjusted gross income for 2006 was $115,000. I have an existing Roth IRA. Can I make a contribution for 2006?

No, you made too much money. For 2006, if your modified adjusted gross income was less than $95,000, you could make a full contribution to your Roth IRA. The rules say if it was more than $110,000, you cannot make any contribution. If it was between $95,000 and $110,000, there is a formula to calculate a partial contribution limit.

If you were married and filed a joint return, you could have made up to $150,000 and made a full Roth IRA contribution. If you were married and your modified adjusted gross income was over $160,000, no contribution would have been possible. For incomes falling between these numbers, a partial contribution determined by a formula could have been made.

Also note the income limits are now indexed; they will be higher in 2007 and beyond.

4. I have an existing traditional IRA and I want to roll it over to a Roth IRA. Is this possible?

It depends on four things: What year it is, how much money you make, your marital status and the type of income tax return you file. If you are talking about a tax year before 2010 and your adjusted gross income exceeds $100,000 or you are married and file a separate return, you can’t convert your traditional IRA to a Roth. Period.

After 2009, these limitations don’t apply and you are good to go. Moreover, you can spread the income tax due on the rollover over tax years 2011 and 2012.

5. I am 55 and have had my Roth IRA for 3 years. I just went on disability and need to withdraw a good portion of it. Is the withdrawal taxable? And since I am not 59 1/2 do I have to pay the 10% penalty tax?

Your Roth IRA consists of two elements: your contributions and earnings. You can take out any amount up to your total contributions tax free.

In order for any earnings withdrawal to be tax free, the distribution has to be a “qualified distribution”. To be qualified, the distribution needs to be made after five taxable years starting with the first Roth contribution.

Then assuming this five year rule is satisfied, you can take out money tax free if you are over age 59 1/2, disabled, or to buy a first home for yourself, your spouse, children or grandchildren ($10,000 maximum). The rules go on to say if you die and your spouse elects to treat your Roth IRA as their own, any distributions would be qualified.

Distributions before age 59 1/2 are subject to a 10% premature penalty tax. However, this tax only applies if the distribution is includable in income. If you take out your contributions, these are not taxed.

In your case, you qualify for one of the exceptions: disability. So there is no 10% penalty tax.

These examples are based on my interpretation of the rules and should not be relied upon as tax advice. The complexities of distributions from any qualified plan or IRA underscore the necessity to consult with a qualified tax professional prior to making any withdrawal.

It is a common knowledge that Australia is one of the most friendly countries to visit because of the great infrastructure and natural resources that they offer to the locals and tourists.

The popular travel destinations in Australia are the Great Ocean Road and Sydney Harbour. The Great Ocean Road experience offers offers a world class spectacular drive in downtown Melbourne, you can choose from a car drive or bus tour. On the other hand Sydney’s Harbour is also one of the world’s best. You can tour the bay for a scenic cruise by yacht, boat, kayak and through other exciting options.

Another great reason to travel down under is to experience scuba diving in the Australian waters.

Their colorful culture is as colorful with their reefs so it is one of the main factor that draw people to scuba dive in Australian coast.

Most enthusiasts have heard good reviews and raves about the Great Barrier Reef located in the west coast of Australia. It is a scuba diver’s dream because of its much publicized underwater sights and it is also the largest natural reef in this planet. If that is not enough, divers can also explore and experience the beauty of aquatic life in the northern coast. The popular dive spots are located along the Aratura Sea and in the Gulf Of Carpentaria which is in the border of Queensland and the Northern Territory.

If you want to explore the beaches in the southern area of Australia, the Great Australia Bight is the way to go. It leads to the waters between the country and Tasmania and offers different dive spots for divers. Meanwhile on the West, The Coral Sea is highly recommended and its main highlight are the vast water wildlife that awaits once you plunge into deep water.

For experienced divers, swimming in the southern coast of Adelaide will be another feather in their cap. It is not recommended for newbies because it is the home of the Blue Devil Fish, the fish itself is not dangerous but its trashing when caught so much sea wildlife experience is recommended before your encounter with this specie.

The northern diving spots are open to scuba divers all year long while the southern coast waters are seasonal. The east and west diving spots are the place to go for people who have the guts to encounter different sharks.

Australia offers numerous under water experience available in different parts of the country, theres definitely one suitable for the newbies and experienced scuba divers.

“There are two kinds of knowledge”, states Napoleon Hill, author of “Think and Grow Rich; “one is general and the other specialized”. Contrary to most educational systems Mr. Hill believed that general knowledge in and of itself was worth little, regardless of “quantity or variety”.

 

He further believed that knowledge is not power, as many to this day believe and state, but rather the potential for power. Knowledge, according to him, has a conditional requirement for power. It must be organized into a definite plan of action with a definite direction.

 

Mr. Hill says, “An educated man is not, necessarily, one who has an abundance of general or specialized knowledge”. Furthermore he states, “An educated man is one who has so developed the faculties of his mind that he may acquire anything he wants, or its equivalent, without violating the rights of others”.

 

He cites Henry Ford as an example. Mr. Ford was not concerned with having great general knowledge. If he needed the answer to a question that he didn’t know, he simply asked one of his employees that were experts in their field. Today we would call that a master mind group.

 

So was Napoleon Hill anti-knowledge?  Certainly not! He realized that only applied and directed knowledge had value, and that no one person had to posses it all personally.

 

So what does specialized knowledge have to do with thinking and growing rich?

 

“Think and Grow Rich”, does not state that riches will just appear. But rather to the willing mind, a way will open to acquire them through some sort of action. In Mr. Hill’s personal experience, this action most often required a special type of knowledge.

 

 Specialized knowledge as he defined it is, “knowledge of the service, merchandise or profession which you intend to offer in return for fortune”. Many examples are given in his text of this process, but the cases are all similar. There is a call for action, a demand for special knowledge and then an action to be taken.

 

A simple illustration may explain it best. Often times we need to get from point A to point B in life. This process will require us to take action. In order to accomplished this we need to have or gain specific information, a specific skill, provide a service, etc. As we acquire and utilize these things we can begin to make the transition toward our goal.

 

A secondary result, he noted, will often occur at this point. An idea will be born with the addition of imagination to our specialized knowledge. It’s sort of like being in the right place at the right time and all the right things are in place.

 

The birth of this idea is our moment of opportunity. It’s the seizing, or rather our seizing of the moment, that can lead to our fortune.

 

“Think and Grow Rich” introduces us, the readers, to the need and the possibility of making dramatic changes in our lives and reaping the benefits. The choice is always ours. The alternative though, is to remain the same, doing the same things and seeing the same results.