Publication 590
Individual Retirement Arrangements (IRAs)

For use in preparing 2002 Returns

Table of Contents

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Publication 590, Individual Retirement Arrangements (IRAs)

• Important Changes for 2002
• Important Changes for 2003
• Important Reminders
• 1. Traditional IRAs
  • Important Changes for 2002
  • Important Changes for 2003
  • What Is a Traditional IRA?
  • Who Can Set Up a Traditional IRA?
    • What Is Compensation?
      • What Is Not Compensation?
  • When Can a Traditional IRA Be Set Up?
  • How Can a Traditional IRA Be Set Up?
    • Individual Retirement Account
    • Individual Retirement Annuity
    • Individual Retirement Bonds
    • Employer and Employee Association Trust Accounts
    • Simplified Employee Pension (SEP)
    • Required Disclosures
  • How Much Can Be Contributed?
    • General Limit
    • Spousal IRA Limit
    • Filing Status
    • Less Than Maximum Contributions
    • More Than Maximum Contributions
  • When Can Contributions Be Made?
  • How Much Can I Deduct?
    • Are You Covered by an Employer Plan?
      • For Which Year(s) Are You Covered?
      • Situations in Which You Are Not Covered
    • Limit If Covered By Employer Plan
      • Social Security Recipients
      • Deduction Phaseout
      • How To Figure Your Reduced IRA Deduction
    • Reporting Deductible Contributions
    • Nondeductible Contributions
    • Examples - Worksheet for Reduced IRA Deduction for 2002
  • What If I Inherit an IRA?
  • Can I Move Retirement Plan Assets?
    • Trustee-to-Trustee Transfer
    • Rollovers
      • Time Limit for Making a Rollover Contribution
      • Rollover From One IRA Into Another
      • Rollover From Employer's Plan Into an IRA
    • Transfers Incident To Divorce
  • When Can I Withdraw or Use IRA Assets?
    • Age 59½ Rule
      • Exceptions
    • Contributions Returned Before the Due Date
  • When Must I Withdraw IRA Assets? (Required Distributions)
    • IRA Owners
    • Minimum Distributions
      • Change in Marital Status
      • Figuring the Required Minimum Distribution
      • Which Table Do I Use To Determine My Required Minimum Distribution?
      • What Age(s) Do I Use With the Table(s)?
      • Miscellaneous Rules for Required Minimum Distributions
  • Are Distributions Taxable?
    • Distributions Fully or Partly Taxable
    • Figuring the Nontaxable and Taxable Amounts
    • Recognizing Losses on Traditional IRA Investments
    • Inherited IRAs
    • Other Special IRA Distribution Situations
    • Reporting and Withholding Requirements for Taxable Amounts
  • What Acts Result in Penalties or Additional Taxes?
    • Prohibited Transactions
      • Exemptions From Penalties
      • Investment in Collectibles
    • Excess Contributions
      • Tax on Excess Contributions
      • Excess Contributions Withdrawn by Due Date of Return
      • Excess Contributions Withdrawn After Due Date of Return
      • Deducting an Excess Contribution in a Later Year
    • Early Distributions
    • Excess Accumulations (Insufficient Distributions)
    • Reporting Additional Taxes
• 2. Roth IRAs
  • Important Changes for 2002
  • What is a Roth IRA?
  • When Can a Roth IRA Be Set Up?
  • Can I Contribute to a Roth IRA?
    • How Much Can Be Contributed?
    • When Can I Make Contributions?
    • What If I Contribute Too Much?
  • Can I Move Amounts Into a Roth IRA?
    • Conversions
      • Converting From Any Traditional IRA
      • Converting From a SIMPLE IRA
    • Rollover From a Roth IRA
    • Failed Conversions
    • Recharacterizations
      • Reconversions
      • How Do I Recharacterize a Contribution?
      • Reporting a Recharacterization
      • Recharacterization Examples
  • Are Distributions From My Roth IRA Taxable?
    • What Are Qualified Distributions?
    • Additional Tax on Early Distributions
    • Ordering Rules for Distributions
    • How Do I Figure the Taxable Part?
      • Examples
  • Must I Withdraw or Use Roth IRA Assets?
    • Recognizing Losses on Investments
    • Distributions After Owner's Death
• 3. Simplified Employee Pension (SEP)
  • Important Changes for 2002
  • Important Changes for 2003
  • What Is a SEP?
  • How Much Can Be Contributed on My Behalf?
    • Figuring the 25% Limit
      • Deduction Limit for a Self-Employed Person
      • Time Limit for Contributions
      • Overall Limit - Employer With Defined Contribution and SEP Plans
    • Are My Employer's Contributions Taxable?
    • Can I Contribute to My SEP-IRA?
  • What Is a Salary Reduction Arrangement?
  • When Can I Withdraw or Use Assets?
• Savings Incentive Match Plans for Employees (SIMPLE)
  • Important Changes for 2002
  • Important Changes for 2003
  • What Is a SIMPLE Plan?
    • Eligible Employees
  • How Are Contributions Made?
  • How Much Can Be Contributed on My Behalf?
  • When Can I Withdraw or Use Assets?
    • Are Distributions Taxable?
      • Rollovers and Transfers Exception
      • Additional Tax on Early Distributions
• 4. Retirement Savings Contributions Credit
• 5.
  • How To Get Tax Help
• Appendices

Index

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A

• Account balance
• Additional taxes
• Adjusted gross income limit, Modified AGI
• Adjusted gross income limit, Modified AGI
• Age limit, Roth IRA
• Age limit, Roth IRA
• Age limit, Traditional IRA
• Age limit, Traditional IRA
• Age limit, Traditional IRA
• Annuity
• Annuity
• Annuity
• Annuity distributions, From an insurance company

B

• Basis
• Basis
• Basis
• Beginning date, required
• Beneficiaries
• Beneficiaries
• Beneficiary, date determined
• Bonds, retirement
• Broker's commissions
• Broker's commissions

C

• Collectibles
• Community property
• Compensation, Alimony and separate maintenance
• Compensation, Commissions
• Compensation, Defined
• Compensation, Employee
• Compensation, Roth IRA
• Compensation, Self-employment
• Compensation, Self-employment
• Compensation, Self-employment
• Compensation, Self-employment
• Compensation, Self-employment
• Compensation, Wages, salaries, etc.
• Conduit IRA
• Contribution limits, More than one IRA
• Contribution limits, Reduced
• Contribution limits, Roth IRA
• Contribution limits, SEP-IRA
• Contribution limits, SEP-IRA
• Contribution limits, SEP-IRA
• Contribution limits, Spousal IRA
• Contribution limits, To traditional and Roth IRAs
• Contribution limits, Traditional IRA
• Contributions, Deductible employee
• Contributions, Designating the year
• Contributions, Employer
• Contributions, Excess
• Contributions, Excess
• Contributions, Excess
• Contributions, Filing before making your contribution
• Contributions, Less than maximum
• Contributions, Matching (SIMPLE)
• Contributions, More than maximum
• Contributions, Nondeductible
• Contributions, Nonelective employer
• Contributions, Not required
• Contributions, Reporting deductible
• Contributions, Roth IRA
• Contributions, Salary reduction
• Contributions, SEP-IRA
• Contributions, SIMPLE IRA
• Contributions, Traditional IRA
• Contributions, When to contribute
• Conversions, 10% additional tax on early distributions
• Conversions, Failed
• Conversions, From traditional to Roth
• Conversions, Roth IRA
• Credit, for retirement savings contributions

D

• Deductible contributions
• Deduction limits, Reduced or no deduction
• Deduction phaseout
• Deduction worksheet for self-employed
• Deduction, federal estate tax
• Deferrals, Excess
• Defined benefit plan
• Defined contribution plan
• Deposit, frozen
• Designated beneficiary
• Disabled
• Distributions, After death of owner
• Distributions, After death of owner
• Distributions, Beneficiaries
• Distributions, Beneficiaries
• Distributions, Beneficiary other than spouse
• Distributions, Fully or partly taxable
• Distributions, Income from
• Distributions, Inherited IRAs
• Distributions, Installments
• Distributions, Insufficient
• Distributions, Minimum
• Distributions, Not qualified
• Distributions, Ordering rules, Roth
• Distributions, Partial rollovers
• Distributions, Periodic
• Distributions, Roth IRA
• Distributions, Roth IRA
• Distributions, Surviving spouse
• Distributions, Tax treatment
• Distributions, Tax treatment
• Divorce, Qualified domestic relations order
• Divorce, Rollovers
• Divorce, Transfer of interest

E

• Early Distributions, Additional Tax on
• Early distributions, Additional tax on
• Early Distributions, Additional Tax on
• Early distributions, Age 59 rule
• Early distributions, Defined
• Early distributions, Exceptions
• Early distributions, Exceptions
• Early distributions, Exceptions to age 59 rule
• Education expenses
• Employees, Eligible for SIMPLE
• Employees, Excludable from SIMPLE
• Employer plans, Benefits from previous
• Employer plans, Covered by
• Employer plans, If covered
• Employer plans, If spouse covered
• Employer plans, Limit if covered
• Employer plans, Nonvested employees
• Employer plans, Nonvested employees
• Employer plans, Not covered
• Employer plans, Social security coverage, Railroad retirement coverage
• Employer plans, Year(s) covered
• Endowment contracts
• Estate tax
• Excess contributions
• Excess contributions

F

• Fiduciary
• Filing status
• Filing status
• Firefighters, volunteer
• Form, 1099-R
• Form, 5329
• Form, 5329
• Form, 5329
• Form, 5329
• Form, 8606
• Form, 8606
• Form, 8606
• Form, 8606
• Form, 8606
• Form, W-2

H

• Home, first
• How to, Avoid failed conversion
• How to, Figure the taxable part of a distribution that is not a qualified distribution from a Roth IRA
• How to, Figure your reduced IRA deduction
• How to, Recharacterize
• How to, Recharacterize a contribution
• How to, Set up an IRA
• How to, Treat withdrawn contributions
• How to, Treat withdrawn interest or other income

I

• Important changes
• Important changes
• Important changes
• Important changes
• Important changes
• Important changes
• Important changes
• Individual retirement account
• Individual retirement account
• Individual retirement annuity
• Individual retirement arrangements (IRAs), Roth IRA
• Individual retirement arrangements (IRAs), SIMPLE IRA
• Individual retirement arrangements (IRAs), Traditional IRA
• Individual retirement arrangements (IRAs), When set up
• Inherited IRAs , From spouse
• Inherited IRAs, Contributions
• Inherited IRAs, From other than spouse
• Inherited IRAs, From other than spouse
• Inherited IRAs, Rollovers
• Insufficient distributions
• Investment in collectibles, Exception

K

• Keogh plans

L

• Life insurance
• Limits, Contributions to SIMPLE
• Limits, Employer matching contributions
• Limits, Nonelective employer contributions
• Limits, Salary reduction contributions
• Losses on IRAs, Roth
• Losses on IRAs, Traditional

M

• Marital status, change in
• Matching employer contributions limit
• Medical expenses
• Medical insurance
• Minimum distributions, From Roth IRA
• Minimum distributions, Which table to use, Distribution period, Life expectancy

N

• Nondeductible contributions, Failure to report
• Nondeductible contributions, Tax on early distributions
• Nondeductible contributions, Tax on earnings
• Nondeductible contributions, Withdrawals

P

• Penalties, Overstatement of nondeductible contributions
• Penalties, Prohibited transactions
• Prohibited transactions, Borrowing on an annuity contract
• Prohibited transactions, Exemptions from penalties
• Prohibited transactions, Investment in collectibles
• Prohibited transactions, Pledging an account as security
• Prohibited transactions, Taxes on

Q

• Qualified distributions, Roth

R

• Rate Table for Self-Employed
• Rate Worksheet for Self-Employed
• Recharacterizations
• Reconversions
• Recordkeeping
• Reporting, A recharacterization
• Reporting, Additional taxes
• Reporting, Nontaxable distribution on Form 8606
• Reporting, Rollovers
• Reporting, Rollovers
• Reporting, SEP-IRA contributions
• Reporting, Tax on excess accumulations
• Reporting, Taxable amounts
• Reporting, Taxable distributions
• Required distributions, Conversions
• Required distributions, Miscellaneous rules
• Required distributions, Required beginning date
• Required distributions, Rollovers
• Required distributions, Rollovers
• Reservists
• Retirement bonds
• Retirement bonds
• Retirement plans, eligible
• Rollovers, And transfers
• Rollovers, Direct rollover option
• Rollovers, Eligible rollover distribution
• Rollovers, From a Roth
• Rollovers, From an IRA
• Rollovers, From an IRA
• Rollovers, From an IRA
• Rollovers, From employer's plan into an IRA
• Rollovers, From one IRA into another
• Rollovers, In general
• Rollovers, Notice
• Rollovers, Roth IRAs
• Rollovers, Time limit
• Rollovers, To an IRA
• Rollovers, Waiting period between
• Rollovers, Withholding requirements
• Roth IRAs, Contribution limit
• Roth IRAs, When to set up

S

• Salary reduction arrangement
• Salary reduction arrangement
• Savings Incentive Match Plans for Employees (SIMPLE) ( See SIMPLE IRAs )
• Section 501(c)(18) plan
• Section 501(c)(18) plan
• Section 501(c)(18) plan
• Section 501(c)(18) plan
• Self-employed person
• Self-employed person
• SEP ( See Simplified employee pension )
• SIMPLE IRAs, Conversion to Roth
• SIMPLE Plan, Defined
• Simplified employee pension, Contribution limits
• Simplified Employee Pension, Defined
• Simplified employee pension, Defined
• Simplified employee pension, Employer's contributions
• Simplified employee pension, Excess employer contributions
• Simplified employee pension, Limits on deferrals
• Spousal IRA
• Suggestions for publication
• Surviving spouse
• Surviving spouse
• Switch from the five-year rule

T

• Tables I, II, and III
• Tables I, II, and III
• Tables I, II, and III
• Tables I, II, and III
• Tables I, II, and III
• Tables I, II, and III
• Tax year
• Tax-sheltered annuity
• Taxpayer Advocate
• Traditional IRAs, Disclosures, required
• Traditional IRAs, Example, comprehensive
• Traditional IRAs, Kinds of IRAs
• Traditional IRAs, Moving assets
• Traditional IRAs, Social security recipients
• Traditional IRAs, Transfers
• Traditional IRAs, Transfers to Roth IRAs
• Trust account
• Trust as beneficiary
• Trustee, same
• Trustee, same
• Trustee-to-trustee transfer
• Trustees' fees
• Trustees' fees
• TTY/TDD information
• Two-year rule

W

• Withdrawals
• Withdrawals
• Withdrawals
• Withdrawals
• Withdrawals
• Withdrawals
• Withdrawals, tax-free
• Withholding, IRA distributions delivered outside the United States
• Withholding, On rollover
• Withholding, Tax on distributions