Matt wrote:

- quote -

I agree -- if her total Roth contribution is not
to exceed the $3000/$3500 limit, and if there's no early
distribution penalty from the former employer plan, it's
probably simpler to take the money, pay taxes on it, and
deposit directly into the Roth IRA.

However, even if the check was written in a way the
investment firm could process, it would have to be rolled
over to a conventional IRA and converted to a Roth, so you
still didn't quite have the paperwork in order. But I
see you noticed that.

--
This account is subject to a persistent MS Blaster and SWEN attack.
I think I've got the problem resolved, but, if you E-mail me
and it bounces, a second try might work.
However, please reply in newsgroup.

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- quote -

Yes, it would be easier, providing your joint income allows
a ROTH IRA. But.....

- quote -

You are still going to pay taxes on the $900, NOT $700.

Helen, EA in PA
Member of The Tax Gang
President, PA Society of Enrolled Agents
Campaigning for NAEA Board of Directors - Looking for YOUR vote

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My spouse was recently was sent a distribution from a former
employer, their employer sponsored retirement plan, for
about $900.

Naturally, the employer deducted 20% for federal taxes, and
as part of the initial investment into her Roth IRA, I
planned on making up what the employer deducted to avoid the
tax hit next spring.

So far so good.

As it turns out, the check was made out to my spouse's
former surname (goes back to before we were married), and
the investment firm sent it back asking for a signature
guarantee from a bank employee, since the Roth IRA is in her
new name, and the check is made out to her old name. The
instructions for a signature guarantee make sense to me,
it's just a big hassle us.

Wouldn't it be easier to just cash the distribution check at
our bank, and then issue a personal check for the same
amount or more to send to the investment firm to put into
her Roth IRA (current year contribution)? They said they
cannot put the distribution directly into a Roth IRA, as it
is still characterized as pre-tax dollars. As I understood
it, a Roth IRA requires taxed dollars.

Otherwise, I'm doing a signature guarantee and setting up a
rollover IRA just to for it to be recharacterized to a Roth
IRA in the near future, and will be taxed on it for changing
it to a Roth anyway. Seems like a lot of work for nothing.

Either way I suspect I'm going to be liable for the same
amount in taxes, I'm just looking for the path of least
resistance. Just wondering if cashing the distribution
check myself and putting that money and more initially into
her Roth makes sense to anyone else. The upside now is that
it's only about $700 that I will be taxed on, not like it's
thousands of dollars in a traditional IRA being
recharacterized as a Roth (for a big tax hit!).

Thanks,
Matt

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