"gindie" <gindie[at]hotmail.com> writes:

- quote -

If this is the company I think it is :-), anyone looking
to answer the original poster's questions may want to
look at:
http://www.saic.com/saic-ipo/qa.html
to see the company's take on these things

--
Rich Carreiro rlcarr[at]animato.arlington.ma.us

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2005) - All rights reserved. > << ================================================== ===== >

"gindie" <gindie[at]hotmail.com> wrote:

- quote -

If you like.

- quote -

If you've made Roth contributions and it turns out your AGI
prohibits them you have time even after December 31 to fix
it. You can either withdraw the excess or recharacterize it
as a traditional IRA contribution, with the same treatment
for th earnings.

It's not necessary to keep the potentially excess
contributions in their own account, but that might make it
more understandable to you if you do have to change it. The
rules for calculating how much must be attributed to
earnings are in IRS Publication 590.

--
Phil Marti
Clarksburg, MD

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2005) - All rights reserved. > << ================================================== ===== >

I need to do a little explanation before askng my questions.

In 2006, my employer may IPO. In conjunction with this,
they want to distribute all of the IPO proceeds as a
"special dividend" to shareholders holding taxable and
tax-deferred ESOP stock. However, instead of re-investing
the ESOP dividend into more stock and keeping it in the
retirement plan, they are petitioning the IRS to allow them
to pay the dividend on the ESOP shares in cash to the
employee, basically resulting in a forced distribution from
the retirement plan that will be taxed at ordinary income
tax rates (but not subject to 10% penalty)

Many employees are objecting to this, and it is far from
certain that the company will be able to get away with this.
There is no timetable on the IRS decision. It could come
in 2006 or later.

Nonetheless, if this is approved, then the resulting
increase of income will put me over the income limits for a
Roth IRA. In light of the uncertainty of the substance and
timing of the IRS ruling:

1) Should I go ahead and start funding my 2006 Roth IRA?
2) What happens if the IRS approves the company's request
sometime in 2006 and pushes me over the income limits? I
will have already (partially) funded the Roth IRA and those
contributions might have generated earnings. Should I
segregate these contributions into a separate fund in case I
have to withdraw them mid-year?

Thanks.

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2005) - All rights reserved. > << ================================================== ===== >