ROTH

Yes and no. In your case you don't need to file as you had no income. But if you did have income outside the US and it is greater than the filing threshold (usually around 8k for single people who cannot be claimed as a dependent), then you have to file a US tax return even if you did not have any US income. This is because you're a US citizen or resident. In many other countries, they don't tax their citizens who are non residents, but in the US they do. But you usually get a foreign tax credit for the tax paid to the foreign country, and you get a foreign earned income exclusion to exclude a certain amount of salary from taxation. There are tax treaties that govern social security benefits paid to one country but you're a citizen of another.

As you had no earned income in 2009, you should not have made an IRA contribution (regular or Roth). You should take out your Roth contribution by 12/31/2010 and pay a 6% of $5000 penalty. Use form

5239, part III. If you took out the $5000 by 4/15/2010 you would have been fine.

I'm not sure if you have to take out your Roth contribution plus earnings, or just the original $5000. And what if the $5000 lost value? And what if other investments in your Roth increased in value but the $5000 your invested decreased, and total Roth increased, then what do you do? And what if other investments in your Roth increased in value but the $5000 your invested decreased, and total Roth decreased, then what do you do?

BTW, they have a special rule that if you liquidate your entire Roth IRA, you can claim the loss on Schedule A, subject to the 2% of AGI limit.

All right, I am going to have to face it, I am getting older and something needs to be done w/ my 401k. It's in the 1/2 mil range. Have some smaller investments, but this is the big kahuna. I have left it sitting after I retired because of interia and not wanting to make a decision. I'm turning 70 this month and will need to make RMDs next year. Don't really need the cash on an annual basis yet, thank god, thanks to pensions and SS's and would like to keep the tax man far away.

1) Can I put the RMD into a Roth? Does this make any sense?

!) Can I put it in a deferred annunity? Does this make any sense?

I am not risk adverse but my time horizon shinks everyday. Don't need to save it for the kids and wouldn't like to change my lifestyle too much either, just slower. Got my wife covered (my life insurance) and vice-versa, whichever kicks first. All the usual suspects for health coverage.

Chip

Next year when you take your RMD, you cannot put it into any sort of IRA. If you have taxable compensation such as wages or self employment income, you could fund a Roth IRA, but not a traditional IRA.

Many deferred annuities pay large commissions to whoever sells you the deferred annuity, and the annuity probably has distribution restrictions the first several years, and might not be the best investment.

But, sure, it's legal to do what you suggest.

Chip - the RMD is taxed and then resides outside the retirement accounts. One thing to consider - look at

and understand your marginal rate. Say in 2010 your taxable income is $50K. You are in the 25% bracket, and if convert $18K from traditional IRA to a Roth, you'll fill your bracket, and avoid that $18K only adding to the RMD. You can use this strategy each year to hit the top of your bracket exactly.

2 points - I know this is an RMD from a 401(k). To convert to Roth you need to roll this money to an IRA first (I believe this is still the case). Also - IRA withdrawals/conversions can affect the taxing of social security. You need to look at that as well before employing this strategy.

The deadline for correcting a 2009 excess contribution is 10/15/2010. If the contribution and the earnings on it are withdrawn by that date there is no excess contribution penalty. If the earnings were positive there will be a 10% early distribution penalty on the earnings, assuming OP is under 59 1/2. See Pub 590 and Forms 5329 &

8606.

Phil Marti VITA/TCE Volunteer

No. The only thing you can put into a regular or Roth IRA is earned income -- that is, salary and self employment income.

Also, when you reach 70.5 years you cannot contribute to an IRA. I think this means both regular and Roth IRA.

The upfront fees might not be worth it at age 70, but check the numbers to be sure.

There is no age limit for contributing to a Roth IRA.

You have to clarify about "i don't have any income." Just because you live outside the USA don't automatically mean you have no income. Are you a US citizen? Do you have earned income from any source, inside or outside the USA? If you have earned income anywhere as a US citizen, you have earned income.