MasterBlaster
Thinks s/he gets paid by the post
- Joined
- Jun 23, 2005
- Messages
- 4,391
A friend of mine asked me a question about funding a Roth IRA of which (believe it or not) I did not have the answer to.
So here's the introduction to the problem and the question.
The friend is going to start taking pension distributions from a pension that was partially funded from after tax (employee) payments as well as company funded payments. When the pension distributions are made that portion of the pension payment that was funded with after tax payments is tax-exempt meaning that income taxes have already been paid on it. The remaining distributions that are not tax-exempt will then require the usual income tax payments.
It is clear that the taxable portions of the pension can continue the tax deferment by rolling that (taxable) portion over into a normal (taxable when withdrawn) IRA.
The question then is...
Can the tax-exempt portion of the pension payment be rolled over into a Roth IRA such that that portion of the money can grow tax-free.
So here's the introduction to the problem and the question.
The friend is going to start taking pension distributions from a pension that was partially funded from after tax (employee) payments as well as company funded payments. When the pension distributions are made that portion of the pension payment that was funded with after tax payments is tax-exempt meaning that income taxes have already been paid on it. The remaining distributions that are not tax-exempt will then require the usual income tax payments.
It is clear that the taxable portions of the pension can continue the tax deferment by rolling that (taxable) portion over into a normal (taxable when withdrawn) IRA.
The question then is...
Can the tax-exempt portion of the pension payment be rolled over into a Roth IRA such that that portion of the money can grow tax-free.