Am I considered covered by an employer sponsored retirement plan for the year if I do not participate in the plan or if I did not work long enough to be vested?

The answer to this question depends on your type of retirement plan. If your employer's plan has a separate account for each employee, this is called a defined contribution plan. If any amount was contributed or allocated by you or your employer to your account, you are considered covered. It does not matter if you have worked long enough to be vested.

In the other type of plan, the plan employer must make enough contributions (together with earnings) to provide the retirement benefit promised in the retirement plan. This is called a defined benefit plan. In this type of plan, if you meet the minimum age and years of service requirements to participate in your employer's plan, you are considered covered. It does not matter if you are vested.

The Form W-2 you receive from your employer has a box used to indicate whether you were covered for the year. The "Pension Plan" box should have a mark in it if you were covered.

How do I calculate the minimum amount that must be withdrawn from my IRA after age 70 1/2?

You will need to get Publication 590, Individual Retirement Arrangements (IRAs) to find out this amount. Generally the minimum distribution is computed using one of three tables found in Publication 590. Table I is used by beneficiaries. Table II is for use by owners who have spouses who are more than 10 years younger. Table III is generally for use by unmarried owners and owners who have spouses who are not more than 10 years younger.

How long do I have to roll over a distribution from a retirement plan to an IRA account?

You must complete the rollover by the 60th day following the day on which you receive the distribution. (This 60-day period is extended for the period during which the distribution is in a frozen deposit in a financial institution.) The IRS may waive the 60 day requirement in certain situations, such as in the event of a casualty, disaster, or other event beyond your reasonable control. To obtain a waiver, a request for a ruling must be made and a user fee of $90.00 will apply, See Revenue Procedure 2003-16 (within IRS Bulletin 2003-4). A written explanation of rollover must be given to you by the issuer making the distribution. For information on distributions which qualify for rollover treatment, refer to Tax Topic 413, Rollovers from Retirement Plans . For information on the Direct Rollover Option, refer to Publication 590 Individual Retirement Arrangement .

If I can't withdraw funds penalty free from my 401(k) plan to purchase my first home, can I roll it over into an IRA and then withdraw that money to use as my down payment?

Yes, if you are receiving a distribution from a 401(k) that is eligible to roll over into a IRA and you meet all of the qualifications for an IRA distribution for a first-time homebuyer. Your plan administrator is required to notify you before making a distribution from your 401(k) plan whether that distribution is eligible to be rolled over into an IRA. To see if you qualify for a distribution to be used as a first-time homebuyer, refer to Publication 590, Individual Retirement Arrangements (IRAs) .

Do I report my nondeductible Roth IRA contributions on Form 8606?

There are no forms to report a Roth contribution. The financial institution, which is the trustee of your Roth IRA, will send you information on the amount in your Roth IRA. They will also send the information to the Internal Revenue Service. Use Form 8606 (PDF), Nondeductible IRAs, if you made a nondeductible contribution to a traditional IRA; converted from a traditional IRA, a SEP, or Simple IRA to a Roth IRA, received a distribution from a traditional IRA, a SEP, or a Simple IRA and made nondeductible contributions to a traditional IRA, or received a distribution from a Roth or traditional IRA.

Can a person make a contribution to a SEP-IRA and a Roth IRA, too?

Yes, you can make a contribution to a SEP-IRA and a Roth IRA. See Publication 590, Individual Retirement Arrangements, for the requirements to contribute to a SEP and a Roth IRA. However, your SEP IRA contribution and Roth IRA contribution can not be made to the same IRA.

I want to establish a traditional individual retirement arrangement (IRA) for my spouse, and I need additional information. What is the most I can contribute to a spousal IRA during the tax year?

If both you and your spouse work and both have taxable compensation, each of you can contribute up to $3,000 (or the amount of each IRA owner's compensation, if less) to a separate traditional IRA. Even if one spouse has little or no compensation, up to $3,000 can be contributed to each IRA if combined compensation is at least equal to the amount contributed to both IRAs and you file a joint return. You can contribute $3,000 to a separate IRA for your nonworking spouse if you file a joint return. Your total contribution to both your IRA and the spousal IRA for this year is limited to the smaller of $6,000, or your taxable compensation reduced by any contributions you make to a traditional IRA or Roth IRA. You cannot contribute more than $3,000 to either IRA for the year. If you are 50 or older in 2004, the most that can be contributed to your traditional IRA for 2003 is the lesser of:

For additional information, refer to Tax Topic 451, Individual Retirement Arrangements (IRAs), or Publication 590, Individual Retirement Arrangements (IRAs) .