Passive income cannot be the basis for the contribution. It is common to mistakenly believe that contributions to retirement plans can be based on total income (i.e., earned income from work plus passive income), but this is not true. Retirement plan contributions can only be based on earned income subject to FICA and Medicare taxes. If both you and your spouse have compensation, each of you can open an IRA and use it to buy physical gold. Both cannot participate in the same IRA.
If you file a joint return, only one of you needs to receive compensation. You can instruct the traditional IRA administrator to transfer an amount from the traditional IRA to the Roth IRA trustee. If you inherit a traditional IRA from your spouse, you can usually renew it or you can choose to make the inherited IRA your own, as explained earlier in What Happens If You Inherit an IRA. Your participation in your employer's SIMPLE IRA plan doesn't prevent you from making contributions to a traditional or Roth IRA.
To recharacterize a contribution, you should generally have the contribution transferred from the first IRA (the one to which it was made) to the second IRA in a transfer from trustee to trustee. Amounts contributed for the tax year to your Roth IRAs (except for amounts properly and timely transferred from a Roth IRA or successfully converted from a traditional IRA or transferred from a qualified retirement plan, as described below) that exceed your contribution limit for the year (explained earlier in How Much You Can Contribute); more. If you participate in the prohibited transaction with your employer or the association, your account is no longer considered an IRA. The amount contributed to your Roth IRA is considered part of your cost base (investment in the contract) in the Roth IRA and is not taxable at the time of distribution.
These amounts are usually included in the income on your return for the year you converted it from a traditional IRA to a Roth IRA. You can withdraw all or part of the assets from a traditional IRA and reinvest them (within 60 days) in a Roth IRA. Generally, except as mentioned earlier in Kay Bailey Hutchison's spousal IRA limit, your marital status has no effect on the amount of contributions allowed to your traditional IRA. Requalifications made with the same trustee can be made by redesignating the first IRA as the second IRA, instead of transferring the account balance.
While your deduction for IRA contributions can be reduced or eliminated, contributions can be made to your IRA up to the general limit or, if applicable, the Kay Bailey Hutchison marital IRA limit. You can take into account any loss of contribution while you were in the IRA when calculating the amount to be withdrawn. A transfer from a designated Roth account can only be made to another designated Roth account or to a Roth IRA account. Under certain conditions, you can transfer assets from a traditional IRA or from a designated Roth account to a Roth IRA.
If your spouse or former spouse is allowed to keep their share of the IRA assets in your current IRA, you can ask the trustee to transfer the assets you can keep directly to a new or existing traditional IRA created in your name.
