2006: New Roth 401(K) Plans will target High-Income Earners.

Individuals who make too much money to contribute to a Roth IRA may get a new opportunity to do so next year.

The Treasury Department and the IRS have released proposed regulations that provide guidance on how employers can add ROTH 401(K) accounts, created as part of 2001 tax law, to their plans starting January 2006.

IRA Tax Loss

You cannot take a tax loss for any individual asset in an IRA unless you cash in ALL of your IRAs and can show that the total distribution is less than the basis in ALL the IRAs.  The loss is claimed as a “miscellaneous “ itemized deduction. Generally this is not a good idea unloess the worthless investment made up a large percentage of the IRAs’ total value.

Withdrawals From IRAs To Pay Education Expenses

Withdrawing funds from IRAs for “qualified “ higher education expenses aren’t subject to the 10% penalty.  Eligible expenses include tuition, room and board (must be attending half time), fees, books, supplies and equipment.