Q: Almost 30 years ago, I received some silver bars from my boss in lieu of a paycheck because he could not afford to pay me at the time. Now that I am retired, I’m thinking of selling the bars, which have increased in value.

Chances are that this transaction was not recorded in the payroll department, and taxes were not deducted. If I do sell them, will the proceeds be taxable?


A: You probably should have paid income taxes on them when you received them, said Michael Goller, chair of the tax practice for law firm Reinhart.

Except in cases of fraud, though, the statute of limitations on that would have passed now, Goller said.

When you sell the bars, you’ll likely owe 28 percent capital gains tax (for collectibles) on the entire amount, he said, because you never established a tax basis.

Q: I am over 50 and contributed to a 401(k) this year over two months with a former employer. I am not eligible to contribute to my new employer’s plan until next July.

May I still make contributions to my traditional IRA? If so, do I need to deduct the amount contributed to my 401(k) from the IRA contribution? I also have a Roth IRA. May I contribute to the Roth if I cannot contribute to the traditional IRA?

Also, my wife contributed for just one pay period to her 401(k) before she changed jobs in January. Can she contribute to her traditional IRA, only to her Roth or neither? She is over 50.

— M.A.

A: Because you and your wife will be covered by workplace plans for at least part of both this year and next, you are considered covered by a plan for the full years, said Isaac Allen, founder of Stalwart Financial Planning.

That doesn’t stop either one of you from contributing to an individual retirement account — up to $6,500 each with the special provision for catch-up contributions for people over 50, he said.

What it does mean, though, is that depending on how much income you both make, your ability to deduct the IRA contribution could be limited or eliminated. For 2014, if your combined modified adjusted gross income is $96,000 or less, and you are filing jointly as a married couple, you can qualify for a full deduction, according to the IRS. If it is more than $96,000 but less than $116,000, you’ll qualify for a partial deduction. If it’s higher, the deduction goes away.

Couples older than 50 with annual income below $181,000 can contribute to a Roth IRA up to the limit, but that ability is phased out at higher income levels. “Anyone with earned income can contribute to an IRA, but in cases like this, I would wait until they are doing their tax return for 2014,” said Greg Yahn, founder of Yahn Financial Planning.

His thinking: If it turns out your IRA contributions aren’t deductible, it’s better to keep nondeductible contributions in a separate IRA rather than mingling the funds in a deductible IRA, he said.

Q: I bought a variable annuity for about $22,000 in the 1990s, and, thankfully, it has grown since then. Because this was earned income that I had previously paid tax on, is there a way I can transfer any of the $22,000 to an existing Roth IRA without triggering a tax liability?

— H.S.

A: Was the annuity inside a nondeductible IRA? If not, you can’t simply convert an annuity to a Roth IRA, said Ed Slott, an accountant who leads IRA training sessions for financial planners.

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“If he put after-tax money in an annuity, that is his basis, and he gets that back tax-free when he cashes it in, but you can’t then convert that to a Roth,” he said.



Janet Kidd Stewart writes The Journey for the Chicago Tribune. Share your journey to or through retirement or pose a question at journey@janetkiddstewart.com.


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