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Finance questions: We still like living in Florida's sun

We asked: Is the Tampa Bay area still a good place to retire?

By Helen Huntley, Times Personal Finance Editor
Published March 2, 2008


We asked: Is the Tampa Bay area still a good place to retire?

I thought I might hear from so readers so fed up with property insurance rates and taxes that they were heading for the hills of Tennessee. However, that wasn't the case. Here's what one reader had to say:

The Tampa Bay area is a great place to retire if you've prepared fiscally, physically and mentally for retirement. There's fresh seafood, fruit and vegetables, beef raised in-state and year-round fun in the sun. What's not to like?

Billy Ball, Pinellas Park

You asked

Today's questions are about individual retirement accounts. IRAs come in two basic varieties, traditional and Roth. Contributions to a traditional IRA may be deductible and withdrawals are tax except for the portion based on nondeductible contributions. Roth IRA contributions are never deductible, but there are no taxes when the money comes out, assuming you've followed the rules.

If you have earned income, you can make a 2007 IRA contribution of up to $4,000 if you're younger than 50 or $5,000 if you are 50 or older. For 2008 contributions, the limits are $5,000 and $6,000.

I am due to withdraw money from my regular IRA next year and had planned to use it solely for my granddaughter's college expenses; will it be taxable to either of us?

Yes. You will have to pay income tax on your IRA withdrawals. If you give her more than $12,000 a year, you will need to file a gift tax return but will not have to pay gift taxes until you've given away $1-million. Tuition costs paid directly to the college do not count as part of the $12,000 annual limit. Your granddaughter will not owe any taxes on your gifts. Because she is not your dependent, you will not get the benefit of education tax breaks. However, she or her parents may be eligible, depending on their situation.

My IRA assets have increased as a result of capital gains through the years. Can I write off part of my gains in my IRA against losses in my taxable accounts? I have more than $150,000 of accumulated capital losses.

I'm afraid not. IRA withdrawals are taxed as ordinary income.

Should I consider systematically converting my IRA to my Roth? I read somewhere that this was prudent as long as you stayed in a low income bracket. What's a low income bracket?

Gradual conversion is a good idea since money in a Roth grows tax-free. Money left in a regular IRA at your death will be taxable to your heirs, while Roth IRA money will be tax free. The lowest tax bracket is 10 percent, which applies to taxable income after deductions and exemptions of up to $7,825 if single and $15,650 if marriedfiling jointly.

Next week's question: Are rising food costs causing you to change your diet?

To ask a question, make a comment or answer the Money Question of Week, e-mail or write Helen Huntley, P.O. Box 1121, St. Petersburg, FL 33731. Visit her MoneyTalk blog ( for more money information.

[Last modified February 29, 2008, 21:26:15]

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