Roth IRA

[kiendienn]

^^ im interested in the explanation of the timing as well

i think its great that the amount contributed is not taxable because i know life has its obstacles and sometimes the emergency fund just isnt enough

 

[dfabix]

I'm in full support of everyone getting a Roth IRA...
put in the max every year and hope to die in comfort....

 

[Betonblck]

I never knew that you could withdraw your contributions from the Roth IRA at any time. I would have been had one.

 

[based mod]

maxed out last and this year cause i had money lying around and don't know much about investing in stocks :\

btw, vanguard ftw.

 

[jthagreat]

maxed out last and this year cause i had money lying around and don't know much about investing in stocks :\
btw, vanguard ftw.

and to me thats the problem with these stories about investing into these IRA's and other 'ads' aboout how "if you put in x amount, by the time you retire, with an average 8% increase, youll have $1.3 mil bla bla bla..."

regular everyday folks dont know and truly get to utilize this great 'vehicle.' Folks like myself thought that i just put this 5000 in and it magically will make the 1 million$, NOT TRUE.

you have to actually do some investing/deciding where this money goes.

(im actually 100% all for ROTH IRA's, and have had one since i was 19, but these articles have always forget to mention you have to do some "deciding" on your own)

Yes companies offer there 2050 "retirement mix" but that can be a scary task to those that dont know....

 

[crcballer55]

maxed out last and this year cause i had money lying around and don't know much about investing in stocks :\
btw, vanguard ftw.

and to me thats the problem with these stories about investing into these IRA's and other 'ads' aboout how "if you put in x amount, by the time you retire, with an average 8% increase, youll have $1.3 mil bla bla bla..."

regular everyday folks dont know and truly get to utilize this great 'vehicle.' Folks like myself thought that i just put this 5000 in and it magically will make the 1 million$, NOT TRUE.

you have to actually do some investing/deciding where this money goes.

(im actually 100% all for ROTH IRA's, and have had one since i was 19, but these articles have always forget to mention you have to do some "deciding" on your own)

Yes companies offer there 2050 "retirement mix" but that can be a scary task to those that dont know....

It's a great starter program though. You don't need to know much, yet it adheres to tried & true methods for investing until you can get your feet under you and gain a little knowledge and diversify your own funds.

 

[josebronx]

 

[memphisboi55]

I need to stop procrastinating on opening one.

 

[mr brown]

need some advice my money minded NTers. I have a 403b w my current job, but I don't anticipate being there past 2013. Can anyone kick some knowledge on roll over options? I'm assuming if I rolled over to a Roth, Id have to pay tax on the balance amount? Would it be best to just transfer to traditional IRA and keep the value since I'm only 26? I know some companies let you keep the plan w/ them even if you leave... will they likely continue paying fees and transaction costs though??? Appreciate any feedback/suggestions.

 

[villansfinest]

Elaborate on the Roth timing... It's late & it's been a while since I studies for the Series 7, so I'm probably missing something here that was quite obvious.

Are you speaking of them providing the Roth to incentivize Boomers to start saving for retirement because they knew this SS situation was coming down the pipe?

Yeah, basically. That and getting another method to pump cash from other sources into the market at that point. I was looking at a few articles published around 96, and 97, it got me thinking. Putting together the pieces after the fact is a little difficult, but it's good practice for looking forward to the future if you want to try and figure out what's coming next.

 

[lyonbc1]

GREAT post OP, I found out about this last summer when I had my internship and decided to open one up with Vanguard....I suggest you call and do it over the phone to anyone interested in starting it up as they were extremely nice and very helpful with me since I had the most basic understanding of a Roth IRA . I was able to deposit about $500 two different times over a month period to start mine up, the interface is really simple too. And you can call them with any concerns you may have and they'll go through everything....so glad I started this now, while I may not have a ton of money in there, once I graduate and get a job where I can deposit 5k a year starting younger is the best time, increasing donations can't make up for the years lost with that interest buildup...if anyone is hesitating, don't it can only help you and is a great planning tool for your future.

Here's some of the links I looked into:

http://cashmoneylife.com/where-to-open-a-roth-ira-account/

http://www.thewisestudent.org/its-never-too-late-but-its-never-too-early/

http://amateurassetallocator.com/20...r-fund-vgstx-the-ultimate-fund-for-beginners/

 

[itshlittt]

so if you withrdaw the earnings its a 10% fee regardless of the amount? or is that subjective?

 

[lazyj10]

Not sure how old/recent this is, but this may help you:

Exceptions
The early withdrawal penalty does not apply to distributions that:

1.Occur because of the IRA owner's disability. (This can be a very narrow definition, so if you get a severe paper cut, don't consider a Roth IRA distribution for a disability until you review IRS Code Section 72(m)(7) and IRS Publication 590.)
2.Occur because of the IRA owner's death.
3.Are a series of "substantially equal periodic payments" made over the life expectancy of the IRA owner.
4.Are used to pay for unreimbursed medical expenses that exceed 7 1/2% of adjusted gross income (AGI).
5.Are used to pay medical insurance premiums after the IRA owner has received unemployment compensation for more than 12 weeks.
6.Are used to pay the costs of a first-time home purchase (subject to a lifetime limit of $10,000).
7.Are used to pay for the qualified expenses of higher education for the IRA owner and/or eligible family members.
8.Are used to pay back taxes because of an Internal Revenue Service levy placed against the IRA.

 

[crcballer55]

so if you withrdaw the earnings its a 10% fee regardless of the amount? or is that subjective?

Amount is irrelevant. It's 10%+ your tax rate. However, there is an allowable 60 day time period that you have to pay back the loan without penalty though. The downside of that though is that you're unplugging the investment so you are risking losing any gains you may have had if the money was still invested.

The circumstances, however, are what will allow you to withdraw it penalty free though as LazyJ10 stated.

 

[capricdragon]

Just wanted to add to this thread...

I closed my IRA today. A Retirement-2040 with under $8k that I haven't contributed to for many years.

- 10% penalty since I'm under the age of 59 1/2
- (optional) T.Rowe Price can withhold a minimum of 10% to cover any Federal taxes due for early withdrawal for tax season 2015. This option is to act like a buffer so that my Fed tax 'hit' will be covered with the IRS already or at least a large portion will be credited already.

The broker said some customers choose not to have T.Rowe withhold any money.... either they want to take care of their taxes on their own, or are simply in need of every single penny for personal use. I opted for the 10% withhold since its a small amount anyways.

- California by law is a mandatory withholding state... so there is rule for 1% deduction automatic to cover State tax

Going to use the funds to pay down high interest credit cards to zero and pick up my credit score.
I calculated the CCard interest fees I'll be saving from now till April 2015 (next tax season) alone greatly outweighed any nomimal tax hit for withdrawing early.
Plus money that would have gone to those CCard monthly payments can now be used toward paying school loans faster or put aside for emergencies.
Yes I still plan to leave those CCard accounts open so my credit history stays intact.... will just have to chop up those cards for sure.