Rethink Your Rollover

Archive for the ‘IRA Roth’ Category

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Roth IRA death benefits

Question: Roth IRA/Variable annuity?

I have an 80 year old relative with less then 100K in a variable annuity. Its basis is probably about 25K meaning there is about 75K in appreciation over a 20 year period. My relative will not need this money before death other then the small amount of interest it throws off monthly. This relative also wouldnt want to take a current distribution of this money because it would disturb an income based prescription drug benefit. The main concern is the tax liability to the heirs. What are some good strategies to avoid the taxation?

Answer: With only $100k in question, there won’t be any taxes if that’s their entire estate. The estate tax exlcusion is currently $2 million. The appreciation would pass tax free to the heirs. The only items that pass to an heir with a tax liability attached are qualified pension plans such as traditional IRAs or 401(k)s where the contributions went in tax-free.

Apr 15, 2009 – 10/14 – Dan Walkow

Roth IRA basics

Question: What time of investments should I look into making?

I’m 21, soon graduating from college, and am interested in diving into some investments. I already have a Roth IRA, but am curious as to what other ideas I should consider (i.e. bond funds, growth v. value). I know the very basics of investing but not enough to feel comfortable to jump right in. Any investment advice would be greatly appreciated. Thank you in advance.

Answer: Congratulations on starting an investment program so early. If you want to invest for the long term (money you won’t need for at least ten years), at your age you should definitely look to stocks or, if you don’t want to pick individual stocks yourself, stock mutual funds. Until you develop more experience and confidence I’d recommend buying shares of some no-load mutual funds with low expenses. Three of the best places to look are vanguard.com, fidelity.com, or troweprice.com. Go with stock funds, and agressive stock funds at that including REIT funds (Real Estate Investment Trusts), Small Cap stock funds, and International Funds. Over periods of ten years or more stocks will outperform bonds-at your age I’d forget the bond funds. Growth has lagged behind value for years-each year I hear that this is the year growth comes back and each year it doesn’t. It will eventually but nobody knows when. Put what you can into your fund(s) each month (known as dollar cost averaging) rather than investing a large chunk all at once so if the market drops you don’t lose a lot right away. Stick with it and, because you are starting so early, you won’t need to worry about retirement.

Suze Orman Roth IRA Rollover in 2010 for 401k’s

Roth IRA qualified distributions

Question: Form 8880 line 4 – do they mean all distributions or just the non-qualified ones?

In 2007 I “cashed out” 3 of my mutual funds in my IRA account. These were separate funds from the Roth IRA that I want to contribute to this year. The amount that I cashed out was in an IRA that was 10 years old. I did not make anything on this IRA and did not pay taxes on that money since it was not money earned while in the IRA.
My question: do I need to report this on line 4 of the 8880 form?
Thanks

Answer: If you took money out, it’s a distribution. So, yes, you must report it.

Roth IRA qualifications

Question: How much to put in IRA?

I am thinking of getting an Roth IRA, but I was deciding how much to put in. I was wondering if I put $5,000 in, would that be good. I heard with these accounts you can accumulate over million a dollars. I am 18 now, what age will it be when I will be able to take money out. Also where can I go to get an IRA and isn’t there some qualifications to open up one? To tell you the truth I have no idea what to do, and these IRA is so confusing. Anyone can explain and give examples. I would greatly appreciate it. By the way i appreciate every-ones responses to me question before. It helped a lot.

Answer: If you are able to put the maximum in, then do that. If you are able to contribute at least $3,444 per year, on average, and you manage an average annual return of at least 6%, then you will have $1 million in 50 years.

If you contribute at least $5,000 each year, you’ll have $1.5 million in 50 years if you average a 6% annual return. This is a fairly conservative estimate of your earnings. If you are invested in the stock market for a 50-year period and you manage a 9% average annual return, then your amount at age 68 would be $4.6 million!

Or, let’s say you want to retire at age 59, which is the earliest you can withdraw earnings from a Roth IRA without a tax penalty. Contribute $5,000 each year until you’re 59, and you’ll have over $2 million dollars by then, assuming a 9% average annual return.

A good choice for an IRA is a discount brokerage, such as Vanguard. Their fees are very low, and over time that will make a huge difference in the amount of money you have available to you at retirement.

I suggest you consider a broad market mutual index fund, such as the Wilshire 5000. This offers you a great amount of diversification with very low management fees. Index funds outperform managed funds about 90% of the time.

By the way, you can withdraw your contributions from a Roth IRA at any time without paying taxes or a penalty. Just be careful not to touch the earnings. And, don’t be tempted to withdraw from your Roth IRA unless it really is an emergency. Any amount you withdraw will have a big impact on how much you are able to accumulate by retirement.

Personal Investment & Loan Tips : Bank Loan Tips & Advice

Roth IRA brokerage account

Question: i have 35k i invest and every year i sell about 3k worth of stocks and fund my IRA, make sense tax wise?

i sell 3k and pay taxes on that 3k each year, then turn around and put it into my Roth IRA and invest it. i mean the only other legit option i see is either putting the portion of my paycheck into my roth instead of into my core brokerage account and investing it, this way i’m not paying taxes on the earnings, or, what’s my other option?

Answer: Whether you should sell 3K of your stocks or use your paycheck to fund your roth depends on what you expect to happen to the stock you are selling. If you think it’s going to go down, yes sell it. Another factor is that if you sell stock thats already lost value you can deduct the loss on your taxes.

Beginner Investing : Roth IRA Facts