Rethink Your Rollover

Posts Tagged ‘financial’

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

Roth IRA home

Question: Is it worth it to cash out an IRA for a deposit on a home?

I’m 26 and started putting money into a Roth-IRA 10 years ago. I really want to buy a house. I know first time home buyers can take $10,000 out of their IRAs without penalty. Would it be a good idea to use this money and some more from savings to buy a home? Also, I am young enough that I think I could still have roommates for another 5 years (who could help pay my mortgage) Should I leave my IRA alone and save for a few more years or should I cash it out next year and buy a home?

Answer: I was able to use the fact that I had the IRA’s toward my home purchase without actually having to cash them in. I did have 10% saved for a downpayment, though, separate from the IRA’s. Shop around for lenders and find some terms that are agreeable to you. There are a lot of first time homebuyer programs out there that you could probably take advantage of. You are smart to think about having roommmates to help pay for the mortgage. Sounds like you are very much financially on the ball if you set up an IRA 10 years ago! There are people 20 years older than you are now who haven’t even begun to think about saving for retirement. Smart girl…I’m impressed.

Roth IRA and Silver ETF SLV

Roth IRA benefits

When Do You Pay Taxes on a Roth IRA?

When Do You Pay Taxes on a Roth IRA?

When you are choosing which type of IRA to open, there are many things to consider. One of the factors is how the taxes are handled. To answer the question of when to pay taxes on a Roth IRA, you must understand the difference between a traditional IRA and a Roth IRA. With a traditional IRA account, all of your contributions are made before taxes. This means that the amount is deducted from your pay before any taxes are taken out. The result is that when you later begin to withdraw from the account after retirement, you will have to pay those taxes.

With a Roth IRA, the taxes are taken before any contributions to the account are made; you may not have even noticed because your employer likely already deducted the taxes before giving you an employment check. In essence, you make the contribution from your net pay, after all taxes have been taken out. This can be a very important point when choosing a type of IRA. While it may seem like you are losing out, after-tax contributions are beneficial. The great thing about this is that when you retire and begin to withdraw from your Roth IRA, all of the money is accessible without paying any taxes. This is because you have already paid the tax before making the contribution. So to answer the question of when to pay taxes on a Roth IRA, the answer is before you make the contribution to the account.

When to Pay Taxes on a Roth IRA: Benefits of After-Tax Contributions

When you make a contribution to your Roth IRA, you pay your taxes up front. This means that for the life of the roth ira account, there will be no more taxes to deal with including capital gains taxes, incomes taxes, or death taxes. This is one of the many benefits of this type of account. It allows you to contribute money after taxes and let it grow tax-free, eventually allowing you to withdraw your money tax-free. A Roth IRA is one of the best financial tools to utilize when planning for retirement because the account will provide tax-free income later in life.

Other Considerations of Your roth ira taxes

Since your contributions to your Roth IRA are after taxes, the amount is not considered a deductible on your annual taxes. However, upon withdrawal, no taxes will be owed. This means that all of your contributions, plus all earnings, will be available for use completely tax-free. In essence, this provides a way to avoid paying taxes on any gains in the account. While this type of IRA retirement account may not be the best option for everyone, it does have some great benefits. Aside from the taxes, there are different IRA rules with a Roth IRA. One is that there is no age limit. This means that as long as you are earning money, you can continue to contribute to your account after taxes. This is not allowed with traditional IRA accounts, where you have to stop making contributions at a certain age. Also, with a Roth IRA, you are not required to take mandatory distributions. You can let the account continue to grow tax-free for as long as you want. The longer the account is contributed to, the more money you will save.

A tax-free source of income is the main attraction with a Roth IRA. Many people do not understand the many differences between various types of IRA accounts. The answer to when to pay taxes on a Roth IRA is simple. You pay the tax before you make the contribution.

Top 5 Roth IRA Benefits – Skloff Financial Group

Roth IRA brokers

Question: What is the best online broker for a Roth IRA if I have a lump sum to open with but not $ to put in regularly?

I am going back to school soon and won’t have extra money to contribute for the next couple years, but would like to at least start the account so it can grow. Most info I’ve read says to compare annual fees and trading fees, and obviously I don’t want to pay an annual fee if I’m not putting new money in to offset it and also don’t think I’ll do a lot of trading right now.

Answer: Try Vanguard...Vanguard.com

Roth iras

sep ira loans

Question: Should I use my SEP IRA to pay off my debt?

I have a Sep IRA from my old job that I do not and have never paid into that would cover my student loan and most of the rest of my debt. I’m in a debt management program, which gives me a decent interest rate on the debt I incurred when I was not able to work. But I am left with little/no disposable income & a stinky credit rating. I’m scheduled to be done in 4 more years, but I’d like to have some disposable income & be able to build a little emergency savings while fixing my credit ASAP in prep for buying our 1st home. Just waiting for hubby to finish his Master’s and secure a new job in the Fall.

I have a 401k at my new job and I try to make a little money on the side, but don’t have a lot of time for that with a 3 month & 3 yr old. So, I’m working extra hard at the 9-5 to target a raise in the Spring. I just want some peace of mind, to be able to afford a haircut once a quarter and to see the possibility of home-ownership sometime…

Can anyone suggest a good plan?

Answer: The tax consequences of early withdrawal before age 59 1/2 from any retirement account will be 10%. If you are willing to accept this fact, then by all means, use your IRA funds to pay off the debt. I wouldn't suggest you do that because you will lose the earning power if you withdraw money from the IRA. Your SEP IRA may or may not be growing at all since you don't work there anymore. So it may be wise to roll it over into a Traditional IRA. Then 12 months after that, roll it over again into a Roth IRA.

Here is what I would do if I were in your situation:
1) Create a budget worksheet. That way you can analyze your monthly spending and where you can save money on. The budget worksheet should list everything you spend on, from food, gas, car, insurance, maintenance, entertainment, utility, personal maintenance (ie haircut), clothing, child support, etc.
2) Stop contributing to your 401k
3) If you have any insurance (car, life, etc), shop around for a lower premium.
4) Whatever money you save, use it to pay off the principal balance (if there's no early payment penalty on the loan)

What is Private Money Lending and How Safe is your Money?