Rethink Your Rollover

Posts Tagged ‘roth’

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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 information

Question: Rollover IRA (is it Roth or traditional?)?

I have a rollover IRA (from an old 401K). I am considering funding it more so I started searching online but there is virtually no information re:Rollover IRAs. They either talk about Roth or traditional. So what category does my Rollover fall under?

Answer: Neither AND both. A rollover IRA simply means the funds came from another retirement plan. That is ALL it means. EVERY IRA is either a traditional or a ROTH. In most cases, a 401(k) is rolled into a traditional IRA.

Should You Convert Your IRA To A Roth IRA?

Roth IRA conversion 2009

Question: In 2009 I am considering converting $200,000 in a Rollover IRA to a Roth IRA (I’m 44). ?

The amount converted will be taxed as income. I would not be able to pay all the taxes on this conversion by April 15, 2010. Would the IRS allow me to pay in installments over time? If so, what is this called by the IRS? (I want to do additional research on this).

Thanks,

Answer: I believe in 2010 you will be able to convert and pay the taxes over 2 years. You may want to wait until then. Also, do you meet the income limitations? Single contributors cannot make more than around $100,000. That will also go away in 2010. You certainly can convert part of it this year. Also, I think ( but am not positive check with an accountant) that you can pay the taxes out of the IRA itself–so you would have the tax money.

No RMD in 2009? Time for a Roth IRA Conversion

roth ira account rules

Question: Question about the 5 year rule on a Roth IRA account.?

I’m 22 years old and have got into investing. I have about 10,000 that i have been playing around with and would really like to start an Roth IRA. All though I plan on buying a house and going back to school and would like access to the money in the next 5-10 years.

I have been told that if you have money in a Roth IRA that you can take the money out without tax penalties if it has been in the account for 5 years or more.

Can someone explain this to me in better detail. I always thought that you have to wait till you get 59.5 years old to take it out. Please help me thanks

Answer: You do.

You pay no taxes when you make qualified withdrawals after age 59½ and your account has been open at least five years.

What can a Roth IRA do for you? – Vanguard

Roth IRA tax free

Question: I want to rollover my traditional ira to a Roth IRA verses?

I only have $5000 in traditional, and want to roll it over now because i’m taxed in the 15% tax range. And when i but it in a Roth IRA, it’ll be tax free when i take it out when i retire. Verses the traditional ira, which would be taxed at a higher rate when i retire in 20 years, ( that is if i’m in a higher tax braket). Does this sound like a smart thing to do?

Answer: I use the rule that if I’m in a 15% tax bracket or less, I move IRA money…if I’m in the 25% bracket, I don’t.

I’ve seen many retirees have *higher* tax rates in retirement than they do in the years before….

Roth IRA: Building a Tax-Free Retirement on Money Smart Radio