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Started By
Message
Roth IRA - Question about contributions
Posted on 12/31/16 at 11:32 am
Posted on 12/31/16 at 11:32 am
I'm employed and going to earn more than $5,500 in 2017 (and less than $130k). I currently have more than $5,500 in savings. I'd like to contribute the max $5,500 for 2017 in the first week of January (using my savings). This would be before I've earned $5,500 for the year (and before I actually receive any money for the year, since I won't receive a paycheck before I send in my contribution). Can I do this? It'd basically be "pre-empting" the money I actually receive from my employer, although I will earn more than that amount eventually in the course of the year.
(This isn't a thread about strategy or advice or if it'd make sense to do this. I'm just looking for an answer on the rule. And yes, I've already maxed 2016 contributions.)
(This isn't a thread about strategy or advice or if it'd make sense to do this. I'm just looking for an answer on the rule. And yes, I've already maxed 2016 contributions.)
3
Posted on 12/31/16 at 11:43 am to Buckeye Fan 19
Yes you can. I always make mine early in the year to get the extra time
Posted on 12/31/16 at 11:44 am to Buckeye Fan 19
quote:
Can I do this?
Yes.
quote:
This isn't a thread about strategy or advice
/thread
Thanks for stopping by!
Posted on 12/31/16 at 11:45 am to Buckeye Fan 19
Yes, you can. I think dollar cost averaging is a much better idea, but that's up to you.
Posted on 12/31/16 at 11:48 am to Joshjrn
Thanks guys!
Posted on 12/31/16 at 1:13 pm to Joshjrn
He can still dollar cost average into positions. I've always loaded my account at the beginning of the year and then worked my way into desirable positions over time.
Posted on 12/31/16 at 5:26 pm to Jag_Warrior
quote:
He can still dollar cost average into positions. I've always loaded my account at the beginning of the year and then worked my way into desirable positions over time.
What do you "load" into?
Posted on 1/1/17 at 11:39 am to Joshjrn
Typically just a money market type fund with a small interest rate
Posted on 1/1/17 at 11:44 am to RJSambola
quote:
Typically just a money market type fund with a small interest rate
What rate are you getting? If it's less than the 1% you'd get leaving it in something like an Ally account, I'm not sure I understand the logic.
Posted on 1/1/17 at 9:31 pm to Joshjrn
The most he'd get from the Ally account is roughly $55 if he held the $5500 in the savings account for the entire year, and then funded the Roth the following year. I'm willing to pass up $55 in order to be able to immediately take advantage of a security(s) that hits a price target on a limit order.
On the first business day of each year, I drop the max into my Roth. If I can't beat 1%/$55 (or in my case, $65) in interest, then I probably shouldn't be investing on my own. But that's just me. If a person would rather make a monthly or quarterly contribution and then immediately buy something, that's fine too. You can dollar cost average using either method.
Whichever method is preferable, the main thing is to take full advantage of tax exempt or tax preferred accounts.
On the first business day of each year, I drop the max into my Roth. If I can't beat 1%/$55 (or in my case, $65) in interest, then I probably shouldn't be investing on my own. But that's just me. If a person would rather make a monthly or quarterly contribution and then immediately buy something, that's fine too. You can dollar cost average using either method.
Whichever method is preferable, the main thing is to take full advantage of tax exempt or tax preferred accounts.
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