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Message
Just married: Where to put combined funds?
Posted on 8/7/14 at 1:13 pm
Posted on 8/7/14 at 1:13 pm
We have our checking and savings. Have little over 4k in savings bank. Wife is about to pull money from HSBC and her credit union and put it in the savings bank. I have a Roth IRA and 403B that I put money in monthly. How do I max out my Roth? I see alot of you talk about but not really sure what you're talking about and how. I put about $50 a month to it. Wife is in nursing school so funds are kind of stretched right now until she finishes. Just wondering if we just keep the money in the banking savings account and put some in there monthly or should we put some elsewhere?
1
Posted on 8/7/14 at 2:07 pm to couv1217
you can each have a roth. max is $5500/person annually i believe (google to check), so max would be about $458/mo. as for putting savings into roth, that is really up to you. you need an emergency fund. some people use a roth for this, but if you do, you should be pretty conservative with the portion that is your emergency fund imo. don't want your emergency fund wiped out by a downturn in the market.
Posted on 8/7/14 at 4:04 pm to lsujro
Is that 458 for 2 people per month? What happens when you max out your Roth? Can you put in more than your max? If so, what happens?
Posted on 8/7/14 at 5:08 pm to couv1217
quote:
Can you put in more than your max?
Sure.
quote:
If so, what happens?
Interest and penalties, of course. So make sure that before April 15 rolls around you take stock of what you've contributed. It's the year-end total that counts, so if you did overcontribute pull it back out before 4/15 and it's all good.
Posted on 8/8/14 at 10:05 am to couv1217
quote:
Is that 458 for 2 people per month? What happens when you max out your Roth? Can you put in more than your max? If so, what happens?
no, $458 is what one person would need to contribute monthly to hit $5500/year. as the previous poster said, just check it come tax season and make sure you hit your mark.
Posted on 8/8/14 at 11:01 am to foshizzle
Foshizzle, so you're saying that someone can put in 10k into their ROTH but before tax season, needs to pull out the $4500 and redistribute it somewhere else?
Posted on 8/8/14 at 11:05 am to lsujro
quote:
just check it come tax season and make sure you hit your mark
Is there any incentive to max it out/hit your mark?
Posted on 8/8/14 at 11:18 am to CHiPs25
quote:
Foshizzle, so you're saying that someone can put in 10k into their ROTH but before tax season, needs to pull out the $4500 and redistribute it somewhere else?
I also would like to know the answer to this.
quote:
Is there any incentive to max it out/hit your mark?
Retirement reasons. This protects the amount of money invested from taxes when you pull it out at retirement age.
if you expect your retirement tax rate to be equal or higher than it is today, a Roth IRA should yield the greatest benefit.
if you expect your retirement tax rate to be much lower than it is today, you should probably choose a Traditional IRA.
This post was edited on 8/8/14 at 11:24 am
Posted on 8/8/14 at 12:32 pm to TigerRob20
quote:
Retirement reasons. This protects the amount of money invested from taxes when you pull it out at retirement age.
if you expect your retirement tax rate to be equal or higher than it is today, a Roth IRA should yield the greatest benefit
So not maxing it out will hurt me at retirement? I'm a teacher and don't anticipate my tax to change much assuming I understand what you are saying.
Posted on 8/8/14 at 2:01 pm to couv1217
quote:
So not maxing it out will hurt me at retirement? I'm a teacher and don't anticipate my tax to change much assuming I understand what you are saying.
it's commonly thought that tax free income in retirement is preferable to taxed income. thus, people try to max out their tax free income as much as possible. that is what you use a roth for. you put in after tax dollars and take it out tax free upon retirement. i wouldn't worry too much about your current tax rate vs expected upon retirement. taxes are likely only going to go up. also, i saw a comparison chart in a recent Money magazine that showed that roth's outperform traditional ira's no matter the tax rate. if you are a public school teacher, that means no 401k (i think?) b/c of teacher retirement. so your primary savings tool should be maxing out your roth imo.
This post was edited on 8/8/14 at 2:02 pm
Posted on 8/8/14 at 5:19 pm to lsujro
I guess I still don't fully understand the concept where the guy said I should take out what I put in before filing for taxes. Was he just way out of line? Should I just should for maxing out the Roth yearly and letting it sit until retirement? I am a public school teacher so yes you are correct that there is no 401k but there is a Teacher Retirement that gets taken out monthly and put away for us and we are also given an option of a 403B which I put close to 350 in monthly
Posted on 8/8/14 at 5:36 pm to couv1217
Just keep it simple and don't over fund the account. Put in the Ira max if you can for you and wife.....max 403b. Combined w state retirement you should be sailing....
Posted on 8/8/14 at 5:42 pm to eye65
Thanks eye
Posted on 8/8/14 at 6:13 pm to couv1217
quote:
Just keep it simple and don't over fund the account. Put in the Ira max if you can for you and wife.....max 403b. Combined w state retirement you should be sailing....
+1
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