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re: Someone Tell Me About Roth IRAs (New ? on Pg 3)
Posted on 9/2/12 at 2:38 pm to crosswood
Posted on 9/2/12 at 2:38 pm to crosswood
quote:
why or why not an individual should invest in one, and how one can acquire it.
You can open an account at almost any financial institution or brokerage. You get no deduction on your current taxes for the contributions that you make. The payoff comes when you start withdrawing your money because you pay no tax on the money you withdraw even though it presumably has appreciated over the years to be worth far more than your original contributions.
With a standard IRA the contributions are tax free but the withdrawals are not. With a Roth IRA the earnings are tax free provided you have reached 59-1/2 and you have held the account for five or more years.
Incidentally, distributions from a Roth IRA to your heirs are also not taxed. Additionally, there is no required minimum distribution when your reach 70-1/2.
This post was edited on 9/2/12 at 2:43 pm
1
Posted on 9/2/12 at 5:06 pm to Layabout
Any advice on what funds to pick with the Vanguard Roth IRA? Should I just go with one of the target retirement funds or pick them individually. I would like to be more aggressive than conservative at this point.
Posted on 9/2/12 at 5:24 pm to saderade
quote:
I would like to be more aggressive than conservative at this poin
Vanguard is a good choice. If you pick a fund with a target date well into the future, the investments will be a lot more more aggressive than one with a target of, say, five years.
You can tweak it by adjusting the target year, i.e., if you actually plan to retire in 20 years, get into the plan with a target date of 25 or 30 years. These will be investing more aggressively given the longer time horizon.
This post was edited on 9/2/12 at 7:51 pm
Posted on 9/2/12 at 10:07 pm to CQQ
Not sure if it's been covered but Roths are taxed first in first out so you can withdrawal contributions at any time. There are situations& where u can withdrawal earnings and bypass the IRS penalty if it's a qualified distribution. Otherwise earnings grow tax free and are withdrawn tax free after 59 1/2. If you're in a lower tax bracket you may be eligible for a tax credit up to $1000
Posted on 9/5/12 at 6:18 am to gatorsimz
If you are over the contribution limit, there is a loop hole that allows you to contribute to a Roth IRA. You can contribute $5K to a traditional IRA and then roll or convert the $5k over into a Roth. You obviously, won't be able to take the the tax deduction from the traditional, but it essentially allows you to contribute to a Roth with an extra paperwork step.
IRA's are self directed, so you can invest in them how you want. Most retirement advisors don't recommend this, but something I like to do is have MLPs in my roth IRA. One thing to note is you need to manage it so that you aren't making mire than $1,000 in distribution yields/yr or else you'll feel the pain later when you withdraw.I try to stay around $700/yr in distributions just incase. Samething with REIT's.
IRA's are self directed, so you can invest in them how you want. Most retirement advisors don't recommend this, but something I like to do is have MLPs in my roth IRA. One thing to note is you need to manage it so that you aren't making mire than $1,000 in distribution yields/yr or else you'll feel the pain later when you withdraw.I try to stay around $700/yr in distributions just incase. Samething with REIT's.
This post was edited on 9/5/12 at 6:19 am
Posted on 9/5/12 at 6:52 am to Skin
Skin, were the returns you listed average or actual rates of return? Thanks.
Posted on 9/5/12 at 8:29 am to Layabout
Perfect time for me to read this thread. I am actually planning on opening a ROTH this week. I was looking at the Vanguard Target Retirement 2050 Fund. It requires a minimum of $1,000 and has a low expense ratio of 0.19. Anyone have any good or bad news on this one? I would rather just contribute the money and not have to actively manage my allocations.
Posted on 9/5/12 at 10:26 am to Cousin
quote:
Perfect time for me to read this thread. I am actually planning on opening a ROTH this week. I was looking at the Vanguard Target Retirement 2050 Fund. It requires a minimum of $1,000 and has a low expense ratio of 0.19. Anyone have any good or bad news on this one? I would rather just contribute the money and not have to actively manage my allocations.
Can't really say any benefits except I signed up for the exact same fund last week bc of this thread. Well not bc of this thread but this thread confirmed what I wanted to do.
Posted on 9/5/12 at 10:35 am to Cousin
quote:I am trying to decide between that one and the 2055 fund right now. Doesn't look like much difference
was looking at the Vanguard Target Retirement 2050 Fund. It requires a minimum of $1,000 and has a low expense ratio of 0.19. Anyone have any good or bad news on this one? I would rather just contribute the money and not have to actively manage my allocations.
eta: Just found my answer
quote:
Vanguard recently released a new mutual fund: Vanguard Target Retirement 2055. As you might imagine, it’s basically the same as their existing 2050 fund, but with each of the asset allocation changes scheduled to occur five years further into the future
This post was edited on 9/5/12 at 10:38 am
Posted on 9/5/12 at 10:55 am to saderade
Make sure you figure out your risk tolerance. Just because you pick a fund that matches your target date, doesn't mean its base allocation is allocated how is best for you.
I realize most of you guys are young here, so you should be more aggressively allocated, but it doesn't hurt to make sure.
I realize most of you guys are young here, so you should be more aggressively allocated, but it doesn't hurt to make sure.
Posted on 9/5/12 at 12:05 pm to GoCrazyAuburn
Thank you for the advice Sir
This post was edited on 9/5/12 at 2:03 pm
Posted on 9/5/12 at 12:14 pm to CQQ
Posted on 9/5/12 at 1:04 pm to Catman88
Is the cap $5k per household or $5k per person?
Posted on 9/5/12 at 1:15 pm to FinleyStreet
per person. Im not sure if they have to be different IRA accounts though.
Posted on 12/28/12 at 8:50 am to Catman88
I'm bumping this instead of starting a new thread but before I started this thread, I opened a Fidelity Roth IRA. I don't see anywhere that has a target date fund like you guys are talking about through Vanguard. Does anyone know if they do and if not, can I close this account (haven't contributed anything yet) and open a Vanguard account?
Posted on 12/28/12 at 9:42 am to CQQ
Honestly..
My first investment account was a ROTH through Fidelity. Had a target date fund. Great idea, terrible investment returns when compared to the market.
If you make a 5k contribution with Merrill Edge (online version of Merrill Lynch), you can actually open a free Roth IRA and receive personal financial advising and more tailored investment decisions.
My first investment account was a ROTH through Fidelity. Had a target date fund. Great idea, terrible investment returns when compared to the market.
If you make a 5k contribution with Merrill Edge (online version of Merrill Lynch), you can actually open a free Roth IRA and receive personal financial advising and more tailored investment decisions.
Posted on 12/28/12 at 11:57 am to CQQ
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