Anyone here have a Roth IRA?

[thawolfman]

I'm only 20, but I've got a good bit of money saved up from working the past 4 years. I haven't had to pay for college so far(just books)...got a 4 year scholarship through my high school and have kept my grades up enough to keep it through the first two years. It's only Central Connecticut State, but hey...it's free and we made it to the NCAA tourney

Anyways, I've thought about putting my money into one of these before, but haven't actually done anything about it. I figure I'm better off keeping some stashed away for retirement/my future instead of letting my money earn interest at a sh!tty rate. Enough with the ramblings, anyone have any opinions on these, and where/how I would actually go about getting into one?

thx

 

[joemamma]

i opened one in college...the money you put in the account has to be money you earned that year not money saved or gifts cos they tax you now then whatever you earn and withdraw from the account is not taxed....whereas in a 401k you are not taxed on whatever you put in the account but taxed on your earnings and when you take it out...

usually the max contribution per year ix 2000 and there maybe a certain amount you have to deposit in order to open an account...i have it with charles schwab...their website should give you more details than what i said...check it out

 

[Draco]

I have a ROTH IRA with Schwab. It's a great idea. You can spread the it around and invest it in different things. Just keep plopping $2k in each year and you'll have a bundle when your 50 or 60.... if you make it that long.

Who the hell wants to blow all their money when their 60 anyway. It's all backwards!

 

[vi edit]

Look into a principal or MFS account that lets you invest something like 60% into the S&P 500 index, and then the remaining into international stock, mortgages, and goverment treasury bonds. A healthy dose of fairly agressive (the S&P), and a nice little chunk of conservative(bonds, mortgages) to help make up for bum years.

As of this year, you can put $3000 into an IRA. You are young, you have the money, use it wisely and invest in your future. 1/3 of your life will be spent in retirement, baring medical problems or accidents. You CAN NOT count on social security, and you don't want to have to mooch off of your family to pay your property taxes and medical bills.

Take the initiative and start your financial future now while you have the $$ and determination.

 

[thawolfman]

I believe they upped the max contribution to $3000 in 2002, and yeah the good thing about them is that you pay the taxes now, and get to withdrawal all you've made tax free

 

[DaveSimmons]

Roth is great if your income is low, since all your growth is tax free and you can even take out your original contributions tax-free to buy a house, etc. The only "gotchas" for you are:

- most brokerage houses like Schwab will charge you an annual fee since that will be your only money with them (unless you have a spare $50K to put into a non-IRA account). For ETrade it's $20K.

- you should have started in April to contribute to tax year 2001, now you can only contribute for year 2002, max $3,000. You might not be able to put in that much unless your income this year will be over $3,000 (you'd have to check the 1040 instructions for eligibility).

I'd recommend getting a bank CD for simplicity (check rates, etradebank.com is decent), since you'll at least get the interest tax-free and not pay brokerage fees. With a 1-year CD you can just keep adding money every year at renewal time. If you really want to get into mutual funds (hint: S&P500 index fund) find out the annual fee for the brokerage house first -- it can eat up all your growth.

 

[Tripleshot]

Talk to these people.

You will get all the answers you will need.

 

[RossMAN]

Originally posted by: thawolfman
I believe they upped the max contribution to $3000 in 2002, and yeah the good thing about them is that you pay the taxes now, and get to withdrawal all you've made tax free

Yep, Yep and you're paying taxes at your current tax bracket ... most people will move into the higher tax brackets as they get older assuming they get promoted, etc.

I'd rather pay the taxes now than later. Plus with a Roth IRA can't you take funds out under certain circumstances like first time home buyer, school education, etc.?

 

[PsychoAndy]

i could cash out my IRA to get a house? hmmm.....

i started my roth at 16. sank $4k into mutuals. miraculously, they managed to pull a 12% ROI in the goddamn recession. i gotta give them props for that one. i missed this years payment cause of some hot deals, but i'm considering sinking 3k in.

you can sign up with any major brokerage, or even your bank or credit union.

i'm into mutuals and i'm enjoying my ROI. i am never buying a stock again in my life. i love my roth ira. it was the one thing i dont curse my mom for doing for me.

 

[SuperTool]

I just turned 22, and I have a Roth IRA.
Unfortunately I was wise enough to buy PFE at 41, so I lost 30% of it.
Oh well. I am buying 3K more this year.

 

[thawolfman]

Originally posted by: PsychoAndy
i could cash out my IRA to get a house? hmmm.....

i started my roth at 16. sank $4k into mutuals. miraculously, they managed to pull a 12% ROI in the goddamn recession. i gotta give them props for that one. i missed this years payment cause of some hot deals, but i'm considering sinking 3k in.

you can sign up with any major brokerage, or even your bank or credit union.

i'm into mutuals and i'm enjoying my ROI. i am never buying a stock again in my life. i love my roth ira. it was the one thing i dont curse my mom for doing for me.

Just curious who you have your IRA with?

 

[PsychoAndy]

Originally posted by: thawolfman

Originally posted by: PsychoAndy
i could cash out my IRA to get a house? hmmm.....

i started my roth at 16. sank $4k into mutuals. miraculously, they managed to pull a 12% ROI in the goddamn recession. i gotta give them props for that one. i missed this years payment cause of some hot deals, but i'm considering sinking 3k in.

you can sign up with any major brokerage, or even your bank or credit union.

i'm into mutuals and i'm enjoying my ROI. i am never buying a stock again in my life. i love my roth ira. it was the one thing i dont curse my mom for doing for me.

Just curious who you have your IRA with?

The Kaufman Fund. Their objective is long term growth. They're in the federated family now.

 

[linuxboy]

i could cash out my IRA to get a house? hmmm.....

Up to 10 K for first time qualified purchases. Can also do substantially equal distributions under section 72 (t) of the code before 59.5

Oh and to answer your question, wolfman, yes.

Cheers !

 

[mithrandir2001]

What's nice about the Roth IRA is that you can always take out your contributions at any time for any reason at any age without penalty. Your gains, no, but you can stick money in a Roth and not worry about never being able to touch it until retirement.

 

[mithrandir2001]

The limitations about withdrawing money for a house, for example, is when you want to tap your gains. You can take out your pre-retirement gains tax-free under certain circumstances, but contributions are always fair game for withdrawing (not that you should, however).

 

[tm37]

http://www.rothira.com/

A roth is USUALLY the best way to go as you pay tax NOW if you are in a lower Tax Bracket.

I am planning to start one this year.

Clark Howard tips on investing

His general rule is ROTH FIrst BUT if you are in a high tax bracket it isn't a good idea.

 

[abc]

also with Roth, I think you can basically utilize it as a 'free' 60 day loan to yourself... like if you need some cash but can put it back within 60 days, then the govt. not acess anything to you, but you can only do this kind of thing once per 12months or something to that affect. anybody spill the details on this?

 

[gotsmack]

I use TD Waterhouse for my Roth. I think Datek has one as well. The only reason I use TD waterhouse is because I have a brokerage account with them and they gave me a credit card where when I spend 2K they give me a free trade. If datek had the same thing I'd switch over immediately.

 

[AmigaMan]

Originally posted by: RossMAN

Originally posted by: thawolfman
I believe they upped the max contribution to $3000 in 2002, and yeah the good thing about them is that you pay the taxes now, and get to withdrawal all you've made tax free

Yep, Yep and you're paying taxes at your current tax bracket ... most people will move into the higher tax brackets as they get older assuming they get promoted, etc.

I'd rather pay the taxes now than later. Plus with a Roth IRA can't you take funds out under certain circumstances like first time home buyer, school education, etc.?

I'm gonna disagree with you here Rossman. While it is true that you are paying taxes for a 401K after you start withdrawing, I would venture to say that you're doing that when you are retired. Therefore your tax bracket will be lower than it is while you're in the prime of your life earning money. That means you would be paying less in taxes for that money than if you had paid taxes up front (i.e. Roth IRA).

 

[linuxboy]

Enough with the ramblings, anyone have any opinions on these, and where/how I would actually go about getting into one?

Oh I didn't answer this...


Roth is an awesome new addition (1998) to ways to save money for retirement. 3000/year over 40 years @10 % will get you 1.4 million of tax-free income. Powerful stuff. About the only situation where a TIRA is preferable over a Roth is if the person fails to meet eligibility requirements on the MAGI. Another cool thing one can do with a Roth is leave a legacy by using non-spousal beneficiaries and essentially annuitizing the thing upon death and providing lifetime tax-free income for a grandchild or other beneficiary. Lots of fun tricks in the IRS code for more advanced planning concepts.

If you want one, you can fund it with mutual funds, stocks, or bonds and go down to the bank and open one (they'll most likely stick you in crappy funds, just telling you) or a brokerage (you can then use stocks and mutual funds). The other option is to call up a registered representative and buying into loaded funds (as opposed to, say, Vanguard). If you do that, you'll actually sit down with a planner and hear their spiel and recommendation.


Everyone should have a Roth and max it out. It's free money for the long-term.

mithrandir, yes thanks for the clarification. One can actually withdraw contributions at any time, but not the gains.


like if you need some cash but can put it back within 60 days, then the govt. not acess anything to you, but you can only do this kind of thing once per 12months or something to that affect. anybody spill the details on this?

I'll re-read the code since I don't remember the wording exactly and get back to you.


Therefore your tax bracket will be lower than it is while you're in the prime of your life earning money. That means you would be paying less in taxes for that money than if you had paid taxes up front (i.e. Roth IRA).

Eh... yes, in most cases, unless one started very early and had a huge asset base. Then we need to worry about estate planning.


Cheers !

 

[wyvrn]

Take Tripleshot's idea and look into Variable Life products (mostly what WFG pushes). They offer unique tax benefits superior to IRA's, funds, and cd's (as in no tax if you play your cards right). I have opened a Variable Universal Life account with them and am quite happy with it, in addition to my 401k and real estate holdings. Other firms sell these products, but many do not because their agents don't have the level of licensing needed to sell them (life + securities licenses). In fact, before you invest at all, I would research all options and see what is best for you.

 

[thawolfman]

First and last bump to see if anyone else has some input