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IRA and 401K

Of course. Get the companies 401k definitely (company match), and get a traditional IRA for added savings!
 
Originally posted by: CalvinHobbes
I have a traditional IRA. I'd like to sign up for our companies 401K. Can I have both?
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Wth? IRA? What kind of Irish Repulican Army aren't you talking about?
 
you can have both, but if you contribute money to 401k, you can only deduct the 401k amount off, not the regular IRA, so most people will do the 401k and contribute money to a ROTH IRA, not a regular IRA.
 
Originally posted by: CalvinHobbes
I have a traditional IRA. I'd like to sign up for our companies 401K. Can I have both?
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You can keep your existing traditional IRA but new IRA contributions made in years where you're in (or even eligible to be in?) a 401k are not tax deductible.

So you should set up a Roth IRA account and contribute to that instead, in any years where you have a 401k.

Roth IRA is not tax-deducitble either, but unlike a trad IRA it grows tax-free.
 
i currently have a 401k and leaving my job...how would i roll that money over?

is that done through my current employer? current 401k plan? new 401k plan?
 
As mentioned, don't bother. Top out your 401k and your roth, and if, $18k later, you're still itching to save, dump it into something unsheltered.
i currently have a 401k and leaving my job...how would i roll that money over?

is that done through my current employer? current 401k plan? new 401k plan?
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You can either roll it into a new employer's 401k or an IRA elsewhere...if you're rolling a 401k into an IRA, you'll not suffer any penalties on it. To do the later, get an account at somewhere like vanguard, and then tell your current 401k plan that you want the money sent to vanguard (vanguard gives an account number for you), and then that does it. Alternatively you send it into your new employer's 401k. I would go with the previous route, because then you have the money under "your" control instead of the new plan's, then start with a brand new 401k at your new employer.
 
Originally posted by: xospec1alk
i currently have a 401k and leaving my job...how would i roll that money over?

is that done through my current employer? current 401k plan? new 401k plan?
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You will have better mutual fund choices if you roll the money over to a fund company like Vanguard.com or brokerage like ScottTrade, AmeriTrade, Schwab.

Vanguard.com has excellent mutual funds like their VFINX S&P 500 index mutual fund. If you have over $10K in your 401k this is is my first choice. They have information on rollovers on their website.

An important point for a rollover is you must not take control of the money, you must get the check written out to vanguard or the brokerage instead of to yourself.
 
Originally posted by: xospec1alk
i currently have a 401k and leaving my job...how would i roll that money over?

is that done through my current employer? current 401k plan? new 401k plan?
Click to expand...
As the 2 posts above mine mention.... go with a rollover IRA -- NOT your new employers 401k. Employer plans are typically very limited to whatever lame funds a salesman was able to pawn off on your HR person.

I have personally used vanguard and schwab, and would recommend either.
If you have a ton of money, I'd lean toward schwab... otherwise vanguard.

Whatever your choice, have the investment house handle the rollover. I haven't heard of any that won't do the rollover for you.
 
Originally posted by: xospec1alk
ok so im trying to open this vanguard account, should i be choosing rollover ira? or roth ira? this is all so confusing
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For money from a 401k you usually want a rollover.

If you pick Roth you'll pay a bunch of taxes now to convert from "tax deferred" (401k/traditional IRA) to "tax free growth" (Roth).
 
So im reading around....so if i keep the rollover for 5 years, i can convert it to a roth ira and get tax free earnings, and tax free withdrawals?

Just wondering becuase lets say i have a rollover...do i NOT get tax free earnings and withdrawals? differences between the two?
 
Any advantage to a Roth if I have a 401k? Say I want to invest $10k a year total. It's simpler to just throw is all in the 401k.
 
Originally posted by: xospec1alk
So im reading around....so if i keep the rollover for 5 years, i can convert it to a roth ira and get tax free earnings, and tax free withdrawals?

Just wondering becuase lets say i have a rollover...do i NOT get tax free earnings and withdrawals? differences between the two?
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A conversion from 401k rollover or traditional IRA always involves paying income taxes, since the money was tax-sheltered when you put it into the 410k or trad IRA.

Once you pay that tax money, then the Roth grows tax-free. So if you want to do this and can afford the taxes, you should actually talk to a customer service rep about doing it right away.

401k -> Rollover IRA -> Roth IRA + tax bill.
 
you can have both, but if you contribute money to 401k, you can only deduct the 401k amount off, not the regular IRA, so most people will do the 401k and contribute money to a ROTH IRA, not a regular IRA.
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False. If you're talking a Traditional IRA, you can always make contributions so long as you have earned income and are below 70 1/2 years old. For those who also are participants in a Qualified Retirement Plan, contributions to a Traditional IRA may be deductible in full, part, or not at all (it depends on what your income is... the phaseout of deductibility starts at about $100k for single filers and $160k for joint IIRC). For Roth IRA's, if your income is too high you won't be able to contribute at all.
 
Originally posted by: Jumpem
Any advantage to a Roth if I have a 401k? Say I want to invest $10k a year total. It's simpler to just throw is all in the 401k.
Click to expand...

The general strategy suitable for most people, in order:
1. fund 401k up to employer matching level
2. then fund Roth IRA $4,000 / year
3. then fund 401k up to the limit (or as much as you can afford)

Roth beats unmatched 401k because you can often get better mutual funds (like Vanguard.com and VFINX S&P 500) and because the tax-free growth of Roth will probably beat the up-front tax savings (but deferred tax on growth) of 401k and traditional IRA.
 
Originally posted by: DaveSimmons
The general strategy suitable for most people, in order:
1. fund 401k up to employer matching level
2. then fund Roth IRA $4,000 / year
3. then fund 401k up to the limit (or as much as you can afford)

Roth beats unmatched 401k because you can often get better mutual funds (like Vanguard.com and VFINX S&P 500) and because the tax-free growth of Roth will probably beat the up-front tax savings (but deferred tax on growth) of 401k and traditional IRA.
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Interesting. Is $4k the Roth limit?
 
mmmm well currently theres only a little under 2gs in my 401k...so if i roll it over into a roth it would only be about 200 bucks in taxes? so the benefits are basically that i get to have tax free withdrawals versus not rite?
 
Originally posted by: xospec1alk
mmmm well currently theres only a little under 2gs in my 401k...so if i roll it over into a roth it would only be about 200 bucks in taxes? so the benefits are basically that i get to have tax free withdrawals versus not rite?
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It might be more, depends on how much you'll pay for an extra $2K of income.

Yes, the benefit is free withdrawals at retirement (grows tax-free).
 
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