noob question about Roth IRA's.

[purbeast0]

So I still wanna open one before April 15th. I still am not sure if I'm going to do it online or at my local bank since it can all be in one place, but I wanted to clear something up first.

I have searched online and haven't found a specific answer to this so I figured I'd ask here.

When I went and talked to the lady at the bank about opening a Roth IRA there I was talking about the max you can put in yearly. She then asked if I had a 401k started yet, which I do. She then said that depending what I put into my 401k depends on if I can max out my Roth IRA or not.

She basically said that the 4k (last year max) I can put into the Roth depends on how much I put into my 401k. Like she was sayin that if I had put 1K into my 401k last year, then I could only put 3k into my Roth for last year.

Now prior to this I hadn't heard anything about this. I thought the Roth had a max you could contribute to the Roth itself, which last year was 4k and this year is 5k. I thought it was completely independent of the 401k. But then she said how they are both IRA's (individual retirement accounts) so they are tied together as far as how much you can annually contribute to it.

Is there truth to this or does she not know what she's talking about? I had never heard of this ever in the research I did, and hearing this made me wonder if she knows what she was talking about, which is why I'm asking here.

and this whole conversation w/her made me think maybe i should just go vanguard cause it sounded like she didnt know wtf she was talkin about, but aggain i could be wrong since im a noob to this.

 

[oznerol]

They are independent of each other. 4k max for Roth IRA, 5k this year. And even if you have a Roth 401k, the limits are still independent.

 

[purbeast0]

Originally posted by: ducci
They are independent of each other. 4k max for Roth IRA, 5k this year. And even if you have a Roth 401k, the limits are still independent.

ok thanks that's what i thought, and now i'm pretty sure that i'm going to do it with vanguard or something since she didn't even know wtf she was talking about.

 

[Brainonska511]

I'm pretty sure that your Roth contributions are not dependent upon any other retirement account contributions. Anyway, 401k accounts have no max contribution limit, but companies usually have matching limits (ie: only the first $10k you put in a 401k will be matched by the company).

Personally, I'd also open up a Roth IRA through Vanguard - less overhead and no fees compared with what you would probably get through a bank.

 

[oznerol]

Originally posted by: purbeast0

Originally posted by: ducci
They are independent of each other. 4k max for Roth IRA, 5k this year. And even if you have a Roth 401k, the limits are still independent.

ok thanks that's what i thought, and now i'm pretty sure that i'm going to do it with vanguard or something since she didn't even know wtf she was talking about.

I would recommend opening an IRA account with whatever company your 401k is with, as it is the quickest/easiest. For example, my company does their 401k through Fidelity, so creating an IRA with them did not require any waiting time (especially if you're in a rush to hit the April 15 date).

But Vanguard is good as well.

Most bank employees don't know what they are talking about.

 

[purbeast0]

Originally posted by: Brainonska511
I'm pretty sure that your Roth contributions are not dependent upon any other retirement account contributions. Anyway, 401k accounts have no max contribution limit, but companies usually have matching limits (ie: only the first $10k you put in a 401k will be matched by the company).

Personally, I'd also open up a Roth IRA through Vanguard - less overhead and no fees compared with what you would probably get through a bank.

well i've checked out Vanguard and it seems pretty straight forward to setup. The thing i like about my bank is it has a great online banking and it would be nice to have all my bank/IRA consolodated in one places.

with Vanuguard, can you tell me exactly what fees i will be encountering when opening? I plan on maxing out last years and this years all at once.

I'm going to the bank today (a different branch however, that one i went to before is in a Giant and I'm going to talk to an investment person at the other one today) and I want to be able to flat out compare the fees and stuff.

thanks.

 

[Brainonska511]

Originally posted by: purbeast0

Originally posted by: Brainonska511
I'm pretty sure that your Roth contributions are not dependent upon any other retirement account contributions. Anyway, 401k accounts have no max contribution limit, but companies usually have matching limits (ie: only the first $10k you put in a 401k will be matched by the company).

Personally, I'd also open up a Roth IRA through Vanguard - less overhead and no fees compared with what you would probably get through a bank.

well i've checked out Vanguard and it seems pretty straight forward to setup. The thing i like about my bank is it has a great online banking and it would be nice to have all my bank/IRA consolodated in one places.

with Vanuguard, can you tell me exactly what fees i will be encountering when opening? I plan on maxing out last years and this years all at once.

I'm going to the bank today (a different branch however, that one i went to before is in a Giant and I'm going to talk to an investment person at the other one today) and I want to be able to flat out compare the fees and stuff.

thanks.

If you set it to electronic only notifications, then you'll see no fees. If you have over $10k per account in Vanguard, the fees are waived even if you don't use electronic notifications.

This might help:
https://personal.vanguard.com/...IRAAcctFeesContent.jsp

 

[purbeast0]

Originally posted by: Brainonska511

Originally posted by: purbeast0

Originally posted by: Brainonska511
I'm pretty sure that your Roth contributions are not dependent upon any other retirement account contributions. Anyway, 401k accounts have no max contribution limit, but companies usually have matching limits (ie: only the first $10k you put in a 401k will be matched by the company).

Personally, I'd also open up a Roth IRA through Vanguard - less overhead and no fees compared with what you would probably get through a bank.

well i've checked out Vanguard and it seems pretty straight forward to setup. The thing i like about my bank is it has a great online banking and it would be nice to have all my bank/IRA consolodated in one places.

with Vanuguard, can you tell me exactly what fees i will be encountering when opening? I plan on maxing out last years and this years all at once.

I'm going to the bank today (a different branch however, that one i went to before is in a Giant and I'm going to talk to an investment person at the other one today) and I want to be able to flat out compare the fees and stuff.

thanks.

If you set it to electronic only notifications, then you'll see no fees. If you have over $10k per account in Vanguard, the fees are waived even if you don't use electronic notifications.

This might help:
<a target=_blank class=ftalternatingbarlinklarge href="https://personal.vanguard.com/us/accounttypes/retirement/ATSRothIRAAcctFeesContent.jsp">https://personal.vanguard.c......cctFeesContent.jsp</a>

thanks for the link :thumbsup:

also i dunno, but there is something scary about just shelling out $9k over an electronic transfer heh. i know how secure online is and have done tons and tons of purchase online, but I dunno something about it just bugs me. i think that is also part of the reason i was contemplating my actual bank.

 

[Brainonska511]

Originally posted by: purbeast0

Originally posted by: Brainonska511

Originally posted by: purbeast0

Originally posted by: Brainonska511
I'm pretty sure that your Roth contributions are not dependent upon any other retirement account contributions. Anyway, 401k accounts have no max contribution limit, but companies usually have matching limits (ie: only the first $10k you put in a 401k will be matched by the company).

Personally, I'd also open up a Roth IRA through Vanguard - less overhead and no fees compared with what you would probably get through a bank.

well i've checked out Vanguard and it seems pretty straight forward to setup. The thing i like about my bank is it has a great online banking and it would be nice to have all my bank/IRA consolodated in one places.

with Vanuguard, can you tell me exactly what fees i will be encountering when opening? I plan on maxing out last years and this years all at once.

I'm going to the bank today (a different branch however, that one i went to before is in a Giant and I'm going to talk to an investment person at the other one today) and I want to be able to flat out compare the fees and stuff.

thanks.

If you set it to electronic only notifications, then you'll see no fees. If you have over $10k per account in Vanguard, the fees are waived even if you don't use electronic notifications.

This might help:
<a target=_blank class=ftalternatingbarlinklarge href="https://personal.vanguard.com/...IRAAcctFeesContent.jsp"><a target=_blank class=ftalternatingbarlinklarge href="https://personal.vanguard.com/us/accounttypes/retirement/ATSRothIRAAcctFeesContent.jsp">https://personal.vanguar.........eesContent.jsp</a></a>

thanks for the link :thumbsup:

also i dunno, but there is something scary about just shelling out $9k over an electronic transfer heh. i know how secure online is and have done tons and tons of purchase online, but I dunno something about it just bugs me. i think that is also part of the reason i was contemplating my actual bank.

You don't have to use electronic transfers for Vanguard - you could always just mail a check.

 

[Blieb]

That lady is an idiot ...

ROTH 2007: 4k max
ROTH 2008: 5k max

Independent of 401k ...

 

[JS80]

Originally posted by: purbeast0
So I still wanna open one before April 15th. I still am not sure if I'm going to do it online or at my local bank since it can all be in one place, but I wanted to clear something up first.

I have searched online and haven't found a specific answer to this so I figured I'd ask here.

When I went and talked to the lady at the bank about opening a Roth IRA there I was talking about the max you can put in yearly. She then asked if I had a 401k started yet, which I do. She then said that depending what I put into my 401k depends on if I can max out my Roth IRA or not.

She basically said that the 4k (last year max) I can put into the Roth depends on how much I put into my 401k. Like she was sayin that if I had put 1K into my 401k last year, then I could only put 3k into my Roth for last year.

Now prior to this I hadn't heard anything about this. I thought the Roth had a max you could contribute to the Roth itself, which last year was 4k and this year is 5k. I thought it was completely independent of the 401k. But then she said how they are both IRA's (individual retirement accounts) so they are tied together as far as how much you can annually contribute to it.

Is there truth to this or does she not know what she's talking about? I had never heard of this ever in the research I did, and hearing this made me wonder if she knows what she was talking about, which is why I'm asking here.

and this whole conversation w/her made me think maybe i should just go vanguard cause it sounded like she didnt know wtf she was talkin about, but aggain i could be wrong since im a noob to this.

your bank rep is retarded.

 

[maddogchen]

wow...that lady really didn't know what she was talking about.

I say go with Vanguard and call them up if you don't understand.
Or if you like over the counter service and talking to people one-on-one, try Fidelity. They have lots of locations to go to. I'm sure they would know more about it than that misinformed lady.

 

[imported_Lothar]

Originally posted by: purbeast0
also i dunno, but there is something scary about just shelling out $9k over an electronic transfer heh. i know how secure online is and have done tons and tons of purchase online, but I dunno something about it just bugs me. i think that is also part of the reason i was contemplating my actual bank.

I don't understand why you have such a hard-on for your bank.

 

[Ns1]

I'm gonna guess that she was thinking of this


Traditional IRA:

Reduced or no deduction. If either you or your spouse was covered by an employer retirement plan, you may be entitled to only a partial (reduced) deduction or no deduction at all, depending on your income and your filing status.

Your deduction begins to decrease (phase out) when your income rises above a certain amount and is eliminated altogether when it reaches a higher amount. These amounts vary depending on your filing status.

 

[Reckoner]

1. Open Vanguard Target Retirement Account (near the age you wish to retire)
2. Submit money electronically through their site
3. Sing your favorite Jamiroquai song while you wait for it to process
4. Once initialized, set up automatic payment and forget about it until it's time to retire
5. Buy a caribbean island and pretend you're on the set of Lost 24/7 (watch out for the monster!)
6. Profit

 

[purbeast0]

Originally posted by: Lothar

Originally posted by: purbeast0
also i dunno, but there is something scary about just shelling out $9k over an electronic transfer heh. i know how secure online is and have done tons and tons of purchase online, but I dunno something about it just bugs me. i think that is also part of the reason i was contemplating my actual bank.

I don't understand why you have such a hard-on for your bank.

try reading the thread, i've already explained why i'd prefer it over another place IF it costs the same.

and I guess that's what I get for asking a lady at the branch in Giant heh.

 

[spidey07]

Originally posted by: Blieb
That lady is an idiot ...

ROTH 2007: 4k max
ROTH 2008: 5k max

Independent of 401k ...

NOT. HCE has special limits and they are not independant of each other.

I can't recall exactly but there is a certain deferral test that has to be run to figure out how much you can contribute on non-401k.

 

[imported_Lothar]

Originally posted by: purbeast0

Originally posted by: Lothar

Originally posted by: purbeast0
also i dunno, but there is something scary about just shelling out $9k over an electronic transfer heh. i know how secure online is and have done tons and tons of purchase online, but I dunno something about it just bugs me. i think that is also part of the reason i was contemplating my actual bank.

I don't understand why you have such a hard-on for your bank.

try reading the thread, i've already explained why i'd prefer it over another place IF it costs the same.

and I guess that's what I get for asking a lady at the branch in Giant heh.

It does not (and will never) cost the same.
I remember we discussed this in another thread earlier where you posted the link to your bank.
They actually wanted you to come to their branch...Used car sales men indeed.

 

[Capt Caveman]

Originally posted by: Brainonska511
I'm pretty sure that your Roth contributions are not dependent upon any other retirement account contributions. Anyway, 401k accounts have no max contribution limit, but companies usually have matching limits (ie: only the first $10k you put in a 401k will be matched by the company).

Personally, I'd also open up a Roth IRA through Vanguard - less overhead and no fees compared with what you would probably get through a bank.

2007 401k Contribution Limit: $15,500

 

[FP]

Originally posted by: Brainonska511
I'm pretty sure that your Roth contributions are not dependent upon any other retirement account contributions. Anyway, 401k accounts have no max contribution limit, but companies usually have matching limits (ie: only the first $10k you put in a 401k will be matched by the company).

Personally, I'd also open up a Roth IRA through Vanguard - less overhead and no fees compared with what you would probably get through a bank.

401k accounts do have a max employee contribution limit. This year it is around $15,000.

Companies usually only match 3-5% of your earnings (10% would be awesome).

If you go over the contribution limit as an employee you will owe taxes and penalties.

 

[Supermercado]

I've got a Roth IRA question. I guess this is as good a place as any to ask it. I've been under the assumption that at any point, I can take out my contributions to a Roth IRA with no penalty or taxes. I was talking to my dad last week about Roths and he said that wasn't true so we went back and forth, each finding various links to support our side. One of the ones he found was directly off the IRS website so that seems pretty strong.

Being able to take my contributions at any time with no penalty or tax seems too good to be true, I'll admit, but do any of you experts know for sure? Thanks!

 

[oznerol]

Originally posted by: Supermercado
I've got a Roth IRA question. I guess this is as good a place as any to ask it. I've been under the assumption that at any point, I can take out my contributions to a Roth IRA with no penalty or taxes. I was talking to my dad last week about Roths and he said that wasn't true so we went back and forth, each finding various links to support our side. One of the ones he found was directly off the IRS website so that seems pretty strong.

Being able to take my contributions at any time with no penalty or tax seems too good to be true, I'll admit, but do any of you experts know for sure? Thanks!

You can withdraw contributions (NOT earnings) at any time.

That is to say, if you put in 4k this year, and next year you have made an 8% return on that initial 4k, you can take out 4k, keep the 8%, and be taxed nothing and pay no penalty (that is, assuming the company your account is with has no minimum fund requirements, and whatever mutual fund/stock you've invested in does not charge an early withdrawal penalty).

If you ever want to touch earnings, you need to meet a certain list of requirements - and it's not just being ~60 years old. First-time home purchases qualify (barring the Roth IRA has been active for at least 5 tax years), among other things.

A quick Google search has plenty of these answers.

 

[purbeast0]

okay back for another quesiton ...

i'm currently online at Vanguard and trying to setup my roth IRA, however it is asking me to choose funds now.

i really have no clue about which funds to choose or anything but I did see the STAR one is one that came recommended for people who don't know much about this.

i'm pretty young (26) and was just wondering if anyone else has any recommendations on exactly what to pick here or feedback on my selection. thanks.

 

[DaveSimmons]

The Vanguard Target <year-number> funds are good because you get a set of Vanguard funds all at once including their US and foreign index funds (VFINX, VEXMX, VEURX, VEIEX, etc., including Europe, Asia and Emerging Markets).

Just pick a year that's higher than your real retirement age so that you get a smaller amount of bond fund shares mixed in. For example your real retirement is 2032 but pick the 2040 or higher for more stocks and less bonds.

 

[purbeast0]

Originally posted by: DaveSimmons
The Vanguard Target <year-number> funds are good because you get a set of Vanguard funds all at once including their US and foreign index funds (VFINX, VEXMX, VEURX, VEIEX, etc., including Europe, Asia and Emerging Markets).

Just pick a year that's higher than your real retirement age so that you get a smaller amount of bond fund shares mixed in. For example your real retirement is 2032 but pick the 2040 or higher for more stocks and less bonds.

aah okay i see those.

so would you say those are better than the STAR one? i honestly have no clue wtf the STAR one is really about other than i saw it recommended from some good IRA link I saw, saying that the fees are waived if you deposit $1K into it and do online xfers. they state it's good for beginners.