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Roth IRA? Explain??

F

fs5

Lifer
For the past 3 months I've been putting $1000 into a scottrade account straight out of my checking account. That's after taxes.

I recall that you're supposed to be able to put money into a Roth IRA pre-tax? How do I do this? Where do I open an account like this? And does it allow me the same luxury of buying and selling stocks myself?
 
Originally posted by: fs5
For the past 3 months I've been putting $1000 into a scottrade account straight out of my checking account. That's after taxes.

I recall that you're supposed to be able to put money into a Roth IRA pre-tax? How do I do this? Where do I open an account like this? And does it allow me the same luxury of buying and selling stocks myself?
Click to expand...

when you do your taxes, you report your taxable income 3000 less, and so you get that tax money back.
 
you get taxed on a Roth IRA when you put money in but you don't get taxed when you take it out.

Traditional IRA, you are pretax when you put it in but taxed when you take it out.

I don't think its possible to have a pre-tax Roth IRA.
 
can someone explain how to convert a regular IRA to Roth IRA. let say that I put in $3k into a regular IRA, and now its worth 20k, if I want to convert it to roth IRA so I can take the 3k out 5 yrs later(5yrs after the start of roth or since regular?), do I have to pay taxes on the whole 20k or just the 3k?, any fee?
 
Originally posted by: puffff
Originally posted by: fs5
For the past 3 months I've been putting $1000 into a scottrade account straight out of my checking account. That's after taxes.

I recall that you're supposed to be able to put money into a Roth IRA pre-tax? How do I do this? Where do I open an account like this? And does it allow me the same luxury of buying and selling stocks myself?
Click to expand...

when you do your taxes, you report your taxable income 3000 less, and so you get that tax money back.
Click to expand...
That's a traditional IRA. If you've been doing this with a Roth IRA, you need to file some amended returns since you owe quite a bit in back taxes!
 
Originally posted by: puffff
when you do your taxes, you report your taxable income 3000 less, and so you get that tax money back.
Click to expand...

$3000 is the limit on a Roth IRA correct? So I've already hit my max?
 
Originally posted by: fs5
Originally posted by: puffff
when you do your taxes, you report your taxable income 3000 less, and so you get that tax money back.
Click to expand...

$3000 is the limit on a Roth IRA correct? So I've already hit my max?
Click to expand...
He is confusing Traditional IRA (pre-tax, you deduct it on your 1040) and Roth IRA (after-tax, no deduction now but all growth is tax-free).

The maximum contribution for tax year 2004 is $3,000 for both kinds of IRA, and contributions for 2004 can be made up until April 15, 2005. For 2005 the limit is $4,000.

 
Also, to the OP, an IRA will be different than your brokerage account. A quick check of Scottrade's web site does reveal that they do IRAs, but you have to open a new account with them, you can't simply open an IRA from your brokerage account. Not sure if you can transfer the money in your brokerage account into the new IRA account or not, but you can check with them on that one (I don't have an account there, my Roth IRA is with Vanguard).

Typically IRAs will deal with mutual funds, not individual stocks. You will have some abillity to move money around between funds once your IRA is opened, but it won't be like buying/selling individual stocks.
 
Originally posted by: Cerebus451
Also, to the OP, an IRA will be different than your brokerage account. A quick check of Scottrade's web site does reveal that they do IRAs, but you have to open a new account with them, you can't simply open an IRA from your brokerage account. Not sure if you can transfer the money in your brokerage account into the new IRA account or not, but you can check with them on that one (I don't have an account there, my Roth IRA is with Vanguard).

Typically IRAs will deal with mutual funds, not individual stocks. You will have some abillity to move money around between funds once your IRA is opened, but it won't be like buying/selling individual stocks.
Click to expand...

WRONG! my regular IRA is all in stocks.
 
you can invest in whatever you want with ROTH IRAs.

AFAIK, there is no way to convert from a traditional to ROTH IRA without paying early withdrawal penalties on the traditional IRA.

most brokerage firms offer IRA accounts. etrade, fidelity, etc all have them. some firms will charge a fee for IRA accounts. i think etrade charges $25/year if your total balance in all accounts isn't over a certain amount (like $25k or something)

i think everybody should have a ROTH IRA (unless you make over $110k/year). aside from not having to pay taxes on gains, you can withdraw your contributions (the original money you put in, not any gains) at any time without penalty. obviously you don't want to withdraw money early from your retirement account, but it's nice to know it's available in case of an emergency.
 
Originally posted by: Cerebus451
Also, to the OP, an IRA will be different than your brokerage account. A quick check of Scottrade's web site does reveal that they do IRAs, but you have to open a new account with them, you can't simply open an IRA from your brokerage account. Not sure if you can transfer the money in your brokerage account into the new IRA account or not, but you can check with them on that one (I don't have an account there, my Roth IRA is with Vanguard).

Typically IRAs will deal with mutual funds, not individual stocks. You will have some abillity to move money around between funds once your IRA is opened, but it won't be like buying/selling individual stocks.
Click to expand...

You are correct sir (except for the individual stocks). I went to the Scottrade office at lunch and got some info. Scottrade does offer IRA accounts however they will be completely seperate than your personal trading account. You can transfer the cash amount into the Roth IRA not stocks.

The pro of this is that you can use a referal id (you can't refer yourself) which will net you 3 free internet trades.
 
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