Roth IRA question

[hiromizu]

What's the earliest date I can contribute for 2008? Also do you think it's a good idea to max it out now while we're recovering from the slump or wait?

 

[pulse8]

I believe you can only start contributing to 2008 in 2008.

 

[hiromizu]

Dunno about that. Last year I recall maxing it out in late December sometime. I just need an exact date so I can schedule it.

 

[her209]

As soon as its 2008. On the other hand, you can still contribute to an IRA/Roth IRA for 2007 (assuming you haven't hit the limit yet) up until Tax Day 2008.

 

[axelfox]

1/1/08? I know you can contribute for 07 until 4/15/08 or thereabouts.

 

[hiromizu]

Originally posted by: her209
As soon as its 2008. On the other hand, you can still contribute to an IRA/Roth IRA for 2007 (assuming you haven't hit the limit yet) up until Tax Day 2008.

Max for 07 was $4000 if you're under 50 correct?

 

[RichieZ]

Originally posted by: hiromizu

Originally posted by: her209
As soon as its 2008. On the other hand, you can still contribute to an IRA/Roth IRA for 2007 (assuming you haven't hit the limit yet) up until Tax Day 2008.

Max for 07 was $4000 if you're under 50 correct?

yes, the limit goes up to $5,000 for 2008. I believe the earliest you can contribute for 2008 is 1/1/2008.

 

[hiromizu]

1/1 it is. I forgot about 08's new limit. Sweet.

 

[Eeezee]

How does one go about taking advantage of a Roth IRA anyway?

 

[her209]

Originally posted by: Eeezee
How does one go about taking advantage of a Roth IRA anyway?

You use it to supplement your income. The income from the Roth IRA isn't taxable.

Is that what you mean?

 

[Brainonska511]

Originally posted by: Eeezee
How does one go about taking advantage of a Roth IRA anyway?

You can open up one through various financial institutions. I have mine through Vanguard.

 

[Brainonska511]

Originally posted by: her209

Originally posted by: Eeezee
How does one go about taking advantage of a Roth IRA anyway?

You use it to supplement your income. The income from the Roth IRA isn't taxable.

Is that what you mean?

The income isn't taxable is correct, but you can only withdraw income penalty free only after you reach a certain age.

 

[Reckoner]

Originally posted by: Brainonska511

Originally posted by: her209

Originally posted by: Eeezee
How does one go about taking advantage of a Roth IRA anyway?

You use it to supplement your income. The income from the Roth IRA isn't taxable.

Is that what you mean?

The income isn't taxable is correct, but you can only withdraw income penalty free only after you reach a certain age.

Partially correct. Your contributions can be withdrawn at anytime tax free. Any earnings in excess of your contribution, however, and you have to wait (otherwise you pay the aforementioned penalty).

 

[DaveSimmons]

Originally posted by: Eeezee
How does one go about taking advantage of a Roth IRA anyway?

www.vanguard.com

Get a stock index mutual fund. The "Vanguard Target Retirement Funds" are funds that give you pieces of several different mutual funds so you get US and international stocks, all the "diversification" you need. Target funds

It's personal preference, but I'd be a little more agressive and pick a total fund with a higher number than they say. For example if you're 24-28 they say to pick the "Target 2045." If you pick the "Target 2050" instead you'll get a little more stocks and a little less bonds.

Tip: they now waive most (all?) account fees if you sing up for electronic delivery of all paperwork (statements, prospectus, etc.)

 

[davestar]

Originally posted by: PaulNEPats

Originally posted by: Brainonska511

Originally posted by: her209

Originally posted by: Eeezee
How does one go about taking advantage of a Roth IRA anyway?

You use it to supplement your income. The income from the Roth IRA isn't taxable.

Is that what you mean?

The income isn't taxable is correct, but you can only withdraw income penalty free only after you reach a certain age.

Partially correct. Your contributions can be withdrawn at anytime tax free. Any earnings in excess of your contribution, however, and you have to wait (otherwise you pay the aforementioned penalty).

That's what he said.

 

[ElFenix]

if your medical insurance deductible is over ~$1200, you should open and max out an HSA as well. it's just like an IRA, but you make withdrawals to make medical purchases with pre-tax dollars.

http://www.irs.gov/publications/p502/


the beauty is that any money you don't spend on medical expenses is just like having a higher cap on IRA contributions.

 

[Mxylplyx]

Originally posted by: ElFenix
if your medical insurance deductible is over ~$1200, you should open and max out an HSA as well. it's just like an IRA, but you make withdrawals to make medical purchases with pre-tax dollars.

http://www.irs.gov/publications/p502/


the beauty is that any money you don't spend on medical expenses is just like having a higher cap on IRA contributions.

And the downside to that is that you lose the $1200 if you have no medical expenses for the year. Only put money in a HSA account that you are absolutely certain you are going to spend.

 

[underline man]

Little background before the question.

I'm just out of college (24) and have been working for my first company for about 3 months and finally settled down with getting situated from moving and financially stable.

My 401k does not start with my company until 6 months of employment (should start in March) Can I start contributing to a Roth ira? And if so would it be smart to contribute the maximum now in December for 2007 and then continue into 2008?

 

[hiromizu]

Originally posted by: underline man
Little background before the question.

I'm just out of college (24) and have been working for my first company for about 3 months and finally settled down with getting situated from moving and financially stable.

My 401k does not start with my company until 6 months of employment (should start in March) Can I start contributing to a Roth ira? And if so would it be smart to contribute the maximum now in December for 2007 and then continue into 2008?

Absolutely start a Roth IRA especially if your income is great enough that you can max out both your IRA and 401K and you still have money to burn. (although that's rare if you're just out of school)

 

[IGBT]

..is there still an income phase out??

 

[Nocturnal]

I just started mine through my insurance company. Is it a good idea to max it out ASAP? Is it true that you can withdraw your contributions from any Roth IRA or only certain ones? I don't recall my insurance agent informing me that I could easily withdraw my contributions. Perhaps he was trying to stray me away from doing that?

 

[hiromizu]

Originally posted by: Nocturnal
I just started mine through my insurance company. Is it a good idea to max it out ASAP? Is it true that you can withdraw your contributions from any Roth IRA or only certain ones? I don't recall my insurance agent informing me that I could easily withdraw my contributions. Perhaps he was trying to stray me away from doing that?

Not sure how others do it but I max mine out at once if I feel that the fund that I'm investing in is in a dip, hence the reason creating this thread because it's currently in a recovering state from the major drop in prices the last few weeks and wanted to get in on it.

 

[DBL]

Originally posted by: hiromizu

Originally posted by: Nocturnal
I just started mine through my insurance company. Is it a good idea to max it out ASAP? Is it true that you can withdraw your contributions from any Roth IRA or only certain ones? I don't recall my insurance agent informing me that I could easily withdraw my contributions. Perhaps he was trying to stray me away from doing that?

Not sure how others do it but I max mine out at once if I feel that the fund that I'm investing in is in a dip, hence the reason creating this thread because it's currently in a recovering state from the major drop in prices the last few weeks and wanted to get in on it.

That sounds like a lot of work which is unlikely to realize any long term benefit. You are playing a long term retirement account like a short term investment.

 

[hiromizu]

Originally posted by: DBL

Originally posted by: hiromizu

Originally posted by: Nocturnal
I just started mine through my insurance company. Is it a good idea to max it out ASAP? Is it true that you can withdraw your contributions from any Roth IRA or only certain ones? I don't recall my insurance agent informing me that I could easily withdraw my contributions. Perhaps he was trying to stray me away from doing that?

Not sure how others do it but I max mine out at once if I feel that the fund that I'm investing in is in a dip, hence the reason creating this thread because it's currently in a recovering state from the major drop in prices the last few weeks and wanted to get in on it.

That sounds like a lot of work which is unlikely to realize any long term benefit. You are playing a long term retirement account like a short term investment.

I'm going to have to sort of disagree with you on that since prices in funds do not usually shift very quickly, it's an easier target unlike a fast moving stock. Dips can last days, weeks, months or even years. Nothing wrong with going in for the dip IMHO..it's like j-crossing a not very busy street.

 

[DBL]

Originally posted by: hiromizu

Originally posted by: DBL
That sounds like a lot of work which is unlikely to realize any long term benefit. You are playing a long term retirement account like a short term investment.

I'm going to have to sort of disagree with you on that since prices in funds do not usually shift very quickly, it's an easier target unlike a fast moving stock. Dips can last days, weeks, months or even years. Nothing wrong with going in for the dip IMHO..it's like j-crossing a not very busy street.

So? You make more when you time it properly and lose more when you don't. In the end, it probably all averages out compared to investing x/12 every month. Your method just introduces more volatitily.