Jul 8

My wife’s company just added a 401k and I am considering contributing to it but was wondering if there are limits to max 401k contributions if we file married/jointly? I currently max out my 401k account and I know with our combined income status IRA contributions are no longer tax deductible so I am worried adding to her 401k will bring the same limitation.


Apr 16

I understand the UTMA regulations for my state (Maryland), and the age of majority for equities is 21 for custodial and individual accounts. Do these regulations apply in the same manner to IRAs? What other restrictions would minors have in an IRA or Roth IRA, as limited by UTMA, brokers/firms, or other unforeseen limitations?


Mar 25

My father is trying to pay for my sisters education.I know that we can withdraw money for college from Roth IRA.Is it the same for the Traditional?Any references are more than welcome.Thanks a lot!


Feb 10

We’re beginning our retirement savings, and are not sure why our money market isn’t the best place for the money; I assume for tax reasons.


Jan 31

I’m 27, husband is 34. We’re both going to start IRAs. I don’t know if it’s better to save more now and put less into IRAS. We are halfway to reaching the goal amount for our emergency savings. We intend on going to grad school also. But, we are behind with retirement, so I wasn’t sure if I should beef that up now and be okay with saving less each month.


Jan 23

My boyfriend was in the military for 5 years, and created a few IRAs, savings accounts, and other assets along the way. Unfortunately, he never kept track of his deposits, and now wants to find out what he has floating out there. Is there any place that we can use his SS# to find what accounts are connected to it?


Dec 30

n? Some of the stocks had dividends, some had profits, some losses? So how is the tax computed on the payouts? Is there anything I should be doing with this traditional IRA account to make sure that expenses and losses are taken into account correctly?


Dec 10

Let’s say for 2008, I would like to contribue the $5k (max amount) to my traditional IRA and another $5k to a Roth IRA. At the same time, I’m an active participant to an employer sponsored 401k plan. I will be filing on single status. Can I do this?


Nov 29

Deciding whether to invest in a Traditional IRA or a Roth IRA can be a difficult decision, especially if you are unaware of the differences. A Traditional IRA is an approach typically taken with an employer sponsored plan where before-tax dollars are contributed, thus allowing the employee/investor to invest more money over the life of the IRA. However, a Traditional IRA is subject to income tax at the time of withdrawal (typically retirement).
On the other hand, a Roth IRA is funded with after tax dollars, and none of the principal or growth of the fund is subject to taxation at withdrawal. All tax has been paid before money is ever invested, and the government allows for tax free growth. Sounds like the better option, huh? Lets look at example and find out.
Let’s look at 30 years of investing between a Traditional IRA and Roth IRA, assuming the investor gets an 8% return, contributes $200/month to the Traditional IRA, and only $160/month with a Roth IRA (due to an assumed 20% taxation before investing).
Total amount accumulated after 30 years of investing.
The Traditional IRA accumulates approximately $60,000 more than the Roth IRA. But wait Jeffry, the Roth IRA doesn’t get taxed during retirement and the Traditional IRA does, won’t I end up with more if I go with the Roth IRA? Maybe, maybe not.
Typically folks that go into retirement tend to have less income, and less expenses (they have already paid off a mortgage, kids are grown up and gone, etc.). So, assuming the tax bracket declined from 20% before retirement to 10% after retirement, the total after tax dollars you would have with the Traditional IRA would be $268,264.70. The total after tax dollars you would have with the Roth IRA would only be $238,457.51.
That’s a difference of $29,807.19, quite a difference!
Most financial experts advise their clients to contribute to a Traditional IRA for this reason. It usually turns out to be the better financial choice. Of course, this is based on many assumptions, some of which may or may not turn out to be true. It really depends on your situation. If you have an employer sponsored retirement account, chances are likely that it is a traditional IRA, the employer matches it with some money, and of course, this would be the better approach. But if you are military, without a employer sponsored plan, especially if you are in active duty, then a Roth IRA may be of much more value to you. Because you do not get taxed while on active duty, then in essence, your contributions to your Roth IRA are also tax free (even though they still qualify as after tax dollars).


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