Topic: Retirement savings...Rollover IRA questions!

[CTENG in KS]

OK, SO I have a 401k, a Roth IRA, and I have a rollover (traditional) IRA that I used for the 401k from my last job.  This rollover IRA is just sitting there as I have been of the mind that  you should keep work related contributions and personal contributions seperate.  I want to put more money away though...so I was wondering if it becomes too complicated tax wise and such to do pretax direct deposit contributions to the same IRA that I use to rollover 401k's.

Or does anyone have any other brilliant savings/investment methods to add to what I already have?  I also have a high yield savings accnt, but I like the ones that you can't easily get the money back out of...if you know what I mean.

[kneedownnate]

What's a 401k?   I have this strange thing called a savings account.  Still has the same $42 that's been in it for years, well, minus the $5 innactivity fee they charged me :rolleyes:

I figure when I'm ready to retire in 50 years that $42 will still be there, minus the multiple $5 fees for letting them make interest off my money

[Duffil]

unless I misunterstand your question, I would dump it all into the Roth Acct, being as it is tax deferred...meaning no taxes on it till you withdraw...It's been a while and I am not 100% on whether the roth is tax deferred or tax exempt.


Upon more thinking, the Roth is tax exempt w/a max deposit per year of 2K.  The IRA is tax deferred, meaning no tax on deposited cash, until you withdraw.  so the idea is to put a bunch in your IRA, and transfer as much as possible into your Roth each year.

[BLACKDOG]

unless I misunterstand your question, I would dump it all into the Roth Acct, being as it is tax deferred...meaning no taxes on it till you withdraw...It's been a while and I am not 100% on whether the roth is tax deferred or tax exempt.


Upon more thinking, the Roth is tax exempt w/a max deposit per year of 2K.  The IRA is tax deferred, meaning no tax on deposited cash, until you withdraw.  so the idea is to put a bunch in your IRA, and transfer as much as possible into your Roth each year.

I thought you could put up to 3k in a Roth?  Don't forget, it is only tax exempt if you leave it in there the entire time (30 years, I think) 

CTENG, I'll ask my dad to think on this tommorow.  He's still healing up from his accident, so he doesn't have much to do, and he views investing as a hobby, he really enjoys it, so he knows a lot about it

[CTENG in KS [OP]]

Thanks BD, I'd be interested to hear what he thinks.

Response to question things:
I already max out my Roth IRA which is tax exempt.  edit: Roth max is 4k this year, jumps to 5k next year I think.
I max out my employer match into my 401k.

I want to invest more, but I want to be careful about adding my own money into the rollover acct because things might get tricky tax wise when I have to start pulling that money out in 40 years.  My question is:  Is it a mistake to make personal contributions (pre-tax) to my rollover IRA that only has the results of my original employer matched 401k fund?  OR, because it is still pre-tax, would it be ok to contribute to it?

Thanks!

[Duffil]

  it's been a few years since I looked into investing.

[BLACKDOG]

This is BD's dad:

Hey, my son asked me to look at your posting to see what I thought.  I am not an financial expert, but let me recommend something to you.  It looks like someone has gotten you started on some investments but that you aren't real sure what all you've got.  I hope your accounts are in mutual funds, primarily invested in US stocks, as I believe that makes the best starting place for young people with a long investment horizon.  If that's the case, I recommend you call a representative of one of your mutual fund companies and request advice.  Lay out your situation for him/her with approximate dollar figures and you'll probably get pretty good advice on how to consolidate and proceed.  If your investment activity is with more than one mutual fund company, go ahead and solicit advice from more than one.  Be careful talking to loaded mutual fund advisors or brokerage firms, as they might steer you to one of their high expense funds.  Take your time making any moves.  Good luck.

[CTENG in KS [OP]]

To BD's Dad,

Thanks for taking the time!
The Roth IRA is in a Fidelity Freedom fund...mutual funds managed and strategy adjusts as you get closer to retirement.
The std IRA (rollover) is in a biotech mutual fund...which I have been researching for quite some time...if I am correct, and I am prettty sure I am, once the environmentalists are forced to back off by time, biotech is gonna explode.  For this reason I would like to contribute more into this fund, but I don't know if I should put it in the IRA I already have, or start a different fund to keep personal savings from "professional" savings.

[85 and still running]

I never thought I would see a post like this on this board... My advice is go sit down with a financial planner. The questions you are asking are comparable to calling me on the phone and asking me to diagnos your check engine light.

I would like to clear up a few facts from the previous posts.

A contribution to Roth IRA is made with after tax money (meaning you are paying taxes on it this year and then, making the contribution). The advantage is to invest in stocks and/mutual funds and not pay tax on the growth if you take the money out after you turn 60. Also, if you've had the account for at least 5 years you can use the money without penalty or taxes for:
qualified education expenses (college tuition)
medical expenses greater than 7.5% of your adjusted gross income
first time home buyer
death
disability

In 2007, You can contribute $4,000 to a Roth account if you are under 50 and $5,000 for 50 and above. There are also income limitations:
Single filers: Up to $99,000 (to qualify for a full contribution); $99,000-$114,000 (to be eligible for a partial contribution)
Joint filers: Up to $156,000 (to qualify for a full contribution); $156,000-$166,000 (to be eligible for a partial contribution

[germ]

85 and still running is correct.

I personally would keep the 2 seperate, as what you fear about tax time would come true. It would be a complete nightmare. If you already have a 401k as well as a roll-over, and a Roth, the only solution I can think of is to create a seperate Roth in your wife's name, and max the contribution. You could also create a small buisness (web based?) and open a SEP IRA, an IRA for your wife (the CFO), and hire your children, and contribute 100% of their earnings to a retirement account in their names. The only problem is that now you're "giving" that money to the kids, and I don't know exactly how you would be able to get it back at retirement.

If that doesn't work out, then as far as I know (which really isn't much), you're stuck opening a regular investment account, and then you're fair game for the IRS.

Hope that helps. I'm not a financial planner, but I've faced the same question, and this was the basic advice I was given. It makes sense to me.

I would most definatly keep the 401k/Rollover seperate from your aftertax contributions.

Erik

[CTENG in KS [OP]]

I have a leetle problem...no wife and/or kids.

The actual question is of PRE-tax contributions to the rollover IRA.  I believe I can set them up to be made by direct deposit before tax.