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Post by aggiejazz on Apr 16, 2009 12:22:44 GMT -5
With the major companies stock prices at a all time low, It hit me to open a Roth Individual Retirement Account (Roth IRA) for a couple of family members. A lot of top companies stock prices are ranging from single digits to the teens and low 20's. These companies stock prices have the potential to return to their 2007 values in a lot of cases in the near future (next few years). That is a lot of profit gain if these companies can rebound.
What better way to build wealth tax-free than in a Roth IRA. You will use take-home money to fund your Roth account up to $4000-to-$5000 per year and not have to pay tax on the profits gained when stock is sold. Get the facts on a Roth IRA from an broker.
The reason I am talking about the Roth right now is because a little money can buy a lot of shares due to current lower stock prices on so many companies.
There are companies that the federal government has invested billions of dollars in them. I don't have any crystal ball and I am not an expert on finance and business but I find it hard to believe that the Federal government will let them fail and simply close their doors. Word of caution, some companies, like General Motors, have the potential to fail and go bankrupt even though they have been helped so far by the federal government and Federal Reserve.
Whatever you buy watch it on a regular schedule, be ready to sell it when it reaches your threshold for decline because the theory of buying and holding forever has been greatly debunked in the last 9 years.
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Post by aggiejazz on Apr 16, 2009 12:27:31 GMT -5
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Post by aggielove on Apr 16, 2009 12:30:09 GMT -5
Good looking out!
I was thinking about the same thing as I was filing my taxes the other day. Buy low!!
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Post by captaggie on Apr 16, 2009 13:04:07 GMT -5
I was recently informed by my tax advisor that if you max out your 401K you cannot contribute to either IRA type. I didn't know that and I'm trying to confirm.
Also there are limits to how much you can contribute to an IRA based on how you file and your modified AGI.
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Post by aggiejazz on Apr 16, 2009 13:51:09 GMT -5
I was recently informed by my tax advisor that if you max out your 401K you cannot contribute to either IRA type. I didn't know that and I'm trying to confirm. Also there are limits to how much you can contribute to an IRA based on how you file and your modified AGI. See page 60 of this publication: www.irs.gov/pub/irs-pdf/p590.pdfIt is just like the IRS not to put these rules in simple words but as I read it, maxing out your 401K has no effect on contribution to the Roth IRA. Only contributing to another IRA account in the same year will limit your contribution to a Roth. If your company went bankrupt and you had a 401(k) with the company your contribution to a Roth can increase. Your modified adjusted gross income (AGI) determines how much you can contribute to a Roth IRA. The link should help you greatly. The confusion is that some people say "401(k)" interchangeable with "IRA". The usage is further complicated because you can roll your 401(k) into an IRA (tradional or Roth). As one commercial always say read the book. |
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Post by captaggie on Apr 16, 2009 14:44:18 GMT -5
Reading an IRS publication will give you headaches. ;D
Thanks for the link.
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Aggie77
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Member Since: September 2004
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Post by Aggie77 on Apr 16, 2009 16:42:06 GMT -5
If you gonna invest in the stock market, why put it in an account you can't access until 62.5. Though the gains are taxed deferred, but the losses aren't tax deductible. What are the chances there will be no losses?
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Post by captaggie on Apr 16, 2009 18:28:37 GMT -5
Ok 77, where would you put it??
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Post by Aggie One on Apr 16, 2009 21:29:13 GMT -5
Wrap your cash in plastic, place it in tin cans, and bury them in the backyard yard like my grand daddy did.
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Aggie77
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Post by Aggie77 on Apr 16, 2009 23:22:42 GMT -5
Me, I'm a brokerage account man. I scanned that Roth data, to much to understand. Buy low, sell high, over and over again. Stocks aren't for the passive investor, especially in this market. Most people will not do the homework needed, so it doesn't matter where you put the money if you aren't gonna manage it.
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Post by aggiejazz on Apr 17, 2009 7:51:22 GMT -5
If you gonna invest in the stock market, why put it in an account you can't access until 62.5. Though the gains are taxed deferred, but the losses aren't tax deductible. What are the chances there will be no losses? Before I state that your whole post is incorrect, Let me state that the main purpose for the Roth IRA is to be a source of income during retirement. In addition, you can use up to $10,000 for your first home and you can use the money when you are in a IRS qualified financial distress. BTW, the age is 59 1/2. Now, I can say your statements in your post are incorrect. I encourage everyone to read the links I posted. You did bring to mind the type of investments one can do for safer investments for the Roth. You can have CDs, government Bonds and money markets in your Roth. |
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Aggie77
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Post by Aggie77 on Apr 17, 2009 12:31:21 GMT -5
If you gonna invest in the stock market, why put it in an account you can't access until 62.5. Though the gains are taxed deferred, but the losses aren't tax deductible. What are the chances there will be no losses? Before I state that your whole post is incorrect, Let me state that the main purpose for the Roth IRA is to be a source of income during retirement. In addition, you can use up to $10,000 for your first home and you can use the money when you are in a IRS qualified financial distress. BTW, the age is 59 1/2. Now, I can say your statements in your post are incorrect. I encourage everyone to read the links I posted. You did bring to mind the type of investments one can do for safer investments for the Roth. You can have CDs, government Bonds and money markets in your Roth. Other than the age, I'm not sure what's incorrect in that statement. The restrictions are still there. Granted there are hardship cases that are allowable to avoid the penalty, but does that applied to taxes? If that same amount of money is available in a brokerage account there is no penalty nor tax on the distribution and there is no approval process, nor paperwork, you make the electronic transfer now. The thing that I thought was the greatest benefit is that qualified distributions are not taxable (including any gains), though I don't see that specific language in the Pub. I will consider this when I’m 59.5 by then I will be rolling in dough from my brokerage account, but will I be able make qualified distributions before 64.5? |
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Post by jaffejoffa on Apr 17, 2009 16:52:42 GMT -5
Since you contribute to a Roth w/ post tax dollars, you can withdraw penalty free at any juncture, which is the main benefit when compared to a 401K. And since we dont know the country's tax structure years down the road, youll probably also see a tax benefit as you've already been taxed on your Roth's money ...
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Aggie77
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Post by Aggie77 on Apr 23, 2009 9:39:44 GMT -5
Since you contribute to a Roth w/ post tax dollars, you can withdraw penalty free at any juncture, which is the main benefit when compared to a 401K. And since we dont know the country's tax structure years down the road, youll probably also see a tax benefit as you've already been taxed on your Roth's money ... Though I'm not and expert I think this statement needs a little modification. The word "Since" should be changed to "When". Because you can rollover 401k and other IRA funds into a Roth, and withdrawal of those funds would result in a penalty and tax. Do you agree? |
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Post by aggiejazz on Apr 23, 2009 10:37:50 GMT -5
Since you contribute to a Roth w/ post tax dollars, you can withdraw penalty free at any juncture, which is the main benefit when compared to a 401K. And since we dont know the country's tax structure years down the road, youll probably also see a tax benefit as you've already been taxed on your Roth's money ... Though I'm not and expert I think this statement needs a little modification. The word "Since" should be changed to "When". Because you can rollover 401k and other IRA funds into a Roth, and withdrawal of those funds would result in a penalty and tax. Do you agree? As I read the Roth rules, any withdrawl before the age of 59 1/2 has to meet IRS withdrawl qualifications. I think Congress should have an additional withdrawl rule that once the Roth account has been open for a certain number of years - or the money in the Roth account has been in for a set number of years - then you should be able to withdraw your money without penalty. I don't think a working person just starting out or with little money should put the maximum dollar limit into the Roth Account before establishing at least 6 months of emergency money "socked" away in a savings account or money market account. People just starting to work and students of any young age can do great with just $250 to about $1500 of contribution starting out and then continue contributions with a few hundreds of dollars per year. Beginner investers for the Roth should look at investing in no-loads Government Bond mutual fund, S&P 500 mutual fund or Total Market mutual fund because they need minimum time to check each month. |
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