What would you like to do?
Can you have more than 1 retirement account - for example both a Roth IRA and a 401K?
Yes, the limitation does not apply between a SIMPLE IRA and a Roth/Traditional. However, because a SIMPLE IRA is a "qualified retirement plan" offered by your employer, yo…u may not be able to get a traditional IRA deduction- all depends on your income situation.
The right answer is, It Depends. I like a ROTH IRA. Here we pay tax on our contributons. Qualified distributions from a ROTH IRA are tax free. The ROTH IRA also allows us to t…ake our Annual Contributions out of the IRA at any time without tax or without penalty for any reason, even to make a trip to Vegas and put it all on red. A Traditional IRA is OK too. Here we do not pay tax on our annual contributions giving us a tax advantage now. All distributions from a Traditional IRA are subject to income tax, and if taken before age 59.5 years, there is a 10% penalty. There are a few items that qualify for avoiding the 10% penalty. Everyone can contribute to a Traditional. Not everyone can take the tax deduction. This is called an after tax Traditional IRA. The earnings are tax deferred. When you take a distribution from this IRA part of the distribution is subject to income tax and part of the distribution is tax free. These amounts are based on the ratio of your after tax contributions to the total amount of the IRA. Both IRAs will provide you with more investment choices when you use a discount broker as the IRA custodian. IRAs typically are afforded $1,000,000 of bankruptcy protection. This may vary from state to state. The 401k contribution is taken from our pay each pay day. Some employer's offer a matching contribution. The Traditional 401k is not taxed when we contribute. It is taxed when we take a qualified distribution. Investment choices are usually limited to a set of mutual funds and savings accounts. Some 401k plans offer a loan feature. I do not recommend you ever take a loan from your 401k account. Some employers offer a ROTH 401k. Your contributions are taxed as you make the contribution. When you take the qualified distribution from the plan your money comes out tax free. When the employer makes a matching contribution to this IRA, it is a tax deferred contribution. You will pay ordinary income taxes on distributions of the employer's contribution. When you start contributing to a 401k plan, READ the Summary Plan Description. You will be given a copy, read it. The big advantage of a 401k plan is for 2008 you can contribute up to $15,500. And if you are over age 50, you can contribute an additional $5,000. This "Catch-up" contribution can be made even if your 401k limits you to an amount lower than the $15,500. Which is better? It Depends.
Yes. Your ability to have a personal or spousal Roth IRA is a separate questions from whether you can have a SEP IRA. Anyone with earned income can contribute up to $4,000 (or… $5,000 if your are 50 or over) in 2007 and $5,000 (or $6,000 in 2008) if they meet the income requirements. You must have earned income of under $99,000 for 2007 and $101,000 for 2008 for singles or $156,000 for 2007 and $159,000 for 2008 for married filing jointly. For a SEP IRA, you must have business income to contribute. You can contribute up to 25% of your business income with a limit of $45,000 in 2007 and $50,000 in 2008 (those 50 years or older may contribute $5,000 more). Thus, if you have business income, you can contribute to your ROTH IRA if you are eligible and a SEP IRA. If your SEP IRA is likely to become substantial or you have funds in a 401(k) from a previous employer and you are an one person (or one person with a spouse) business, you should look into individual 401(k)s. All of the major financial institution and self-directed trust companies offer them. They work like a corporate 401(k) but you have complete control. They may be better than a SEP since: 1. The contribution limits are higher 2. You can borrow in a 401k but not a SEP 3. You can have a Roth 401(k) but you cannot make Roth contributions to a SEP 4. You can buy life insurance or invest in a S corporationin a 401(k)
Yes, you can contribute to both a Traditional and a Roth IRA account but contribution limits apply across both accounts. For example, if your contribution limit is $5,00…0 then you could contribute $2,500 in each account. You can not contribute $5,000 into each account.
First, Never borrow from your 401k plan. You can pay off your 401k loan with money form any legal source. The money does not need to be deducted from your pay check. That… is the most convient method. To use money from an IRA, it would be necessary to take an UNQUALIFIED DISTRIBUTON from your IRA. If this is a Traditional IRA, the mney would be subject to income tax. And if you are not yet at the age of 59.5 years, a 10% penalty would be assessed on the amount taken from the IRA. This 10% would need to be paid when you file your income tax return. If this is a ROTH IRA, there are some different rules. Distributions from a ROTH IRA come out in an ordered fashion. - First to come out is our annual contribution amounts. These amounts come out free from tax and free from penalty. - Second to be distributed from a ROTH IRA is our Conversion Contributions. Conversion amounts are distributed tax free. A 10% penalty may apply if the conversion is less than 5 years old. Each Conversion has it's own 5 year clock. - Last to come out is earnings. If the ROTH IRA owner is younger than 59.5 years, the earnings will be taxed and the 10% penalty will apply.
You cannot contribute more to your IRA than the amount of your "compensation income." Compensation income is the taxable portion of your wages/salary, net self-employment, and… alimony. Any amount shown in box 1 of a W-2 minus the amount shown in box 11 of the same W-2 is automatically considered taxable compensation income. So if you are not doing some kind of work or receiving alimony, you can't contribute. There is no age limit for contributions to a Roth IRA. People over 70 1/2 cannot contribute to a traditional IRA.
investing for retirement.
You can roll a 401k plan over into a Roth IRA. However, when you do so, you will have to pay ordinary income tax on the amount rolled into the Roth. Even so, a Roth IRA will… usually perform better over time, as the money not only grows tax free, but is taken out tax free as well. There are some great calculators out there that will show you the impact of conducting this rollover. See attached link.
no >>>>> And why would you want to? You already paid taxes on that money.
You can but you will have to pay income tax on the entire amount you move to the Roth. Copy & Paste the link below for more info. articles.moneycentral.msn.com/Retirement…andWills/InvestForRetirement/jobless-what-to-do-with-your-401k.aspx
In IRA Plans
No. The combined total you contribute to all of your accounts must be less than your annual maximum.
A money market account (MMA) and a 401(k) plan are not the same. The former is a type of savings account while the latter is an investment account. Some of the key differences… lie in the type of deposits, or contributions, made, how the money grows, and whether or not withdrawals can be made from the accounts .
Contributing more than the maximum into a Roth IRA will result in a 6% excise tax. The 6% tax applies only to the amount which one has over contributed.
In IRA Plans
The purpose of a Roth IRA account, is to protect the older generations who can't work any longer so they don't have to pay taxes. It's a retirement plan worked out by the gove…rnment of the United States.
Individual retirement arrangements were created to help you save for retirement while 529 plans are designed for education savings. Even if you're done with school, t…he IRS rules don't allow you to roll money straight from a 529 plan to an IRA. If you do so, you're treated as if you took a 529 plan distribution and made a regular IRA contribution.