Home     Forum     401k     401k Rollovers
    Register   Login   Members   Search   FAQs     Recent Posts    




Roth IRA - What to buy?

Reply to topic
Money Talk > Retirement Planning

Author Thread
workingmonkey
Member


Cash: $ 2.95

Posts: 14
Joined: 12 Jan 2015
Location: Los Angeles
Roth IRA - What to buy?  Reply with quote  

Hi,

I have a Roth IRA with only $400 in it. It is parked at the moment, no particular investments. Should I buy something now or keep my deposits going until I can buy something in particular later?

My other investments include a 401K with about 200K and FUSEX with about $30K.

Thanks!
Post Fri Aug 28, 2015 7:58 pm
 View user's profile Send private message
oldguy
Senior Member


Cash: $ 715.40

Posts: 3479
Joined: 21 May 2006
Location: arizona
 Reply with quote  

How about moving some of your $30,000 into the Roth to utilize your $5500 exemption each year?

Is the Roth account also with Fidelity?
Post Fri Aug 28, 2015 9:34 pm
 View user's profile Send private message
workingmonkey
Member


Cash: $ 2.95

Posts: 14
Joined: 12 Jan 2015
Location: Los Angeles
 Reply with quote  

quote:
Originally posted by oldguy
How about moving some of your $30,000 into the Roth to utilize your $5500 exemption each year?

Is the Roth account also with Fidelity?


Yes, my Roth IRA is with Fidelity. What do I invest in after I move it there?
Post Fri Aug 28, 2015 10:47 pm
 View user's profile Send private message
oldguy
Senior Member


Cash: $ 715.40

Posts: 3479
Joined: 21 May 2006
Location: arizona
 Reply with quote  

More of the same - FUSEX
Post Sat Aug 29, 2015 12:58 am
 View user's profile Send private message
clydewolf
Senior Member


Cash: $ 50.25

Posts: 248
Joined: 27 May 2012

 Reply with quote  

quote:
Originally posted by oldguy
How about moving some of your $30,000 into the Roth to utilize your $5500 exemption each year?

Is the Roth account also with Fidelity?

I believe what Oldguy is saying is to reduce your 401k contributions and make contributions to your ROTH IRA instead.

There is no tax deduction for contributing to a Roth IRA.

While you are working for the employer that sponsors your 401k, you can not move money from the 401k,,, UNLESS the 401k has an in-service investment window. That would allow you to move some of your 401k account to an outside broker for investing. Typically that window has an age requirement of 59 1/2. You need to read your 401k Summary Plan Description to determine if that window is available to you.

If you are no longer employed by the 401k plan sponsor, you can move the entire 401k account to an IRA. Moving to a Traditional IRA is not a taxable event. Moving some or all of the 401k to a Roth IRA would tax the amount going to the ROTH IRA as ordinary income.
Post Sun Aug 30, 2015 12:13 am
 View user's profile Send private message
christcorp
Preferred Member


Cash: $ 38.85

Posts: 194
Joined: 05 Mar 2015
Location: Wyoming
 Reply with quote  

While it is true that a ROTH IRA doesn't have any immediate tax incentives for your "Pre-Tax" income; the fact that all the profits/interest it makes during it's lifetime are "Tax Free", still makes it an excellent choice.

It's also true that you can't necessarily just move investments from one place to another very easily. But there are ways to manually balance your different accounts. Let's say for example, you want to move some of the 401K money to a roth or standalone mutual fund. Instead of trying to move it, simply reduce your monthly contribution to the 401K temporarily to the lowest allowed, and then for the next few paydays, invest as much as you can into the ROTH or or funds you wanted to transfer money into. Granted, it's not an "Immediate" transfer, but within a couple of months, you'll have what you want in the accounts you want. Then, simply readjust your 401K to take on the full investment each month you had going there.

This is just an example, and not designed as a specific course of action. Simply saying, if you have monthly investments going to numerous places, there's nothing to say you can't think outside the box and make larger monthly deposits into the accounts you're trying to increase. Sort of like reducing debt. Pay the minimum amount on the lowest interest rate items, and maximize paying off the higher interest rate items first. Then work down to the next highest interest rate debt once the previous one is gone.

But you didn't say how much you are investing each month into the 401K and FUSEX. But most accounts allow you to make changes online. Reduce your 401K to the minimum that your company matches, reduce the monthly investment to FUSEX to as small as possible; then make mega monthly investments into the ROTH that you have until you've hit the $5500 mark. Then put the monthlies back to the way they were.

This is all part of a balanced diversified retirement plan. And a ROTH IRA is definitely an important part of that plan. When the time comes to retire, the ROTH gives you the option to use that money as an emergency fund and/or as a large purchase fund. Whatever you take out, for whatever reason, is money that is tax free and you don't have to jump through hoops to account for it.
Post Sun Aug 30, 2015 9:20 pm
 View user's profile Send private message
workingmonkey
Member


Cash: $ 2.95

Posts: 14
Joined: 12 Jan 2015
Location: Los Angeles
 Reply with quote  

Thanks folks for the great advice.

I went ahead and reduced my taxable investment by $5100 and deposited this to my Roth IRA. I had $400 in contributions so that brought me up to $5500 in my Roth IRA. I guess I'm not adding anymore this year since this is the limit in my case. I bought $5500 shares of FUSEX.

As for my 401K, I get roughly 7.5% of my salary from my employer every year. It's not a match, it's an automatic employer contribution. I figured since I have about $200K in my 401K it probably be good idea to channel more of my income into Roth IRA for next year and so forth?
Post Tue Sep 08, 2015 5:04 pm
 View user's profile Send private message
oldguy
Senior Member


Cash: $ 715.40

Posts: 3479
Joined: 21 May 2006
Location: arizona
 Reply with quote  

quote:
I figured since I have about $200K in my 401K it probably be good idea to channel more of


What is the $200,000 invested in? Also FUSEX?
Post Tue Sep 08, 2015 5:40 pm
 View user's profile Send private message
workingmonkey
Member


Cash: $ 2.95

Posts: 14
Joined: 12 Jan 2015
Location: Los Angeles
 Reply with quote  

quote:
Originally posted by oldguy


What is the $200,000 invested in? Also FUSEX?


It is invested in Fidelity FreedomŽ Index 2040 Fund FBIFX. I believe it's setup for growth. This is probably why I took a few hits with the recent downturn. Anyway, should this be invested in some other Fidelity product?
Post Tue Sep 08, 2015 5:53 pm
 View user's profile Send private message

Reply to topic
Forum Jump:
Jump to:  
  Display posts from previous:      





Money Talk © 2003-2016