Investing

[ssigmanstinks]

So, in a roth IRA the max investement of 5k costs you 5k of after tax but would not be taxed at withdrawl if held for 5 years and made after the age of 59 and 1/2

in a standard ira the max investment of 5k costs you 3.75k of adjusted after tax money due to the savings, but would be taxed at withdrawl.

I'm having a hell of a time finding out whether normal income tax brackets for current income apply to the withdrawl, or if it is subject to capital gains, or the bracket of the amount of the withdrawl. Anyone know what this gets taxed at upon valid withdrawl?

[ssigmanstinks]

On both also, the earnings year to year are not taxed as would be the case with a CD, savings account, mutual fund, etc.

[ssigmanstinks]

Originally Posted by BaldBil

I am not a big investor, really don't trust the bastards. The markets is rigged for the big boys. My only participation is with mutual funds, the slow growth type.

I am a big believer in "coffeecan" investment. Squirrel your money away, out of the system where only you can find it. It will grow on its' own. Forget about the bank points they are a waste of time. I also don't believe in credit cards, one is all you need and use it sparingly. Those things cost you more than an old school bookie.

Some banks offer decent returns, the wife has an ING savings account that seems to fluctuate between 3 and 4 1/2 percent interest for money that is always available for withdrawl.

As for the CC, a responsible spender (which I am not) could really do well using credit cards offering rewards for monthly spending and paying the balance off monthly.

[ssigmanstinks]

Further, there are rules when a traditional IRA would not be tax deductible following the question:

Is your contribution tax deductible in a traditional IRA

YES, your contributions are fully tax-deductible if you’re:
• Single and don’t participate in your employer’s retirement plan OR you do participate and your AGI is under $30,000.
• Married, but neither spouse participates in an employer’s retirement plan4 OR you do participate and your AGI is under $50,000.
NO, your contributions aren’t tax-deductible if you’re:
• Single and participate in your employer’s retirement plan and your AGI is more than $40,000.5
• Married with combined AGI over $60,0006 and participate in an employer’s retirement plan.

[ssigmanstinks]

and it appears with an IRA you take regular withdrawals for chunks of your money to be used and are taxed based on the earnings of that withdrawal. So if you earned 50k the year before retirement, and chose to withdraw 50k a year from your IRA to maintain that rate you'd be responsible for the same 25 percent in taxes on the earnings.

[BaldBil]

I am running a small investment program right now. Shanty Super Bowl Squares for either $10 or $20. The return is not guaranteed, each investor has a 1 in 100 chance of cashing in each quarter.

[ssigmanstinks]

now that's my kind of investment!

[BtownBeers]

But Bil, banks don't break our legs when the money doesn't change hands in a timely fashion.

[BaldBil]

Originally Posted by BtownBeers

But Bil, banks don't break our legs when the money doesn't change hands in a timely fashion.

Correct! They just take your house or your car and tell you to go suck an egg.

[BtownBeers]

Good point..but walking is fun.

[BaldBil]

Originally Posted by BtownBeers

Good point..but walking is fun.

I have been a pedestrian for eleven years. My willpower may be breaking though, I have been looking a motorbikes for the last couple of months.

[ssigman]

ok my head is dizzy from reading stink's 30 posts..so i'll report what i learned last nite when i spoke to an E-trade person

1. if you rollover your 401k into a Roth directly...the max being 5k for 2008...it is considered ordinary income and raises your overall income by 5k...example...you make 80k(25% tax bracket)..it would now considered 85k a year..also in some cases..like the money being sent to you first before you put it in a roth, you will be taxed and hit with the penalty....BUT

2. you can find a place like an etrade that has a rollover ira which is basically the same as a 401k...it'll be moved without penalty...then from there you can move the money as you wish to a roth without being penalized....you can also move any amount you want...so you don't have to take a 5k hit if you don't want...you can move 1k a year and it'll only up your income that much

3. the roth since its post-tax money can be withdrawn at any time without penalty..so if something comes up and you need money, you can withdraw from it...they said its good to have both a roth and a 401k to diversify also as roth ira are usually more conservative since alot of times people only deposit money in every once in awhile...like tax refunds, etc...

4. i do have 401k here and they match up to a certain dollar value...since i'm just eligible i have 0 dollars in my new 401k

[Rusty27]

Be careful!

[ssigmanstinks]

Originally Posted by ssigman

ok my head is dizzy from reading stink's 30 posts..so i'll report what i learned last nite when i spoke to an E-trade person

1. if you rollover your 401k into a Roth directly...the max being 5k for 2008...it is considered ordinary income and raises your overall income by 5k...example...you make 80k(25% tax bracket)..it would now considered 85k a year..also in some cases..like the money being sent to you first before you put it in a roth, you will be taxed and hit with the penalty....BUT

2. you can find a place like an etrade that has a rollover ira which is basically the same as a 401k...it'll be moved without penalty...then from there you can move the money as you wish to a roth without being penalized....you can also move any amount you want...so you don't have to take a 5k hit if you don't want...you can move 1k a year and it'll only up your income that much

3. the roth since its post-tax money can be withdrawn at any time without penalty..so if something comes up and you need money, you can withdraw from it...they said its good to have both a roth and a 401k to diversify also as roth ira are usually more conservative since alot of times people only deposit money in every once in awhile...like tax refunds, etc...

4. i do have 401k here and they match up to a certain dollar value...since i'm just eligible i have 0 dollars in my new 401k

80k would put you in the 28% bracket, and good info there much easier to read than my nonsense.

Why not just say to hell with the IRA if you have an available 401k with match, there is no better investment option for retirement. Also, you say they match to a certain dollar value. Is that capped? or do they match a percentage of each dollar you invest to a certain percent of your income.

Keep in mind the limits placed on the tax implications for the IRA if you also participate in a company retirement plan along side with that posted above.