Can somebody explain why people are crazy for Roth IRAs?

[KrazyHorse]

They're also better in that they have a $14k limit where an IRA only has a $4k limit.

Didn't know that.

[KrazyHorse]

One thing to consider is that when you retire and start pulling from these accounts, you tax basis will most likeyl be lower than it is now.

Which is why I think Roths are not all they're cracked up to be.

[DanS]

(a) None. The Roth is easier to qualify for, however.

(b) Well, it probably is good for almost anybody. It's good for young people in comparison to the traditional IRA. Besides, it is the thing you get when you max out your other options. Sometimes, those other options have fairly low ceilings, so they are easy to max out.

[Japher]

I am wondering if there is any harm to rolling over a portion of my 401k every year into a roll-over IRA (traditional) just so I don't have to stick with my 401ks stupid mutual funds... Anyone think this is a good or bad idea?

[KrazyHorse]

Uh....the max for the Roth is the same as the max for the traditional IRA

I've already mentioned that the Roth has a slightly higher effective ceiling

And yes, as I've said, the younger you are the more likely it is that a Roth IRA is a better choice. But I can't fathom why a 45 year-old man at the peak of his earning curve who qualifies for the tax benefits of a traditional IRA would ever choose a Roth.

[KrazyHorse]

Originally posted by Japher
I am wondering if there is any harm to rolling over a portion of my 401k every year into a roll-over IRA (traditional) just so I don't have to stick with my 401ks stupid mutual funds... Anyone think this is a good or bad idea?

Getting as much out of mutual funds and into a straight up index fund as quick as possible is always a good idea. You will gain an additional 1% yield over the long run.

[KrazyHorse]

I have an unabashed hatred for any scheme which involves you paying somebody to run a financial portfolio which, on average, matches the market, and whose variance demonstrates white noise statistics.

[Japher]

same here. I loathe mutual funds.

[DanS]

Originally posted by KrazyHorse
Uh....the max for the Roth is the same as the max for the traditional IRA

Not my point. The Roth is the thing that you get when you max out your other options. Those other options sometimes aren't very good. E.g., not everyone has access to a well-managed 401(k) from his employer. There are a multitude of different circumstances.

[KrazyHorse]

My point is

I can't fathom why a 45 year-old man at the peak of his earning curve who qualifies for the tax benefits of a traditional IRA would ever choose a Roth.

[Japher]

Max out your IRAs first, IMO. Many people max out their 401ks first. I say 401k to max for match, or 6%, max out IRA, then get a self managed account and have some fun. Not all money should go to retirement.

Me, I'm trying to get 30% down on my house first, I have 6% going to my 401k (which I don't like), and 2k going into my Roth IRA, and 2k going into Josies educational IRA. Once I get the 30% down I will redirect that money towards vacation funds and the like.

[Arrian]

I have a friend who works at a company where they match 200%

Crazy.

My company's match kinda stinks. They match 1-to-1, but up to a cap of 5% of your salary or $5000, whichever is less.

-Arrian

[KrazyHorse]

My fiancée's new job just throws free money into a retirement account (7.25% of salary). No contribution necessary.



The account is managed by one of 4 major financial firms, according to your wishes. I'm going to make sure she finds out which one will let her have the most freedom in her choices. Any of them that force her to buy their ****ty mutual funds will get the axe.

[Japher]

my last company did that
before they got bought out

lots of nice benefits went away after that

[Imran Siddiqui]

Originally posted by Japher
I am wondering if there is any harm to rolling over a portion of my 401k every year into a roll-over IRA (traditional) just so I don't have to stick with my 401ks stupid mutual funds... Anyone think this is a good or bad idea?

Do they allow you to do that? Read your plan document. Most plan will NOT allow you to roll over your 401k until you leave the company.