How to Buy ETFs and Stocks

And what type of Roth are you talking about taking money out of? If you're talking an IRA you can take out whatever you have contributed penalty free. You will only pay on any interest/earnings that you pull. After having a Roth IRA for 5 years or if you're 59.5 (I think) you can take all the money out penalty free.
 
B767 said:
And what type of Roth are you talking about taking money out of? If you're talking an IRA you can take out whatever you have contributed penalty free. You will only pay on any interest/earnings that you pull. After having a Roth IRA for 5 years or if you're 59.5 (I think) you can take all the money out penalty free.
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Let me make sure I am getting this correct, I could invest in a Roth IRA today and five years from now I can pull out everything, contributions and earnings, tax free??? Or just "penalty" free? I know that the whole point of the Roth is to be able to pay tax now and not later but I was of the impression that I needed to wait for 59.5 - 62 ish years old to draw off it.
 
I needed a place to put 180K in assets last year, and opened up and transferred them to Edward Jones. Bad idea, eh? I realized when I sold a few smaller assets (an inheritance) how expensive this was going to be...
I feel the adviser gave me good advice at the time, but I have not done anything since then.
 
I just looked it up very briefly. Someone better in the know can answer but I think I lied in the previous post. It's 5 years AND 59.5 years old. There are some other qualifications in there that you wouldn't have to pay like education, building/buying/refurbishing home, disability. Stuff like that. Sorry I lied.

You can still pull any contributions tax/penalty free though.
 
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Rodger Wilco said:
Any insight here would be great, I am not quite sure what to do.

I have been sitting on some money in my Vanguard account. After reading A Random Walk Down Wall Street I was convinced to buy a bunch of total market indexes and let it ride (I am still leaning that way).

Vanguard total market index expense is %0.17 and total market ETF expense is %0.05. I don't have over 10K to invest otherwise I could get "admiral shares" that are expense free. None of this is 401k it is all after tax long term savings (20-30years).

Is there a free total market fund for guys with less than 10k? Anyone see a problem with long term indexes? I am not going 401k route because I am afraid that I will need the money for something before age 62 and would be penalized for pulling it. But I am also concerned about taxes later on... What happens if I withdraw a Roth before retirement age? Would I get nailed for taxes and fees?
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.05% is an awfully small number. Small enough that I wouldn't worry about it. The commissions into and out of it will end up being more than the management fees.

If you can contribute to a ROTH account, I would slowly start moving money into that. You can take the contributions out penalty free at any time, and the earnings will be tax free in 20-30 years when you plan on wanting the money anyway.
 
Ok new question: CONTRIBUTION LIMITS?

Specifically, do my personal ROTH and employer sponsored ROTH both contribute to the $5500 limit? Or is that just a personal outside of work sponsored plan limit? Or is that a personal contributions limit not to include employer matching?

I know that the limit is $5500 for ROTH but what counts towards that limit??? I can't find a solid answer anywhere.

Part two, rolling a traditional 401k into a Roth counts towards the limit too right?

@drunkenbeagle @ATN_Pilot
 
ATN_Pilot said:
Russ will have to answer questions about Roths. I've never had one and know little about them.
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HVYMETALDRVR said:
I believe employer matching counts towards the limit also, whenever I contribute to mine I get a nasty message saying I'm limited to $5,500 annually over all Roth accounts. Definitely be careful that the total contributed does not exceed that amount.

The second question? I'm not sure.
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ROTH 401k should be separate. But for most people, the traditional variant is better. Employer contributions do not count to 401k caps,
 
Rodger Wilco said:
Ok new question: CONTRIBUTION LIMITS?

Specifically, do my personal ROTH and employer sponsored ROTH both contribute to the $5500 limit? Or is that just a personal outside of work sponsored plan limit? Or is that a personal contributions limit not to include employer matching?

I know that the limit is $5500 for ROTH but what counts towards that limit??? I can't find a solid answer anywhere.

Part two, rolling a traditional 401k into a Roth counts towards the limit too right?

@drunkenbeagle @ATN_Pilot
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They are seperate. You can make contributions as long as you have earned income that is equal to or exceeds the amount you are contributing. There are income limits though. For 2015 if you are single and your modified adjusted gross income is more than $131k you are not eligible to contribute. If your magi is between $116k and $131k you are eligible for partial contributions. These numbers are higher if you are married. You should seek out a tax advisor if you have questions about the amount you can contribute.

Rollovers and conversions do not count towards your contribution limits. You should not roll pre-tax assets (your 401k) into a roth ira as the recordkeeping burden falls upon you. Roll the 401k into a rollover ira (or traditional, same thing) first, then convert.
 
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CoolRunnings said:
They are seperate. You can make contributions as long as you have earned income that is equal to or exceeds the amount you are contributing. There are income limits though. For 2015 if you are single and your modified adjusted gross income is more than $131k you are not eligible to contribute. If your magi is between $116k and $131k you are eligible for partial contributions. These numbers are higher if you are married. You should seek out a tax advisor if you have questions about the amount you can contribute.
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You are always eligible to contribute to an IRA, so long as you have income. You may not be able to contribute to a ROTH IRA, or deduct contributions to a Traditional IRA. You can still make a non-deductible contribution to a traditional IRA. Why would you do this? The earnings still grow tax deferred, but with current tax rates, that isn't a great reason. You can also convert a traditional IRA to a ROTH IRA, and there is currently no income limit on the conversion. There may be a tax liability, depending mostly upon how much money you have in other traditional IRAs. If you don't have any traditional IRAs, this effectively lets you make ROTH IRA contributions without an income limit. Thanks, Congress!

CoolRunnings said:
Rollovers and conversions do not count towards your contribution limits. You should not roll pre-tax assets (your 401k) into a roth ira as the recordkeeping burden falls upon you. Roll the 401k into a rollover ira (or traditional, same thing) first, then convert.
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It may not be a great idea to do this. As I point out above, you will have a tax liability on the traditional to ROTH conversion. If you don't do the conversion, it will trigger taxes on a non-deductible IRA contribution later converted to a ROTH IRA. Given this, I would not roll over the 401k to any IRA.... (Pretty much every financial adviser and brokerage is going to recommend rolling over a 401k. This is because they make money from commissions on IRAs, and management fees, while they make nothing when the money stays in a 401k.)
 
drunkenbeagle said:
You are always eligible to contribute to an IRA, so long as you have income. You may not be able to contribute to a ROTH IRA, or deduct contributions to a Traditional IRA. You can still make a non-deductible contribution to a traditional IRA. Why would you do this? The earnings still grow tax deferred, but with current tax rates, that isn't a great reason. You can also convert a traditional IRA to a ROTH IRA, and there is currently no income limit on the conversion. There may be a tax liability, depending mostly upon how much money you have in other traditional IRAs. If you don't have any traditional IRAs, this effectively lets you make ROTH IRA contributions without an income limit. Thanks, Congress!
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I should have been more clear. My first paragraph was in reference to his question regarding ROTH IRAs.

It may not be a great idea to do this. As I point out above, you will have a tax liability on the traditional to ROTH conversion. If you don't do the conversion, it will trigger taxes on a non-deductible IRA contribution later converted to a ROTH IRA. Given this, I would not roll over the 401k to any IRA.... (Pretty much every financial adviser and brokerage is going to recommend rolling over a 401k. This is because they make money from commissions on IRAs, and management fees, while they make nothing when the money stays in a 401k.)
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Should have been more clear on this too. His question: Part two, rolling a traditional 401k into a Roth counts towards the limit too right?

I was merely referencing the fact that you should avoid mid-air conversions(pre-tax 401k direct to roth ira), as they create a recordkeeping headache for the investor. As for leaving it in the 401k, that is a personal preference. If you don't mind being limited to the investment options in the plan, it is a fine option.
 
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