Comments on: Roth IRAs versus 401k: How to Decide? http://www.debtkid.com/roth-iras-versus-401k-how-to-decide Get Out of Debt @ DebtKid.com Sat, 20 Mar 2010 17:41:55 -0700 http://wordpress.org/?v=2.9.2 hourly 1 By: jessica w http://www.debtkid.com/roth-iras-versus-401k-how-to-decide/comment-page-1#comment-21422 jessica w Tue, 13 Oct 2009 21:52:09 +0000 http://www.debtkid.com/?p=4594#comment-21422 Hey there Anon--I didn't pay anything to open the account--The $600 was just the one time ocst of making the trades I made upon opening. Overall, I've got to say, I'm thrilled with the results on this portfolio (it's at Edward Jones). There's no maintenance fee--only one-time trade fees when I buy shares. I've realized a 38% gain this year. Hey there Anon–I didn’t pay anything to open the account–The $600 was just the one time ocst of making the trades I made upon opening. Overall, I’ve got to say, I’m thrilled with the results on this portfolio (it’s at Edward Jones). There’s no maintenance fee–only one-time trade fees when I buy shares. I’ve realized a 38% gain this year.

]]> By: Britt (Your Roth IRA) http://www.debtkid.com/roth-iras-versus-401k-how-to-decide/comment-page-1#comment-20918 Britt (Your Roth IRA) Tue, 08 Sep 2009 19:41:25 +0000 http://www.debtkid.com/?p=4594#comment-20918 No kidding. Management fees from Wall Street money managers can kill you over the course of 30 or 40 years. Some mutual funds charge fees as high as 1.5% versus 0.07% for an index fund such as the Vanguard Total Market Index (VTI). That 1.43% compounded annually adds up to a lot of money, money you won't have for retirement. So you're wise to advise others to watch out for the fees! No kidding. Management fees from Wall Street money managers can kill you over the course of 30 or 40 years. Some mutual funds charge fees as high as 1.5% versus 0.07% for an index fund such as the Vanguard Total Market Index (VTI). That 1.43% compounded annually adds up to a lot of money, money you won’t have for retirement. So you’re wise to advise others to watch out for the fees!

]]> By: no difference http://www.debtkid.com/roth-iras-versus-401k-how-to-decide/comment-page-1#comment-20336 no difference Mon, 17 Aug 2009 04:52:47 +0000 http://www.debtkid.com/?p=4594#comment-20336 I do the traditional IRA and then I save the refund as well; if you get a 4% CD (penfed for example), your refund doubles (72/4 = 18 years) at least once. I do the traditional IRA and then I save the refund as well; if you get a 4% CD (penfed for example), your refund doubles (72/4 = 18 years) at least once.

]]> By: anon http://www.debtkid.com/roth-iras-versus-401k-how-to-decide/comment-page-1#comment-20260 anon Thu, 13 Aug 2009 02:11:24 +0000 http://www.debtkid.com/?p=4594#comment-20260 Assuming that your tax rate remains constant, there's really not that much of a difference in investing in one vehicle or the other. But what will happen to your tax rate? For people in their 20s (like me), that's quite a gamble. On one hand, we hear that we will likely have lower tax rates in retirement than while working. This is not true for everyone, and there's also a high possibility (becoming more likely every day) that the government will have to raise tax rates eventually to begin paying down the deficit (or just holding steady?). My husband and my solution is to contribute to both, so that by the time we retire we have significant tax-deferred and taxed assets. Right now, we contribute about $10k each year to each. (Combined income of about $70k, so we are saving a big chunk of our salaries.) We're hoping to up the 401k contributions, someday to max them out, as we move up in our careers. As for the expenses, getting these as low as possible is key. Where are you having to spend $650 to open Roth IRA accounts? May I suggest Vanguard? They have the lowest expense rates I've been able to find, and really easy (maybe too easy) online access. As Assuming that your tax rate remains constant, there’s really not that much of a difference in investing in one vehicle or the other. But what will happen to your tax rate? For people in their 20s (like me), that’s quite a gamble. On one hand, we hear that we will likely have lower tax rates in retirement than while working. This is not true for everyone, and there’s also a high possibility (becoming more likely every day) that the government will have to raise tax rates eventually to begin paying down the deficit (or just holding steady?). My husband and my solution is to contribute to both, so that by the time we retire we have significant tax-deferred and taxed assets. Right now, we contribute about $10k each year to each. (Combined income of about $70k, so we are saving a big chunk of our salaries.) We’re hoping to up the 401k contributions, someday to max them out, as we move up in our careers.

As for the expenses, getting these as low as possible is key. Where are you having to spend $650 to open Roth IRA accounts? May I suggest Vanguard? They have the lowest expense rates I’ve been able to find, and really easy (maybe too easy) online access.

As

]]> By: Jacqui http://www.debtkid.com/roth-iras-versus-401k-how-to-decide/comment-page-1#comment-20214 Jacqui Mon, 10 Aug 2009 20:55:03 +0000 http://www.debtkid.com/?p=4594#comment-20214 There's another option, and a great one for self-employeds like you and me: [drumroll please] The Roth Solo 401(k) You get the awesome Roth ability to pay tax now on the 'small money', but get the much higher contribution limit of the 401(k). With the Solo designation you can also opt to 'match yourself' and make a tax deductable company contribution - but that part has to go into a non-Roth account. They're not offered by everyone, but E*Trade, TRowePrice and Vanguard all have pretty good ones available. I signed up for E*Trade's (<a href="https://us.etrade.com/e/t/welcome/businessindivk" rel="nofollow">details here</a>) because I get to invest in anything I want from individual stocks and bonds to mutual funds and ETFs. While they don't have the absolute lowest per trade fees, I'm a big fan of their platform. And they do offer a pretty good selection of fee-free mutual funds and waive my annual fee for having a total balance of $50,000 across all my accounts (checking, 401k, Roth 401k, Roth IRA, and a taxable brokerage account). For those who don't want to bother with anything but mutual funds, <a href="https://personal.vanguard.com/us/accounttypes/retirement/ATSI401KOverviewContent.jsp" rel="nofollow">Vanguard's</a> is probably the way to go. The paperwork was a lot simpler than I expected, though I will have to file some sort of IRS form each year once my account gets over $200,000 or so. There’s another option, and a great one for self-employeds like you and me: [drumroll please]
The Roth Solo 401(k)

You get the awesome Roth ability to pay tax now on the ’small money’, but get the much higher contribution limit of the 401(k). With the Solo designation you can also opt to ‘match yourself’ and make a tax deductable company contribution – but that part has to go into a non-Roth account.

They’re not offered by everyone, but E*Trade, TRowePrice and Vanguard all have pretty good ones available. I signed up for E*Trade’s (details here) because I get to invest in anything I want from individual stocks and bonds to mutual funds and ETFs. While they don’t have the absolute lowest per trade fees, I’m a big fan of their platform. And they do offer a pretty good selection of fee-free mutual funds and waive my annual fee for having a total balance of $50,000 across all my accounts (checking, 401k, Roth 401k, Roth IRA, and a taxable brokerage account). For those who don’t want to bother with anything but mutual funds, Vanguard’s is probably the way to go. The paperwork was a lot simpler than I expected, though I will have to file some sort of IRS form each year once my account gets over $200,000 or so.

]]> By: Craig http://www.debtkid.com/roth-iras-versus-401k-how-to-decide/comment-page-1#comment-20207 Craig Mon, 10 Aug 2009 18:21:03 +0000 http://www.debtkid.com/?p=4594#comment-20207 I like the Roth IRA because my money grows tax deferred so I know exactly the amount of money I have and can take out when the time comes. I like the Roth IRA because my money grows tax deferred so I know exactly the amount of money I have and can take out when the time comes.

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