Opening a Roth IRA

[TeenInvestor2688]

I have some money in a regular Scottrade account and I was looking to open a Roth IRA with Scottrade. Can I simply move $4K (the max) over to the Roth or do I have to sell and rebuy in the Roth? Basically, I want to move part of the regular account to the roth account. I hope this makes sense. thanks

[autoxer]

You will have to sell, pay tax on the gain, then buy in the Roth where it can grow tax free. You might want to figure out the tax liability ahead so you aren't suprised when you do file your taxes.

[disneysteve]

Just remember that only earned income can be put in an IRA. I'm guessing from your ID that you are a teen. You can put in the $4,000 max as long as your 2006 income is at least $4,000. If not, you can only invest up to your income amount.

[TeenInvestor2688]

thanks all

[sakigt]

Question:

If I open a Roth IRA with my bank, are they going to charge me taxes then?

Just trying to figure out what they base taxes on. Technically through my paycheck taxes have already been deducted on that money.

[sweeps]

No, once the money goes in the Roth you will not be charged any taxes. You may be charged fees, however, depending on where you open the account.

[poundwise]

I honestly don't know the answer to this, but...

Isn't it foolish to open an IRA through a stock-broker like Scottrade?

I mean, won't you pay fees (commission) in excess of those you would pay if you went directly through T. Rowe Price or Janus or whatnot? I realize companies like Schwab have low-fee/'no-fee' options. Maybe Scottrade does too. Maybe someone else can address this.

[sweeps]

Paying commissions is always an issue unless you open your IRA at a company that gives you free access to their own funds. But even if you open an IRA at Vanguard, you're going to pay commissions to buy individual stocks or non-Vanguard mutual funds.

[disneysteve]

Originally Posted by poundwise

Isn't it foolish to open an IRA through a stock-broker like Scottrade?

Well, it depends on what you want to invest your money in. If you want to buy individual stocks or ETFs, than a discount broker is a reasonable way to go. If, however, you prefer mutual funds, then you are probably better off opening the account with the fund company directly.

Also keep in mind that you can have multiple IRA accounts in different places as long as your total annual contribution doesn't exceed the limit.

[poundwise]

Originally Posted by Sweepsplayer

Paying commissions is always an issue unless you open your IRA at a company that gives you free access to their own funds. But even if you open an IRA at Vanguard, you're going to pay commissions to buy individual stocks or non-Vanguard mutual funds.

Thanks for the reply.

I know you will pay something with every offering, whether is a commission called a 'load' or whether it is labeled as some other fee or fees, however, in the case of funding an IRA with mutual funds, it would still seem to me to be MORE costly to go through a source like Scottrade rather than just opening an account at Janus, and/or other mutual fund providers.

That's something I'm still in-the-process of learning about, so any follow-up response would be appreciated.

[poundwise]

Originally Posted by disneysteve

Well, it depends on what you want to invest your money in. If you want to buy individual stocks or ETFs, than a discount broker is a reasonable way to go. If, however, you prefer mutual funds, then you are probably better off opening the account with the fund company directly.

Also keep in mind that you can have multiple IRA accounts in different places as long as your total annual contribution doesn't exceed the limit.

Thanks for the reply to my question.

I don't mean to hijack the thread but I was curious.