Roth IRA Q

[Blue Leader]

Both my wife and I work for the same school district. We both put enough into the offered retirement fund to get the full employer match. This is the first year teaching for both of us, so we also just recently opened a Roth IRA under my name only. (coming out of my paycheck.)

I have started out with a very small amount each month just to see where our finances will sit and am now wanting to invest about double. So here's the question: should we open a roth for the wife and invest in hers what I am currently investing, or just double my contribution?

Pros? Cons?

Thanks

[Thrif-t]

You can only put 4k/yr for 2007 in an IRA, set to go up to 5k in 2008. My opinion cause I'm going thru the exact same thing. I opened one in my name and one in DH's name. We are invested in different funds not the same thing. I've come into a small inheritance so I need to be able to put more then 4k in an IRA reason I'm opening up one for each of us.

[jIM_Ohio]

4k per year is the max for 2007, 5k per year is max for 2008.

Does the Roth custodian charge fees? if yes, then keep all contributions in name of one spouse until you hit 5k limit for 2008... maintain contributions each year until you get to point where no fees are assessed.

[Blue Leader]

4k per year is the max for 2007, 5k per year is max for 2008.

Does the Roth custodian charge fees? if yes, then keep all contributions in name of one spouse until you hit 5k limit for 2008... maintain contributions each year until you get to point where no fees are assessed.

I know the limits, and we are going to be well below max for at least 3-5 years. Honestly we will be able to contrib about $100-200/mo in said time period. I kind of think it may be better to just keep one IRA for the time being....thoughts?

[jIM_Ohio]

I know the limits, and we are going to be well below max for at least 3-5 years. Honestly we will be able to contrib about $100-200/mo in said time period. I kind of think it may be better to just keep one IRA for the time being....thoughts?

who is IRA with and what are the custodial fees?

There is merit to having some IRA monies with each spouse if a traditional IRA and merit to reversing that logic if in a Roth IRA and merit to both pieces of advice being reversed if ages of spouses suggest one will retire earlier than other.

So questions:
1) what are ages of spouses?
2) do both work?
3) are you eligible for Roth?
4) what is probable retirement age?

If you plan less going in, it might be harder to take money out.

If older spouse wants to retire early, that is one set of problems
If younger spouse wants to retire early, that is another set of problems.

Tell me which set I am working with. thx

[Blue Leader]

.

Tell me which set I am working with. thx

Haha, didn't think of all that!

Well I am 24, wife 23.

Both work for a school district.

Roth IRA through school financial planner...no fees, Axxa is the name of the company I believe.

Really haven't even thought of a date to shoot for retirement...probably low-mid 60's. Hopefully 28.

Thanks for the input!!

[jIM_Ohio]

both young, and with qualified withdraws not allowed until age 59.5, you have little issue to think about one spoubse vs other spouse.

In this case I think it's "safe" to keep all in one spouse's name. If you ever think that one spouse will stop working before the other, might make sense for this spouse to have the ROTH.

If one spouse will live longer than the other, makes sense for that spouse to have the traditional accounts (because of withdraw rules and when RMDs are required).

If the spouse which lives shorter also retires first before 59.5, might make sense for that spouse to 72(t) an IRA or 401k, so that logic presented before then gets reversed (put IRA assets where 72(t) can be applied for spouse retiring first).

Putting the money in is only part of the issue, always think about how the money will come out as well!

[Blue Leader]

Putting the money in is only part of the issue, always think about how the money will come out as well!

Excellent excellent excellent! Really appreciate the info and thoughts sir. I think I am going to go increase the contribution tomorrow.

[ljd1971]

JiM, I think I can extrapolate your logic to my scenario, but let me just ask you to be sure:

I'm 36, my wife is 47. I work, she is disabled. Part of my pay is funneled into a government pension (I will fully vest next year and plan to stay at this job indefinately) and I also contribute (not nearly enough at this point) to a deferred compensation plan. From this site, I have learned the advantages of the Roth IRA and would like to open one this year. Would it make more sense for me to open a spouse IRA for wife or one in my own name?

[jIM_Ohio]

JiM, I think I can extrapolate your logic to my scenario, but let me just ask you to be sure:

I'm 36, my wife is 47. I work, she is disabled. Part of my pay is funneled into a government pension (I will fully vest next year and plan to stay at this job indefinately) and I also contribute (not nearly enough at this point) to a deferred compensation plan. From this site, I have learned the advantages of the Roth IRA and would like to open one this year. Would it make more sense for me to open a spouse IRA for wife or one in my own name?

How long will you continue to work?
Can you contribute more than 5k to the IRA?
Does your wife collect disability?
Are you both eligible for SS?
What age for SS?

Age 59.5 is the key number-

will you work until age 59.5?
will you be able to collect pension prior to age 59.5? How much of your income will this replace?
how much income do you need IRAs to provide (percent and/or amount needed)

[disneysteve]

Roth IRA through school financial planner...no fees, Axxa is the name of the company I believe

I'm a bit concerned about this. I'm not familiar with the company at all, so it might be just fine. I'd just suggest looking into it more before investing.

1. Are you sure there are no fees? No annual fee. No fee for a balance below a certain amount.

2. What are your investment options? Do you have access to a wide variety of no-load mutual funds from a broad range of companies or are they selling load funds from particular companies or something in-between? Do they have a brokerage department if you want to buy individual stocks or ETFs and, if so, what is their commission structure?

It is quite simple to open a Roth virtually anywhere from a bank to a credit union to a mutual fund company to a discount brokerage. Don't feel you need to pick this company just because it is offered through work. Roths aren't like 401Ks where you have to take the company plan. You can open your Roth anywhere.

[kv968]

Roth IRA through school financial planner...no fees, Axxa is the name of the company I believe.

I was thinking the same thing Steve was. As soon as I hear "financial planner" my ears perk up. There may be no loads or fees, but also check the expense ratio on the funds as compared to similar funds offered by other companies (ie. T Rowe, Vanguard, Fidelity etc...) The expense ratios may be 1% more or higher for basically the same fund.

[Blue Leader]

Sorry, it's AXA, not Axxa. Honestly I opened the Roth before I really looked elsewhere. I know there are no fees. Just taken directly from my paycheck and I get a statement every month.

You can get specific and really pick what you would like to invest directly in. I just chose the most aggresive, as I'm young and can weather a 25 year storm

[kv968]

Sorry, it's AXA, not Axxa. Honestly I opened the Roth before I really looked elsewhere. I know there are no fees. Just taken directly from my paycheck and I get a statement every month.

You can get specific and really pick what you would like to invest directly in. I just chose the most aggresive, as I'm young and can weather a 25 year storm

I looked at their website and all I saw was four different funds to choose from. If those are the only funds you have to choose from, it would be a good idea for you to look at other fund companies to have your Roth with. That's not much choice and, although there are no "fees", there are either loads or very high (>2%) expense ratios.

[Broken Arrow]

Just to clarify, I would not recommend opening the IRA at a bank or credit union. If you look at the rates, you'll notice that they're suspiciously similar to CDs... and that's probably what the banks and credit unions use anyway.

Unless you already have a high balance and is planning to retire in less than 5 years, I recommend to open the IRA at a reputable brokerage.