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i was reading about roth iras and learned that you can only have one if your income (as a single person) is under 95k. what happens if you start a roth ira and in a few years your income surpasses 95k? do you just stop contributing to it or do you have to transfer your money out of it?
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You must stop contributing to it, but the money can remain in the account -- you do not need to withdraw it. -
ok, thanks. can someone point me to a discussion of which is better, roth or traditional ira, assuming you are elligible for both? im so confusedComment
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If you anticipate your tax rate to be higher in retirement than it is now, then you typically want to choose a Roth IRA (or Roth 401k). If you anticipate your tax rate to be lower than it is now, then you typically want to choose a traditional IRA (or pre-tax 401k). A Roth IRA has additional advantages so if you really have no idea, choose the Roth.
Company match in a 401k usually trumps anything else -- max out your company match first, if available.
Also FYI, for 2008, the income limit starts to phase out at $101,000.Comment
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the 95k limit is ADJUSTABLE gross income, not gross income. This means the 95k is the max income after deductions are included.
I make 110k gross each year and my AGI for 2007 was well below 90k.Comment
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cool, thanks for the info. i should be able to do a roth ira for a while then before i exceed the income constraints. are there any particular firms you'd recommend using to open a roth ira?Comment
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How much do you have to invest?
Do you like index funds, managed funds, or would you prefer to trade individual stocks and ETFs?
Do you already have an account at a mutual fund company or brokerage?Comment
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