finding a good cd for roth was not possible

[Goldy1]

ok so for the past few years we have held money in ING cd accounts. WE have to pay income tax on the interest we earn yearly. Not a bad problem to have, but I got to thinking.

Me and dh have roth ira's at fidelity. You can buy cd's in the roth ira. I noticed you must purchase them in 1K increments which ING does not require but anyway...

WE normally only put about 2 to 3 G each in the roths each year. WE don't max them, and I put the money in retirement fund target date mutual fund.

I was thinking we could put the extra 3 or 4 grand in the roth in a cd. That way we can invest conservatively and not owe income tax on the interest.
We could still take money out of the roth in future years if we need it as long as it is less then what we put in it.

Then I checked fidelity's cd rates and they were very low! I am talking 1.8 and the like for a one year cd. The rates are always terrible.
Maybe it's b/c I am buying the cd from a bank with fidelity as the middle man.
So much for my idea.

[disneysteve]

So buy your Roth CDs somewhere else. Any bank that sells CDs should let you do so in a Roth account. You are allowed to spread your Roth money among multiple institutions as long as your total annual contribution doesn't exceed the limit.

I'm curious. If you have the money to max the Roth, why haven't you been doing so?

[MonkeyMama]

Agreed with Steve, get CDs elsewhere. You can open a cash ROTH pretty much anywhere.

We invest about 50% of our Efund in our ROTHs. For now we have about half in a CD and half in MMMFs. (CD at some bank & MMMFs are with the rest of our ROTHs at the mutual fund companies).

Basically, if you don't need the ROTH or it's not prudent to max it out, might as well use it as a tax deferred cash savings tool. (I've seen mentioned as a college savings tool as well). Not everyone makes enough income to max out a 401k and a ROTH, etc., etc.

[Goldy1]

I am a little confused. Just say I find a cd rate for a 1 year cd at ING I like. I can somehow get that cd in my roth ira? I went to my fidelity online acount where I have a roth ira. I clicked on cd's available and there were about 80 cd's listed, all from different banks and such and all the rates were gosh awful. I thought these 80 cd's were all they offered and I had to pick one of fidelity's cd b/c I have a roth with them.

Are you guys saying you can have more than one roth ira account? So I can have a roth ira with fidelity and one with ing? I don't know about this.

Why have I not maxed our roth when we actually had the cash to do so? Honestly, my dh keeps track of all outgoing money in excel. I have the investment knowledge curiousity, and teach him. WE actually had more disposable income the past few years than I realized we did. I thought we couldn't afford to max out roth. Also, I want to be in the market but also like to have a nice stock of liquid cash.

[minnie1928]

Are you guys saying you can have more than one roth ira account? So I can have a roth ira with fidelity and one with ing? I don't know about this.

I don't see why you couldn't have more than one IRA account (Roth or traditional). Why would it matter? It's all is based on your tax ID number, so why would it matter if you have one or ten?

I'm sure more experienced minds will let us know the facts, but to me I always assumed you could have as many as you wanted. Different banks, different rates, different terms, etc.

[disneysteve]

minnie is correct. You can have as many IRA accounts, Roth or traditional, as you'd like. HOWEVER, your TOTAL annual contribution to all of them can not exceed the annual limit of $5,000 ($6,000 if you are over 50).

So you could put $3,000 in your Fidelity Roth account and $2,000 in a Roth with ING or the bank of your choice or Vanguard or T. Rowe Price or Scottrade or whoever you'd like.

[Goldy1]

Agreed with Steve, get CDs elsewhere. You can open a cash ROTH pretty much anywhere.



Basically, if you don't need the ROTH or it's not prudent to max it out, might as well use it as a tax deferred cash savings tool. (I've seen mentioned as a college savings tool as well). .

Thanks guys. I had no idea I could do this (have my roth spread out ot more than one institiution) Me and my dh just opened up roth ira's at ING. Since we were already savings account memebers, it literally just took a little reading and a few clicks to transfer over the money. We have had money sitting for years that could have been tax deferred in the ira part, but at least now I know!
Learn something new each day.

[MonkeyMama]

Yes, I won't tell you how many ROTH accounts I have. But my dh likes things very simple and so only has one ROTH account. I have many.

[disneysteve]

Me and my dh just opened up roth ira's at ING.

Good for you.

Just remember that the total amount that you put into all of your Roths combined can't exceed the $5,000 annual limit. So you can't put $5,000 into ING and another $5,000 into Fidelity, but rather $5,000 total between them.