Comments on: Roth IRA vs 401K: Which is Right for You?

By: Scott Grinas

Scott Grinas — Thu, 01 Jan 1970 00:00:00 +0000

401k plans are great if you maximize your contributions and the same can be said for roth ira’s although I would agree that self directed roth ira and self directed 401k products seem to be even better for small business owners.

By: Dona Bellanger

Dona Bellanger — Thu, 01 Jan 1970 00:00:00 +0000

great post to share keep posting

By: Philip Taylor

Philip Taylor — Thu, 01 Jan 1970 00:00:00 +0000

I’m actually going through this process for myself right now. I’ll let you know what I find out. One thing I can say is that I wouldn’t let the payroll company lead me into anything. I’d go find the best solution myself independent of their help.

By: Philip Taylor

Philip Taylor — Thu, 01 Jan 1970 00:00:00 +0000

Hi Steve. The limit for 2011 is $16,500. There is no % limit. It’s a total dollar amount. Divide $16,500 by the number of paychecks you get each year. Then figure out what % that number is of your gross paycheck. Set your % at that level.

By: Steve

Steve — Thu, 01 Jan 1970 00:00:00 +0000

I am currently enrolling in my companies 401k. They match 100% up to the first 1%. Then, they match 50% on the next 5%. The total match is up to 6%, then.

However, I am trying to find out what the legal (IRS) limit is (in %) in order to get the total allowable tax deferral. I think it is 10%, but I am not sure. Whatever it is, I want to change my contribution to that limit so that I can take advantage of the tax deferral, even if it means I don’t get the match over the 6%.

Can you tell me 1) if this is a good strategy and 2) what that % limit is?

Thank you.

By: Harvey

Harvey — Thu, 01 Jan 1970 00:00:00 +0000

To answer your 1st question: no you can’t open a joint account. I tried earlier this year and was told and IRA was only for 1 person. Hence the I = Individual. That doesn’t stop you from opening 1 for each of you though. You’d still be saving 10k/yr max; it’ll just be split between 2 accounts.

By: me

me — Thu, 01 Jan 1970 00:00:00 +0000

thats an awesome picture

By: Philip Taylor

Philip Taylor — Thu, 01 Jan 1970 00:00:00 +0000

John. Honestly, I don't think you can go wrong either way. Many things will change between now and retirement. Just make sure she keeps contributing to something. Some considerations:1. The 401(k) to Rollover IRA and then converting to Roth will mean a big payout in taxes owed. Make sure you can handle the cash outlay.2. Moving to a Rollover IRA is usually a smart move because it typically gives you flexibility and lower costs.3. You could both diversify individually by having two accounts each: you could have the 401(k) and a Roth, and she could have the Rollover IRA and then start a separate Roth. Combined, you could both be contributing over $30K a year. That'd be awesome!

By: John H

John H — Thu, 01 Jan 1970 00:00:00 +0000

My fiancee and I are getting married in 2011. We are 25 and our joint income is around $90k. She has a 401k left from her first job, her new job does not offer any 401k options. My contributions are at the 7% level at my employer (matching the first 4 and 1/2 a percent up to 7%) She will now have to start her own IRA or ROTH IRA. Should I have her roll the 401k from her first job into an IRA and have her start contributing to that? should I Have her roll into an IRA then A roth IRA and contribute to the roth? If I have a 401k and she has a roth I assume at retirement we would have tax diversification? HELP!

By: PT

PT — Thu, 01 Jan 1970 00:00:00 +0000

@Cliff – I just did an article on the Roth IRA withdrawal rules.

It appears as though you will be able to immediately withdraw the money. Keep in mind you will need to convert the 401K to a Traditional (rollover) IRA first, and then convert that to a Roth IRA. Also, when you make the move to the Roth, you will have to pay some taxes.