IRAs/retirement

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electronic_lsd

Veteran XV
I'm about to graduate college and got my first "real" job coming up. They match contributions into a retirement account.

Anyone on TW have a retirement account?

Which kind do you use? I am thinking about a Roth IRA.
 
if they match into an account, it's probably a 401k or equivalent depending on your line of work.

You don't worry about IRAs or Roth IRA's if your company offers matching into a 401k unless you REALLY want total control over everything you are investing in.
 
Ok, with a Roth IRA, it can sometimes be spread out over different types of assets correct? If you invest your Roth IRA into real estate, then sell the house at retirement age, is all that still non-taxable as a normal withdrawal?
 
Yes, but that is way more complicated than you need to worry about. If you want real estate exposure in a Roth IRA try buying REITs.
 
I'm pretty cure you can't "invest" in a house with an IRA- but can get an exemption for first time home buyer. It's not a significant amount last I checked but you can look into it.

Roth vs traditional IRA? If you don't expect to be in a higher tax bracket at retirement age is there any reason to go with a Roth other than the ability to withdraw early without penalty? And if you're in a higher tax bracket at retirement that's a good thing, I'd rather save in taxes now (since contributions are pre-tax).
 
Special---K said:
if they match into an account, it's probably a 401k or equivalent depending on your line of work.

You don't worry about IRAs or Roth IRA's if your company offers matching into a 401k unless you REALLY want total control over everything you are investing in.
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I don't think this is true, I believe companies can match for Roth/Ira's if the company is small enough.
 
You can actually purchase real estate with the money in your IRA if your custodian supports it. You could then do things like collect rent tax free. It is complicated.

re: Roth vs Traditional, because my company offers a 401k, I am limited in what I can deduct when using a traditional IRA so it offers no real benefit. Why not just contribute more to the 401k then? Well, I like to have more control over my investments and my company 401k only offers a small basket of mutual funds most with high overhead.

Also, since there are annual contribution limits with an IRA, when you are contributing post-tax dollars (Roth) and post-tax dollars are "worth" more, your limit is "higher" if you dig.
 
SweetbabyJ said:
I'm pretty cure you can't "invest" in a house with an IRA- but can get an exemption for first time home buyer. It's not a significant amount last I checked but you can look into it.

Roth vs traditional IRA? If you don't expect to be in a higher tax bracket at retirement age is there any reason to go with a Roth other than the ability to withdraw early without penalty? And if you're in a higher tax bracket at retirement that's a good thing, I'd rather save in taxes now (since contributions are pre-tax).
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Up to 10,000 can be withdrawn tax/penalty free for First time home purchase. I'm in the middle of this now.
 
If your company matches it, and its a career job, throw as much in as you can right now, and diversify that shit, nigga.

The govt matches what I put in mine, up to 5%, pre tax, and after thats its some formula, but it ends up coming out to 15% of my wages pre tax end up in my retirement stuff (not all of mine is in that 15%, its like 8.75% me, 6.25% government)


Free money for retirement = awesome, the numbers are amazing on investing early for your future.
 
Rayn said:
You can actually purchase real estate with the money in your IRA if your custodian supports it. You could then do things like collect rent tax free. It is complicated.

re: Roth vs Traditional, because my company offers a 401k, I am limited in what I can deduct when using a traditional IRA so it offers no real benefit. Why not just contribute more to the 401k then? Well, I like to have more control over my investments and my company 401k only offers a small basket of mutual funds most with high overhead.

Also, since there are annual contribution limits with an IRA, when you are contributing post-tax dollars (Roth) and post-tax dollars are "worth" more, your limit is "higher" if you dig.
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Didn't know about the real estate investment rules- makes me wonder why custodian rules would override the limit on first time home buyers.

Post-tax dollars are worth more? You pay less in taxes on the same income with contibutions to a traditional IRA, I'd argue that those pre-tax dollars are worth more and is why you have to pay taxes in the future.

edit: Since you are offered a 401k you can't deduct the amount you put into an IRA? That doesn't seem fair.

edit2: It would mean you'd get taxed twice on the income, now and at retirement. Obviously it makes no sense for you, but that's not a typical situation.
 
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Yes, you save tax money, but you can only put in, say, a total of 5 grand a year.

You have 5 grand in there where the tax is already paid or you have 5 grand in there where you have to pay the tax eventually. What are you going to do with the money you save in taxes? To compete with the Roth you'd have to invest it..
 
SweetbabyJ said:
I'm pretty cure you can't "invest" in a house with an IRA- but can get an exemption for first time home buyer. It's not a significant amount last I checked but you can look into it.

Roth vs traditional IRA? If you don't expect to be in a higher tax bracket at retirement age is there any reason to go with a Roth other than the ability to withdraw early without penalty? And if you're in a higher tax bracket at retirement that's a good thing, I'd rather save in taxes now (since contributions are pre-tax).
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I thought the idea was to withdraw from the Roth AFTER you retire so you're in a lower tax bracket at that time.
 
electronic_lsd said:
I'm about to graduate college and got my first "real" job coming up. They match contributions into a retirement account.

Anyone on TW have a retirement account?

Which kind do you use? I am thinking about a Roth IRA.
Click to expand...
Chances are your company matches your contribution only to a point (3-5%).

You should contribute up to the highest point that they will contribute.

Then, put the rest into a Roth IRA so between the 2 you are putting 15% away towards your retirement.
 
SweetbabyJ said:
Where you have to pay the tax eventually- but it might not be the same tax rate!
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With a Roth you put in post tax dollars, but you pay no further taxes, ie the interest is tax free. With a traditional you pay income tax on the entire amount whenever you withdrawl.

My company offers a Roth 401k option which I chose, really it seems like a no brainer to anyone more than 15 years away from retirement.
 
any money that grows in the roth IRA/401k is tax free, is that correct (since i taxed myself putting it in)
 
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Ezlpo said:
Chances are your company matches your contribution only to a point (3-5%).

You should contribute up to the highest point that they will contribute.

Then, put the rest into a Roth IRA so between the 2 you are putting 15% away towards your retirement.
Click to expand...

Yea, basically your retirement savings vehicle priorities should be:

1) Get maximum from 401k match
2) Max out Roth IRA
3) Max out 401k to the total max (15kish)
4) Other retirement vehicles.

Thats all assuming you don't plan on retiring a bit early too, as most of those vehicles restrict withdraw till you are almost 60.
 
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