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financial "implementation"
Old 05-02-2007, 11:27 PM   #1
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financial "implementation"

I've gathered the basic strategy in theory:

-Max out 401k
-Max out Roth IRA
-Max out IRA
-Put other savings into taxable account

However, what is the actual implementation?

My guess:

401k= mutual funds through employer
Roth, IRA, and taxable through online broker


My plan is to get the Roth, IRA, and taxable accounts into a variety of ETFs, primarily index-tracking ones. Are there any restrictions on Roth IRA or IRA allocations?

For an online broker, I am currently w/ Tradeking. I had a stint trading options before a painful loss. I will be more conservative in the future and just go for ETFs etc .

Thanks,
Amb
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Re: financial "implementation"
Old 05-02-2007, 11:46 PM   #2
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Re: financial "implementation"

Nope, no restrictions as far as how you allocate your money within the equity or Fixed income universe within an IRA.

I think you can only do long option strategies (buying puts and calls), and sell covered calls at most brokerages in an IRA.
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Re: financial "implementation"
Old 05-03-2007, 01:08 PM   #3
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Re: financial "implementation"

Just a warning. It sounds like you are planning on maxing out both a Roth IRA and a regular IRA. I'm pretty sure you're only allowed a total of $4000 between the two ($5k if you're old )

Can someone confirm?
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Re: financial "implementation"
Old 05-03-2007, 02:27 PM   #4
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Re: financial "implementation"

that leads to another question. who enforces this? or it "honor system" built into the tax code (IE audit=bad).

or put another way..does my broker prevent me from doing illegal things or should i watch my own back
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Re: financial "implementation"
Old 05-03-2007, 02:32 PM   #5
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Re: financial "implementation"

Quote:
Originally Posted by ambition187
that leads to another question. who enforces this? or it "honor system" built into the tax code (IE audit=bad).

or put another way..does my broker prevent me from doing illegal things or should i watch my own back
Amb, best watch your own back -- everyone else is busy watching theirs.

Coach
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Re: financial "implementation"
Old 05-03-2007, 02:36 PM   #6
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Re: financial "implementation"

Quote:
Originally Posted by ambition187
that leads to another question. who enforces this? or it "honor system" built into the tax code (IE audit=bad).
or put another way..does my broker prevent me from doing illegal things or should i watch my own back
The answer to both questions is: If "someone" turns you in, they're rewarded with a share of whatever penalties the IRS collects.
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Re: financial "implementation"
Old 05-03-2007, 03:33 PM   #7
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Re: financial "implementation"

Hamlet, you're correct. Note that if you're married, you contribution is effectively doubled: husband can contribute $4K/$5K to his Roth or Traditional, and same for the wife.

ambition187, as to enforcement, it depends on what you're referring to. I *think* that the IRA limits would be enforced by the IRS, because I *think* that each IRA custodian sends the IRS a form every year for every IRA showing how much was contributed. Those IRS computers in turn can check to see if your SSN shows up as having contributed more than the appropriate limits. I bet they do check.

Actually you can contribute more than $4k annually to your IRA. It's just that the law imposes an excess contribution tax of 6% of the excess per year as long as you leave the excess in the IRA. If you don't pay that tax, then you'd be guilty of tax evasion, which means federal prison if they catch you.

2Cor521
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Re: financial "implementation"
Old 05-04-2007, 07:59 PM   #8
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Re: financial "implementation"

Quote:
Originally Posted by ambition187
My plan is to get the Roth, IRA, and taxable accounts into a variety of ETFs, primarily index-tracking ones. Are there any restrictions on Roth IRA or IRA allocations?

For an online broker, I am currently w/ Tradeking. I had a stint trading options before a painful loss. I will be more conservative in the future and just go for ETFs etc .
Also, an alternative to the ETFs would be to invest in index funds through a mutual fund company such as Vanguard, Fidelity, etc. We have been happy with both Vanguard and T Rowe Price.
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