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IRA Contributions - DCA or Lump Sum for 2010?
Old 01-01-2010, 10:22 AM   #1
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IRA Contributions - DCA or Lump Sum for 2010?

How are you going to make your IRA contributions this year? One lump sum, true dollar cost averaging, or in weighted contributions (ie. $1k for 5 months)?
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Old 01-01-2010, 10:34 AM   #2
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We lump sum in January every year into both our IRA's as well as our HSA account.

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Old 01-01-2010, 10:55 AM   #3
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Today I transferred $600 * 2 Roths for January and I plan to transfer 2 * $400 a month February through December. We could fund the entire thing now, but I'd rather not put the $10K hit on savings now that my paycheck and benefits are a single point of failure again...
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Old 01-01-2010, 12:59 PM   #4
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I can't make IRA contributions any more. But when I used to do that, I'd lump sum as soon as I could every year.

It's the optimist in me, figuring that the longer the money is in the IRA, the longer it had to grow.

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Today I transferred $600 * 2 Roths for January and I plan to transfer 2 * $400 a month February through December. We could fund the entire thing now, but I'd rather not put the $10K hit on savings now that my paycheck and benefits are a single point of failure again...
You do need to take that into consideration and IMO you need to beef up your emergency fund, so that it can cover both a year's expenses and maybe even the cost of moving, if another job would be hard to find in your location.
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Old 01-01-2010, 02:24 PM   #5
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I can't make IRA contributions any more. But when I used to do that, I'd lump sum as soon as I could every year.

It's the optimist in me, figuring that the longer the money is in the IRA, the longer it had to grow.
Congrats on no more contributions!

I'm optimistic in the same way and am going to make a lump sum this year. I think the market average for 2010 is going to be greater than what it currently is.


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You do need to take that into consideration and IMO you need to beef up your emergency fund, so that it can cover both a year's expenses and maybe even the cost of moving, if another job would be hard to find in your location.
One thing to consider is how Roth IRA contributions can be withdrawn penalty free. So some people consider their Roth contributions as a 2nd stage emergency fund.
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Old 01-01-2010, 02:35 PM   #6
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Like W2R, I can't make IRA contributions any more either. Darn...maybe I'll go get another job.....yeah, right!

I did DCA up until my final (and partial) year of work. That final year I did the lump sum at the beginning of the year, because I didn't feel like messing around with the IRA's after I retired (except to draw out of them someday waaay down the road).

So anyway, if I were still making IRA contributions, I'd most likely go with lump sum.....Get it all in there, and let 'er ride!
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Old 01-01-2010, 02:40 PM   #7
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DCA for me. Contributions to my 457 plan are on automatic paycheck deduction, and thanks for the thread, you've just reminded me to set up my automatic payments into my Roth. Silly Scottrade website wouldn't let me set up a payment for 2010 before today Monday.
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Old 01-01-2010, 03:44 PM   #8
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I just got done setting up my 2010 ROTH contribution. It is for the full $5000.
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Old 01-01-2010, 03:45 PM   #9
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It's probably too late now but did anyone see my post about IRA contributions in 2009? I saw that the g'mnt passed a ruling this fall that allowed an IRA holder to contribute any amount that had been withdrawn during the year to comply with the MRD laws. I had taken out $3K to cover some expenses in Feb (would have had to by law anyway) but then was able to put it back this November. Bank wasn't even aware of the ruling and had to do a lot of checking. It might still be possible to repay any withdrawals as I thought one had until April to do this for a regular IRA.
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Old 01-02-2010, 11:47 AM   #10
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lump sum into TIRA in Jan and then converting to Roth.
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Old 01-02-2010, 12:09 PM   #11
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The costly myth of dollar-cost averaging - MSN Money

I sort of wonder if DCA is even a good idea at all?
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Old 01-02-2010, 12:10 PM   #12
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I DCA into my HSA account.
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Old 01-02-2010, 12:25 PM   #13
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I lump sum both IRAs and a 529 (up to the 10k state tax deductible limit). In fact, I submitted the transfers already yesterday (they'll happen Monday).
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Old 01-02-2010, 01:17 PM   #14
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2009 was the first year I was eligible for a Roth, and it was a combination of not thinking about it and then not being certain I'd be eligible until December, when I made a lump sum.

Likewise I'll probably do the same this year. If the company stock soars, and I decide to leave, forcing me to exercise stock options, I could be over again. I don't know what the procedure is to take back the investment, but it seems easier to do it when I'm sure at the end of the year, even though I'd rather have the money building up tax-free in the Roth IRA asap.
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Old 01-02-2010, 01:26 PM   #15
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2009 was the first year I was eligible for a Roth, and it was a combination of not thinking about it and then not being certain I'd be eligible until December, when I made a lump sum.

Likewise I'll probably do the same this year. If the company stock soars, and I decide to leave, forcing me to exercise stock options, I could be over again. I don't know what the procedure is to take back the investment, but it seems easier to do it when I'm sure at the end of the year, even though I'd rather have the money building up tax-free in the Roth IRA asap.
If your Roth is at Vanguard, you just call them on the phone and they send you a form which you fill out and send to them. Then they compute the amount you must withdraw from your Roth (they add up the contributions for that year and earnings on those contributions, in other words) and they will move all of it to your taxable accounts if that is the destination you indicated on the form. Quick and easy.

I Vanguard.
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Old 01-02-2010, 01:34 PM   #16
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If your Roth is at Vanguard, you just call them on the phone and they send you a form which you fill out and send to them. Then they compute the amount you must withdraw from your Roth (they add up the contributions for that year and earnings on those contributions, in other words) and they will move all of it to your taxable accounts if that is the destination you indicated on the form. Quick and easy.

I Vanguard.
Hmm, that does sound easy, and yes, my Roth and main taxable account is at Vanguard. I will probably go ahead and do it early this year. Thanks for telling me how this works!
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Old 01-02-2010, 01:45 PM   #17
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The costly myth of dollar-cost averaging - MSN Money

I sort of wonder if DCA is even a good idea at all?
It's a great idea if you don't have that much money all at once! I'm curious, how do people arrange their finances so they have several thousand dollars to add to a Roth or TIRA at the beginning of the year?
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Old 01-02-2010, 01:56 PM   #18
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I will put 2x $13K into both children's 529's on Monday.

Not eligible for Roth. But will be after I ER!

My 401(k) I DCA into as it is through payroll withholding at w*rk.

I will sell some Vanguard Index 500 I hold in a taxable account to fund the 529's.

To whoever said they have ESO's, I have learned something interesting. When I retire I will carry some ESO's into retirement. When I exercise them, I will have earned income and get a W-2. So it is possible to be completely retired and fund a deductible IRA or Roth. I think you have to be under 70.5 for the IRA but I don't think there is any such limitation on Roth.
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Old 01-02-2010, 02:16 PM   #19
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It's a great idea if you don't have that much money all at once! I'm curious, how do people arrange their finances so they have several thousand dollars to add to a Roth or TIRA at the beginning of the year?
In my case I have recently stopped reinvesting my dividends/cap gains in most of my MF's and ETF's so just took the cash from those year end distributions to fund the TIRA.
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Old 01-02-2010, 03:02 PM   #20
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It's a great idea if you don't have that much money all at once! I'm curious, how do people arrange their finances so they have several thousand dollars to add to a Roth or TIRA at the beginning of the year?

By earning 50k+ per month...
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