Roth IRA

[mickeyd]

Variable Annuities have an extra layer of expense built in to them that do not benefit the annuitant but are usually quite favorable to the insurance company and agent.

[Bob_Smith]

Quote:

So I can't change anything in my 403(b) to mutual funds. I'm pretty sure I can change the ROTH-IRA to mutual funds.

You can definitely change the ROTH to mutual funds. You can probably change the 403(b) to mutual funds *too. Even if your employer is clueless and has stuck you with poor choices, you can usually get around it. First, choose a no-load money market fund from your employer's menu and direct all of your 403(b) contributions to that fund. Then open a 403(b) account at Vanguard. They have an option on their application that involves opening an account for the receipt of transfers only. Choose that option; it leaves your employer completely out of the loop. Then transfer the balance from your employer's plan to Vanguard periodically. Leave enough in the existing employer account to keep it open; ask about minimum balances. When the funds arrive at Vanguard you can choose any investment there that you want. My daughter is doing this now. I was forced to do it until I convinced my employer to add Vanguard to the list. Unfortunately, if you have money in existing annuities they may hit you with hefty fees to switch, so watch out for that. Also you mentioned visiting with a "rep". Be careful. They usually aren't on your side and you don't want to be asking them for financial advice.

BTW, TIAA-CREF does offer mutual funds. Are you saying your employer denies access to those?

[yelnad]

They have mutual funds, but there is no option for my money to go directly into them. Perhaps I can open one, and then transfer the money from the annuities into the mutual funds? Why does this have to be so confusing and why doesn't the website explain all this crap? I like to think that I know more about this than a lot of my friends ("retirement? what retirement?") and therefore expect to be able to find answers when I have questions. You guys have been very helpful. I'll keep you posted on what I find.

[mickeyd]

TIAA-CREF is a pretty up right company. I suggest that you call the 800 # and ask away. Take good notes, read your notes back to the rep on the phone. ASK manny, many questions.

It is in your best interest to fully understand what you are investing in.

Would you buy a car without knowing that it had a spare tire? What mileage it got? What the crash potential was? Of course not. A Roth IRA, a 403b and any mutual fund is just the same.

[Bob_Smith]

Quote:

They have mutual funds, but there is no option for my money to go directly into them.

Yelnad, if you are referring to your Roth at TIAA-CREF, I checked their site. Go here: http://www.tiaa-cref.org/open_account/iras.html Click on "download an application". A small window will pop up. In that small window notice there are 2 links. Do not click on "select a State". Instead click on the bottom link "Funded with Mutual Funds Only". An application will be downloaded that enables you to invest directly in mutual funds in your Roth at TIAA-CREF.

On the 403(b), I'd call TIAA-CREF as Mickeyd suggests. But on the Roth, it's just a matter of opening a Roth and choosing whatever mutual fund you prefer.

[trumpeting_angel]

I had a 403( b) (if I'm right and that's the 401(k) for non-profits?) with Great American, opened back in the early 80's. Turns out it was in an annuity, and a bunch of wise shareholders got together and instigated a class action suit. There is simply no excuse for putting a tax-advantaged vehicle (not to mention, a HIGH PRICED tax-advantaged vehicle) inside of a tax shelter. It's unconscoinable. Great American lost the suit, and had to give us all some extra money in our choice of incomprehensible choices.

I tried to get out of this stupid company altogether, but the "surrender fees" are absolutely prohibitive.

TIAA/CREF are non-crooks, as far as I've been able to figure out, and very helpful, and often will bend over backwards to help you understand your choices.

Good luck! You're doing the right thing, it's just confusing to get started! A little reading (either the book mentioned above, or Jane Bryant Quinn) goes a LONG way.

Anne

My understanding is that is that "tax-exempt interest" (line 8b of 1040), and "taxable IRA distributions" (line 15b) are included in the computation of how much SS is taxable. However, I don't see any reference on the IRS worksheet to the tax-exempt IRA distribution, which is a component of line 15a.
John Lee

Quote:

The Roth IRA is one of the best gifts that congress ever gave us. * .

Is there a Roth IRA like option for people whose AGI exceeds the limit and therefore are not eligible for it?

The only tax deductions that would reduce our AGI that I have been able to come up with in the past are:

1. Real estate Tax
2. State Tax
3. Mortgage Interest
4. Charitable Contributions

And this set of deductions has left me high and dry when it comes to qualifying for a Roth IRA.

All suggestions are welcome ...... even those that might say: Earn less money, you will have less AGI and can then qualify for Roth IRA.

Regards,

Dante

Hello Dante! Can't help on the Roth. Others will.

My income is so low now that I effectively pay no taxes.
Nice. Before that I spent years caught in a kind of income tax inferno. Hope you can avoid this fate, although with your moniker................

John Galt

[Nords]

Without knowing all the ins & outs of 401(k)s, 403(b)s, 457s, SIMPLEs, or Keoghs, one approach would be to put today's after-tax money in a conventional IRA.

When you ER (ideally well before age 70!) then your income will drop below the conversion limit of $100K. (If it doesn't then you won't care about the conversion anyway, right?) Then you'd be able to convert the conventional IRA to a Roth.

Spouse and I are converting during the "lean years" between my ER and her pension. Converting & paying taxes now can be done below the 25% bracket, which we'd end up in when spouse's pension kicks in. (Assuming that RMD taxes will still be that low in 25 years!)

It seems to me that a Roth IRA, or for that matter any after tax assetts, have an advantage that should be carefully managed when one is also receiving SS.
Within certain income limits, the percentage of SS that is tax free is increases as the ratio of SS to other pre-tax income increases. That is to say, a smaller percentage of our SS is taxable as we minimize the amount of pre tax income that we take.
Therefore, not only do we recieve our Roth IRA income free of tax, but we would also pay less tax on our SS.
This may also be another argument for delaying SS payments until 65+, since this would also increase the above ratio, resulting in us paying less tax on a larger SS benefit.
John Lee