IRA and roth

[bdelgaudio]

Hey guys,

I have a rollover IRA in a T rowe price retirement account that i rolled over after a layoff. I plan on keeping the rollover IRA and can probaly put money in it later. I would like to also be involved with a ROTH. I can not contribute to the 401k at my new job until this january as i had to wait a year before i can participate.

My wife has a part time job and doesnt have a 401k option or anything. I wanted to get her a IRA or ROTH IRA. Not sure which route to go there right now.

I am recovering from the layoff. Still in process of paying off some debts but still want to invest more. Could you recommend some options for myself and and wife to at least make investing more automatic and get started. I will dabble into individual stocks and such later but want to at least have some retirement accounts set up.

I am planing on contributing to my jobs 401k when im eligible but i also wanted to have a Roth.

Brian

 

[Rothman]

Brian, you could convert your IRA to a Roth and pay taxes on it. But probably first I'd use new money to set up a Roth IRA for wife. If you don't meet income restriction for direct contribution you can use back door Roth. Open Trad IRA contribute after tax money to the annual max then next day convert to Roth IRA, since you use after tax dollars to contribute to Trad IRA there is no taxable event. Now watch it grow year after year tax free!

Wish you well with strategy, tax free growth, what could be better than that?

 

[bdelgaudio]

I only had the 401k form my old job for about a year. It has about $1,300 in it and I like that it is in a T Rowe price Target date retirement account as a rollover IRA. I thought of just leaving it and hanging it as a ira i can rollover 401ks from jobs. thought of just opening a roth for myself with a new company. Would that be a good idea?

Also, any recommendations for a roth ira? such as companies or investments. Index funds? We are both 26 so we are young and take on more risk.

 

[Rothman]

I use fido (fidelity) and like it and recommend it without hesitation, others like vanguard. Both are excellent IMO so pick. At your age I'd be heavily equity invested, I was 100% at your age other may suggest 75%, in an index of S&P or total market. The key is low expense ratio in fido I like IVV or IVE funds. Honestly the key is to start, at your age again Roth has nice effect since you are probably in lower bracket than you will be in the future so don't give up much in tax savings of traditional and get that tax free compounding.if you and wife contribute to max the growth can be great, look at this year. If market ever goes down don't pull out, many make this mistake, keep adding and wait for recovery. Unlike individual stocks the market index can be counted on to come back, stay the course.