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What Roth IRA Questions Do You Have for an IRA Expert?
By JLP | March 10, 2010
I’m going to be conducting an email interview with John Bledsoe, the author I mentioned in my last post. I thought I would ask AFM readers if there are any questions regarding Roth IRAs that you would like me to ask Mr. Bledsoe. If so, send me an email with “Questions for John Bledsoe” in the subject line.
I usually try to keep email interviews to around ten questions so this is first come, first serve. That said, I’ll do my best to try to get Mr. Bledsoe to answer your questions.
Topics: Announcements | 9 Comments »
March 10th, 2010 at 3:54 pm
Thank JP! My question: Who exactly would want to use a Roth IRA? (specific income levels, etc).
I’ve saving a significant chunk of my paycheck, but it still makes no sense for me to pay taxes today (Roth) @ 25% marginal, when even though I’m saving a lot, there is no way I’m going to hit the higher 28% bracket that starts at $137k or so, which is where the benefits of Roth kick in (taxes lower today than in retirement). I need to save enough to fill the lower 0%, 10%, etc brackets in a traditional account before even considering a Roth.
By the time (if ever) I earn enough (to save enough) where the Roth might make sense, I’m going to be limited by the $150k income limits for Roth contributions. I just don’t get Roths, perhaps they are a ‘sucker’s bet’…
March 10th, 2010 at 7:46 pm
^ great question, almost what i was going to ask. in addition to that. me and my wife max out 401ks to matching adn max out our roths each year, now we want to save more in 401k’s. I was excited to get more money into savings pre-tax…then my employer has just introduced a roth 401k. and I’m wondering for me if i should be increasing into the roth bucket or the regular tax shelter bucket. basically asking the question above, but it almost removes a the roth limitations of 10k (for married)… i need a formula with like years planned to work, current tax bracket, expected retirement tax bracket…etc… is too much roth a bad thing?
March 10th, 2010 at 10:03 pm
If I have converted my existing non-deductible IRA into a ROTH IRA this month, can I then contribute to my non-deductible IRA and convert it again to my ROTH IRA?
March 11th, 2010 at 3:22 am
If an individual dies and has a Roth IRA, since it’s post tax money, if the wife receives the money in the Roth, will she have to pay taxes on the money.
March 11th, 2010 at 8:07 am
#2 bobby said: “…is too much roth a bad thing?”
YES! Though I am not good at explaining it, it boils down to:
With traditional 401k/IRA, some of your money can go through the entire system tax FREE. No taxes today, and no taxes in retirement. Think of the retirement income needed to fill the Standard Deduction and Personal Exemptions, which are both taxed at 0%, to get the drift.
With Roth, you are always paying a tax (and at the highest current bracket).
If you are going to err, err on the side of contributing too much to traditional. Everybody should be investing (at least something) into traditional accounts — but not everybody should be using Roths.
March 11th, 2010 at 9:07 am
I’m interested in knowing which asset class should ideally be invested into a Roth IRA. Most of my retirement money is spread between my 401k and a traditional IRA, but I have about 40k in Roth IRAs. Right now I use a total stock market index for my Roth. Wondering if that’s the best choice. Would I be better served to invest in international or U.S. funds? Equity or bonds? Giant, large, small, micro?
March 14th, 2010 at 10:03 am
I started out contributing to a traditional 401k with my employer … and then they introduced a Roth 401k so I switched to that … therefore some of my contributions are pre-tax and most are post-tax. My understanding is that the employer match is considered pre-tax regardless of whether I was contributing toward the traditional 401k or the Roth 401k … is that correct? Eventually when I terminate employment with this company and want to roll over these funds into my existing Roth IRA, what can I expect regarding the handling of the pre-tax versus post-tax components and also how can I trust that they kept track of this properly (since it does not appear to be separated on my quarterly statements)?
March 15th, 2010 at 2:41 pm
#7 Katherine) You may want to call your payroll department to find out. At my company, the matching contributions go under the same status as my contributions.
April 17th, 2010 at 12:09 pm
age 65. large traditional IRA. I can convert 1/2 and pay taxes from other sources. Can I then begin to draw down the balance of the traditional while leaving the Roth intact for my kids?