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Author: chsmrmt One star, 50 posts Old School Fool Global Fool Mission Olympia 2 Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 74759  
Subject: Can I contribute to Roth and Traditional IRA? Date: 12/8/2010 1:32 AM
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Does anyone know the answer to this?

I don't like the 401K option at my job, and there are no matching employer funds to incentivize it, so I was wondering if there are rules against contributing to both roth and traditional iras?

That would let me save $10000 annually for retirement, a number I'd be happy with. Otherwise I'll have to put some into the 401K and pay 2% annual expense ratios for some mutual funds I'm not very interested in.

Thanks
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Author: aj485 Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 67817 of 74759
Subject: Re: Can I contribute to Roth and Traditional IRA Date: 12/8/2010 7:19 AM
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I don't like the 401K option at my job, and there are no matching employer funds to incentivize it, so I was wondering if there are rules against contributing to both roth and traditional iras?

That would let me save $10000 annually for retirement, a number I'd be happy with.


Sorry, it doesn't work that way. While you are allowed to contribute to both a Roth and a Traditional IRA in the same year, the total of contributions to all IRAs for a single year is limited to $5,000 ($6,000 if 50 or older). See IRS Pub 590 for details.

Otherwise I'll have to put some into the 401K and pay 2% annual expense ratios for some mutual funds I'm not very interested in.

No you don't. What's wrong with putting retirement money into a taxable account? Not all 'retirement' funds have to be in a 401(k) or an IRA. In fact, from a tax perspective, it can be better if you have a mixture of income sources in retirement, in order to be able to structure your income to limit the amount of income taxes you have to pay when you are retired.

AJ

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Author: Watty56 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 67818 of 74759
Subject: Re: Can I contribute to Roth and Traditional IRA Date: 12/8/2010 11:40 AM
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In case it applies and you didn't know, if you are married , both spouses can have their own $5K retirment account even if only one has the income to fund them.


Greg

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Author: chsmrmt One star, 50 posts Old School Fool Global Fool Mission Olympia 2 Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 67824 of 74759
Subject: Re: Can I contribute to Roth and Traditional IRA Date: 12/9/2010 3:56 PM
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Thanks for the info. I had just assumed that a pretax/traditional IRA would be better than a regular taxable account, but I will reconsider.

My wife and I already max out our Roth IRAs at $5K each.

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