Hi there! First post to this board, although I used to post to REHP (back before it was off-topic all of the time... before TMF cost something, too). I am currently in the process of applying to med school and working full-time. I'm wondering if I should go ahead and put money into my Roth for 2004, even though it might make sense to use it toward med school expenses instead. Some thoughts about this (sorry, I tend to type as I think)--1) it might make sense to do this even if I don't plan to keep it in, just because the $3k wouldn't be part of the financial aid equation this way. Then I could take the money out next fall to pay for school (although this involves the risk of the loss of balance-- should I just put it in something safe in the IRA, instead of my usual total stock market index fund?)2) I am applying to MD/PhD programs which would pay my way through med school, in which case it would be a no-brainer. But assuming (as is reasonable) that I don't get into these highly competitive programs, should I use it toward med school expenses or keep it in there for retirement3) Two things that make me uneasy about using money for med school instead of retirement-- IRAs have a limited window of opportunity (if I don't stick the $3k in now, I don't get to up my contributions later) and I know the power of compoundingSo, does it make sense to put as much as possible into my IRA now? Should I put it into something safe, in case I need to take it out for med school expenses later? Should I just plan to leave it in and add to retirement savings, or is it better to use it for med school expenses and not have to pay the interest?FWIW, I'm 26 and I've got about $30k saved (mostly a rollover IRA in Vanguard's total stock market index fund, some in the rollover IRA in bonds, some in a separate Roth). I know that becoming a doctor is not the best path to FIRE, but I've thought about it and this is what I want to do. (Might start a different thread about this later, but please don't bug me about it now.)TIA,friendlygirl
I would go ahead and stick the money in a Roth and invest it in a money market or short duration bond fund. As you point out, you have a limited window of opportunity to put money in IRAs, plus you will avoid having those assets viewed as available for financial aid purposes. I especially think that a Roth is the way to go because you can always take the principal out of your Roth tax free, so if you later find that you need to use the money for school-related expenses, its no problem to withdraw the money.
I have heard the term "Education IRA" but never looked into it. You might google it or check the IRS website. If you're lucky, you can put in the money before taxes now and then withdraw it without paying taxes to pay for your educational expenses. ayduda
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