I have a question for the community. I have a 401k that I max out each year (except for the $5500 catch-up), my child's 529 and private high school brokerage accounts are in good shape, I use the $5500 catch-up for seed money for my wife's start-up which is starting to create revenue (but not at break even but soon will be [with any luck]), and I have approximately $5000 in CC debt (but it fluctuates). I started a private trading account this weekend foregoing the IRA, but I do have plans to transfer old 401ks of my wife's into the IRA and use it as a SEP for her company. With this as my main finacial status (and I also have about 6 months savings in case of job loss), does the community think I'm ready to start trading in the private account I just opened? thanks for your thoughts.
Do you have a Roth IRA? Why are you focused on a private (retail) account? Are you looking to day trade, or invest for your future? It is not necessary to transfer 401k money into an IRA to establish a SEP IRA. DW can do that with the profits from her business. I am also not sure it is possible to transfer your 401k money into her IRA of any kind. Now, she can take cash from her business and put it into your IRA, but it won't be her retirement savings anymore.What do you mean $5500 catch-up money? Are you over 50 and talking about the $6000 IRA contribution you are allowed to make each year? Can DW also make a catch-up IRA contribution to her own IRA? With an eFund, 401k, 529 and HS education taken care of, it sounds like you are in good shape strategically, but if you could address the questions raised, perhaps I could offer you some more focused advice. Have you thought about in what you would be investing or trading? I am not a big fan of thinking of it as trading - I invest in companies using a buy-and-hold strategy. Others are more comfortable buying and selling daily, weekly or monthly but that's not my style. Are you mostly invested in mutual funds and are now looking into equities? What is the reason you are looking to open a private account and begin trading or investing?FuskieWho would like to see you not carry $5000 in credit card debt, unless you pay it off in full every month, and to set additional savings goals if you are just looking to put some extra cash to work...
I don't have a Roth IRA because I live in a state that has a 10% income tax rate and when we retire we will be moving out of this state to one with a cheaper tax rate. I'm not so much focused on a retail account as much as I prefer the flexibility of being able to get to the assets in the account if something dire were to occur (accident/death). I'm not planning on transferring my 401k money into my wife's IRA. We will eventually transfer her old 401ks into an IRA for her. Thats one of the questions I have, can I have an SEP IRA and transfer her old 401ks into it? Or would it be better to keep them seperate? Catch-Up money - I'm over 50 (52) and I'm able to contribute $5500 more than the 2013 IRS allowance of $17,500 into my 401k, but I'm not doing that in an effort to help my wife with her start-up (using the $5500 for her costs). Her revenues don't quite meet her costs just yet. Wife does not have an IRA or SEP as of yet, which is one of the reasons I'm asking the board (BTW, thanks for your suggestions). I'm interested in long term trading (buy and hold) and my interest has been sparked by 3D printing as well as peripherial natural gas industy companies (I'm in the energy business, but in the governement). My 401k is in Government Bonds right now, but I'm looking to enter the SP500 and DOW Indices and a little International ETF I have access to but I'm waiting for a better entry point. The CC debt doesn't get paid off each month, but I have enough in the bank to do so. The reason I don't is that everytime I do, my wife has a tendency to run it up again. When I leave a balance on them, she doesn't use them nearly as much. I figure the interest vs. paying off, running up and paying off again has been cheaper over the years (I know it sounds crazy). For the most part though, we pay cash and live within our means. Thanks,Beancounter25
Here is the Foolish Take on rolling a 401k into a SEP IRA:http://wiki.fool.com/Can_I_Combine_SEP_IRA_%26_401(k)%3FBasically, you can roll a 401k into a SEP IRA, since they are both tax-deferred accounts, but you may want to keep them separate anyway, in a Traditional IRA for the rollover and a SEP IRA for the business. Then when you move into a state with a cheaper income tax, you can roll the Traditional IRA into the Roth IRA and then be able to take the distributions tax free at a later date. With a Roth IRA, contributions are post-tax so you can withdraw them (but not the gains) tax free even before you turn 59 1/2. This is the best of both worlds if you want access to your cash but want future tax benefits. For an IRA conversion into a Roth IRA, your converted funds have to remain in the Roth IRA for 5 years before they can be withdrawn (unless you hit 59 1/2 first), so if you want the tax advantage down the road but the flexibility to access your cash sooner, converting to a Roth IRA now will start the clock now.The catch-up contribution for a 401k is $5500, but for a Roth IRA, it's $6000, so if you want to maximize your retirement savings, that's another argument for the Roth IRA. I think there's a minimum number of years before a business must show a profit to continue to not be seen as a hobby, but certainly costs of operation as well as business contributions to retirement savings can help you reduce your business income and save on taxes.Given your age and nearness to retirement, I would encourage you to find a balance between conservatively secure investments such savings bonds, and a more aggressive equity approach. You don't want to put at risk any money you will need in the next 10-20 years, because if we have another market downturn, you could see precious savings disappear just when you need it most. Even mutual funds and ETFs tied to an equity index hold a degree of risk tied to market motion.Yes, your approach to credit cards does sound strategy. I would encourage you to work with DW to change her behavior and take some responsibility for her spending. If it's business related, that's one thing, but if it's personal, that's something else completely. The interest you are paying is cutting into your retirement savings potential and the money available to invest in the business. That's a high price to pay for DW not modifying how she uses her credit cards.FuskieWho also encourages DW to not use a business checking account or credit card unless absolutely necessary, as banking laws do not protect businesses the way they do individual consumers...
Thanks for your insight. Unfortunately, I have a 7 year old and won't be retiring until she is out of college (in all probability) so I have a 15 year window (at least) that I'm looking at before retirement.
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