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Author: jjohncm Motley Fool One Everlasting Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75530  
Subject: IRA/Roth Date: 11/30/2013 7:09 PM
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No employer, no salary, money in the bank and stocks, age 62. Is there a way to contribute to a Roth or IRA or equivalent which would help offset taxes and dividends on stocks yet grow without tax until I need it?
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Author: intercst Big funky green star, 20000 posts Top Favorite Fools Top Recommended Fools Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 73860 of 75530
Subject: Re: IRA/Roth Date: 11/30/2013 8:22 PM
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No employer, no salary, money in the bank and stocks, age 62. Is there a way to contribute to a Roth or IRA or equivalent.

You can only make an IRA or Roth IRA contribution with wage or salary income.

If you haven't paid FICA on it, it's not eligible to be contributed to an IRA.

intercst

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Author: pauleckler Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 73861 of 75530
Subject: Re: IRA/Roth Date: 11/30/2013 9:21 PM
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The best you can do is invest in the long term buy and hold style (LTBH in Foolish lingo) in a taxable account. Then you pay taxes only when you sell and then at capital gains rates. Stocks with no dividends are preferred, or qualified dividends are taxed at a low rate similar to capital gains.

An equivalent way is to purchase a variable annuity. Usually you can make repeated additions to the annuity and gains grow tax free. The problem is that most are sold by insurance companies that charge high fees and have surrender charges that keep you from moving your money if the fund you choose under performs. As far as I know all offer a selection of managed mutual funds to choose from. None allow stock trading as you can do in an IRA or Roth.

If you choose to go with an annuity, check out those offered by low cost providers like Fidelity, Vanguard, TRowe Price, TIAA Cref etc.

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Author: BruceCM Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 73878 of 75530
Subject: Re: IRA/Roth Date: 12/2/2013 5:01 PM
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No employer, no salary, money in the bank and stocks, age 62. Is there a way to contribute to a Roth or IRA or equivalent which would help offset taxes and dividends on stocks yet grow without tax until I need it?

There are a couple of theoretically possible ways:
1. Earned income from a spouse that at least equals both of your IRA contributions for the year
2. Alimony being paid by a former spouse per a divorce decree.

You could certainly do a traditional IRA to Roth IRA conversion, but this isn't adding any additional dollars to your IRA holdings...only shifting them.

I agree with the former post that a no-load, low cost deferred Variable Annuity is a way to get your annual earnings tax deferred (not "tax free"). But even the low cost DVA offered by Vanguard carries added fees that tax deferral would have to make up for. And keep in mind, that although there is no required distributions from a DVA (although some contracts require you to annuitize the balance by a certain late age), withdrawals will come out earnings first.

A common asset allocation strategy is to hold tax inefficient investments, such as high dividend stocks, bonds, REITs...in tax deferred accounts and tax efficient investments (growth and most small cap stocks, muni bonds) in taxable accounts. It would be ill-advised to misallocate your portfolio towards tax efficient holdings simply to avoid tax on taxable gains.

BruceM

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