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Subject:  Re: Roth IRA - investment options? Date:  4/23/1998  10:28 AM
Author:  TMFPixy Number:  2998 of 105397

Greetings, YoungNotDumb, and welcome.

<<I recently opened a Roth IRA through AMEX financial planners (this is my first year saving for retirement) and have the ability to choose from over 800 actively traded vehicles. My understanding of the benefit of a Roth is that you aren't taxed on the income it generates, unlike a standard 401(k). Am I correct?

If that's the case, I'd rather invest the money Foolishly, which I think will far outperform the returns AMEX's mutual funds will generate. Is there a way I can set up the Roth so that I manage the money?>>

In a traditional IRA or a 401k, all growth accumulates on a tax-deferred basis. Additionally, both vehicles offer the opportunity for pre-tax contributions. At retirement as previoulsly untaxed monies are withdrawn, they are taxed at the rates in effect at that time. The Roth is funded with money that has already been taxed. Growth on that money accumulates untaxed. Providied it's not withdrawn until the account has been open for five tax-years and provided you are over the age of 59 ½, then any money taken from the Roth at that time will be free of tax..

IMHO, AMEX is not the greatest place to invest due to their high loads and mediocre performance in much of their offerings. If you want to invest your Roth money in the Foolish Four, you will be much better off moving that IRA to a discount broker of your choice. And yes, you can do so. Just contact the broker you want to do and tell them you want to arrange for a transfer of your current Roth IRA. That agency will be happy to guide you through the hoops to do so.


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