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Question 1:
My wife works for the state and has been contributing to her retirement plan. The state only gives 25 bucks toward her retirement plan each month no matter what so I figure we should move her retirement plan over to a Roth IRA at a discount broker since we are in such a low tax bracket right now anyway and I would much rather choose my investment from whatever I want rather than have to select from their few choices of mutual funds. Is this a good idea or is there something I am not taking into consideration?


Question 2:
My dad set me up a SIMPLE retirement account a few years back at a full service broker that is bringing in meager gains. I feel ready to manage my own account and want to move it into a discount broker Roth IRA. Are there any penalties in making this move? Things I should be aware of?


Question 3:
Can me and my wife both contribute our annual max allowance into one IRA account or do we have to have separate IRA's?
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Q1: Depending on your age and goals, the Roth IRA contributions alone will probably not be enough to retire on. So sure, under the circumstances max your Roth IRA first, but don't stop there. Increase your savings rate as soon as you can. Your pension plan probably has a much higher maximum. So max both if you can. If pension plan investments are poor, then do a taxable account, invested long term buy and hold style (LTBH) to minimize income taxes.

Q2: I'll pass on this one. Your father can probably move the account without penalty. You might be able to, but only if you have inherited it as a beneficiary.

Q3: IRA and Roth IRA are INDIVIDUAL accounts. You and your wife must have separate accounts. They can be funded from your joint saving/income, but once funded, they become individually your own/her own.
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Question 2:
My dad set me up a SIMPLE retirement account a few years back at a full service broker that is bringing in meager gains. I feel ready to manage my own account and want to move it into a discount broker Roth IRA. Are there any penalties in making this move? Things I should be aware of?


If it has been over two years since the Simple was first funded you can roll the Simple over to a Trad Ira, then you can do a Roth conversion. The original broker will likely charge you $50-100 to close the account.

buzman
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Question 1:
My wife works for the state and has been contributing to her retirement plan. The state only gives 25 bucks toward her retirement plan each month no matter what so I figure we should move her retirement plan over to a Roth IRA at a discount broker since we are in such a low tax bracket right now anyway and I would much rather choose my investment from whatever I want rather than have to select from their few choices of mutual funds. Is this a good idea or is there something I am not taking into consideration?


It depends. Sometimes retirement benefits are based upon how many years you contribute to the plan. If you are getting increased percentage of pay type increases, then it might not be wise not to contribute to the plan. Some give you a percentage for every year you are in the plan.

So you need to know how benefits are calculated on the state plan.

Most state plans are very generous and hard to duplicate. They are also guaranteed, where putting money in a ROTH depends upon how well you invest it, diversify it, etc.






Question 3:
Can me and my wife both contribute our annual max allowance into one IRA account or do we have to have separate IRA's?


Depending what type of other retirement plans you have, and your gross income, there are limits. In general, if you have NO plan at work, you can contribute the max to your individual IRA.

You both can contribute to ONE IRA only if one of you is not working. You need two IRAs, if each of you is eligible to contribute.

For example, someone with 401K cannot necessarily have an IRA as well that they are contributing to.

t
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telegraph:

{{{Question 3: Can me and my wife both contribute our annual max allowance into one IRA account or do we have to have separate IRA's?}}}

"You both can contribute to ONE IRA only if one of you is not working. You need two IRAs, if each of you is eligible to contribute."

The first sentence is wrong. Both spouses can never contribute to only one IRA. In addition, even if one spouse is not working, the non-working spouse can be eligible for a "spousal IRA" based on the working spouses income. Each spouse must always contribut (or not contribute) to their own IRA; there are no Joint IRAs!

Regards, JAFO


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