No. of Recommendations: 0
I am planning to fund an IRA with $2000 for 2001, which I must do by April 15. I'm trying to decide whether to open a Roth or traditional IRA. My tax advisor just told me that my contribution will not be tax deductible because my AGI is too high, though I do qualify for a Roth. However, due to increases in my AGI over the next several years and the income limitations on a Roth, I will not qualify for a Roth starting in 2003.

My question: Is it worth the added complexity to have a Roth account funded for 2-3 years and then a traditional IRA funded for the next 35 years (i.e., until retirement)? Financially, I think a Roth for the 2-3 years will be slightly better, but logistically I'm not sure that's worth the added complexity in having the different accounts. It is appealing to simply have one large traditional IRA account at retirement, rather than a large traditional account and relatively small Roth account.

What should I do? I would like to hear everyone's thoughts. Thanks!!

Bagginses
Print the post Back To Top
No. of Recommendations: 4
Get the Roth while you can.
Who knows, they may raise limits and you may be eligible more years than you thought.
The Roth means you NEVER pay taxes on the capital gains within the account, provided that you leave the money in the account as intended.
You can have two accounts, a Roth and a non-deductible IRA with the same institution. Not that much extra trouble. You don't report anything having to do with the IRA or Roth to the IRS anyway.
A Roth is a good deal all around. Do it.
Best wishes, Chris
Print the post Back To Top
No. of Recommendations: 3
I agree with the reply you have already gotten...but I would like to add one more reason:

You never have to take a required distribution from a Roth IRA. This increased flexibility can make a big difference in your ability to manage your tax burden over the years...

ACME
Print the post Back To Top
No. of Recommendations: 0
I agree fully with the 2 prev. posters. I have 5 different IRA accounts, and the only 'complexity' involves having 5 file folders instead of one. It won't be a big deal when the time comes for distributions, IMHO.

cheers and good luck!
jtr
Print the post Back To Top
No. of Recommendations: 0
Thanks everyone for the advice.

Bagginses
Print the post Back To Top
No. of Recommendations: 0
Just my opinion... but I would take all the tax free money I could get... convenience be damned. Plus, I don't think it'll really be all that inconvenient. I think it's more an illectually pleasing thing to have it combined rather then any actual convenience.


j
Print the post Back To Top