Why have a Rollover?I HAVE 4 IRA'S no idea how this happened.can you PLS EXPLAIN Pre Tax VS. Tax LATER ?THEN WHAT TO INVEST IN A ROLLOVER IRA VS A ROTH, SEP, INDIV and INHERITED BENE IRA-REITS VS DIVIDEND STOCKS-GROWTH VS VALUELOVE SOME BASICS HEREI AM 57 YEARS OLD - PBFOF - potential BFOF :)aka Cinstocks
There are several questions in your post. This answer is a general answer and may or may not apply to your specific situation.Rollover IRAs are used when transferring existing IRAs between institutions, such as your employer, source is usually a 401k) or another financial institution, source is another IRA.Which to use, Tax now (Roth IRA) vs tax later (Traditional IRA)? The goal is to reduce the amount of taxes paid by paying the taxes at the lower rate of current or the projected tax rate during retirement. If you expect your retirement income tax rate to be lower than your current tax rate, use a Traditional IRA (Pay later) if your current tax rate is expected to be lower now than in retirement, then use a Roth IRA (Pay now).The are a lot of different and conflicting theories and philosophies about what to invest in and what type of account, TIRA, Roth IRA, brokerage... so I'll pass on answering that question.
A few thoughts--Your multiple IRAs can be consolidated into a single IRA is you wish. The transfer is tax free if you do it right. Decide which one you want to keep and ask that custodian to arrange transfers from the others. (Separate IRAs can be used to benefit different beneficiaries on your death, but that is not so common. Consolidating them can reduce your fees and some custodians will pay rewards for a transfer to their firm.)Pre Tax VS. Tax LATERWhere did your IRAs come from? Did you make contributions? Were they tax deductible or not? When you take distributions from a traditional IRA according to the rules usually after age 59-1/2, the distributions are taxed at ordinary income tax rates. But you deduct a portion of your contributions each year until those funds are depleted.Contributions to 401K plans can be pretax or after tax. Distributions are again taxable with a credit for after tax contributions.Roth IRAs differ in that funds from a Roth are not taxed when you take distributions in retirement. But all contributions are after tax. And note that your traditional IRAs can be converted to a Roth IRA, but you must pay income taxes on the amounts converted. Hence, large IRAs are often partially converted over multiple years to keep in the lower income tax brackets.I'm not sure about the rest of your question. Most IRAs or Roth IRAs can invest in a variety of investments including mutual funds, etfs, individual stocks or bonds, etc. A self directed account allows you to make your own choices. But you can also find custodians who will manage the accounts for you for a fee. That is up to you to decide what works for you.Growth and value are investment styles. Too much to cover in one posting.
"Why have a Rollover?I HAVE 4 IRA'S no idea how this happened.can you PLS EXPLAIN Pre Tax VS. Tax LATER ?THEN WHAT TO INVEST IN A ROLLOVER IRA VS A ROTH, SEP, INDIV and INHERITED BENE IRA-REITS VS DIVIDEND STOCKS-GROWTH VS VALUE”I’m 58 YO retired like you and maybe I can help. A lot to unpack in this question but I’ll try.The advantage of rolling over your IRA’s - Many IRA’s are created through an employer sponsored plan. Meaning your employer controls the administration of the IRA. As such, most have a limited number of mutual funds you may invest in. When you leave that employer, you may “roll-it-over” to a self directed IRA. That’s likely how you ended up with 4 IRA’s. By self directed, they mean you may invest in any investment you wish. Not only the ones your employer offers. So YOU direct the IRA's investments. Once you “roll” them into a self-directed IRA you can combine them if you wish into a single account (provided they are all the same type of IRA). You can’t combine a traditional with a ROTH with and inherited but you can combine say, 2 ROTH IRA’s. No change in value but fewer accounts to keep track of.Pre-tax (traditional IRA) vs taxed later (ROTH IRA) - Pre-tax means that you deduct the amount you put into your IRA from this years income taxes. If you invest $6,000 and make $66,000, you are taxed on $60,000. The downside is that when you begin to take that money out of the IRA you are taxed on both the principal and your investment earnings. So if you make a great investment and the $6,000 grows to $10,000 you pay taxes on $10,000. Tax deferred, AKA a Roth IRA, is exactly the opposite. You are taxed this year on the $6,000 you invest however when you take it out, you pay no taxes on the principal or investment earnings. In this case, the $10,000 is tax free. If you are in a lower tax bracket after retirement a traditional IRA maybe worthwhile however, in general a ROTH is more advantageous.An inherited/beneficiary IRA - is one you inherit from someone who passed away. There are special rules that govern when you can take the money out depending if you are a spouse or not. Best to look them up separately. It can become complex.REITS vs. Dividend stocks - REITs are "real estate investment trusts" that, by law, must give a portion of their revenues back to shareholders in the form of a dividend. Dividend paying companies do so on their own and may be in any industry. For you, there is really no difference. Basically both pay you a set amount every quarter for each share you own. REIT’s generally pay more per-share but since they must be real estate investment company’s may have more risk.Growth vs. Value - A growth company is one that is growing sales/revenues faster than its peers in that industry. Since share price is closely linked to revenues they are usually have a higher price to earning ratio. A value stock may be a fast growth company or a more established company however their stock is undervalued vs its earnings. Like buying something on sale. Doesn’t mean that when you try to sell a value stock it'll be worth more (it may be 10% off today and 20% off tomorrow) but it’s under what other company’s are valued at. Price to earning ratio - All company’s have a different number of shares available so the actual share price is not a way to value a company. If Company A has revenues of $100 and offers 100 shares and each share is priced at $1. Company B has revenues of $100 and offers 50 shares and each share is priced at $2. While 1 share costs 2x’s the value you have per-dollar paid is the same. So a company with a low P/E would be considered a “value” company.I hope this helps.
I HAVE 4 IRA'S no idea how this happened.Okay, presuming the IRAs you mentioned later in the post:ROTH, SEP, INDIV and INHERITED BENE IRA are the 4 IRAs, it's actually quite easy to explain how it happened....Roth IRA is an account where you pay taxes on the contributions, but as long as you make qualified withdrawals, they will all be tax-free. If you want to move money from Traditional IRAs to your Roth IRA, you will owe taxes on the amount that you convert.SEP IRA is an employer sponsored account, so you got it through work. You can roll the balance from your SEP IRA into your Indiv(idual) IRA without paying any taxes if you want to combine accounts. Indiv(idual) IRA - is a Traditional IRA that you set up by making contributions to it.Inherited Bene(ficiary) IRA - is an IRA that you inherited from someone else. It is not eligible to be combined with any other IRA accounts.PLS EXPLAIN Pre Tax VS. Tax LATER ?There is no difference between "pre-tax" and "tax later". Pre-tax (Traditional) accounts are accounts that you don't pay taxes on the contributions, but when you make withdrawals, you pay taxes on the total amount withdrawn. That's deferring the taxes, aka "tax later".A question that you didn't ask, but is related is - what's a Roth IRA? As explained above, that's an account where you pay taxes on the amount that you contribute, but, as long as you make qualified withdrawals, the withdrawals will be tax-free.AJ
Your multiple IRAs can be consolidated into a single IRA is you wish.Sorry, that's not correct. The Individual IRA and the SEP IRA can be combined. The Inherited Beneficiary IRA is NOT eligible to be combined with any other IRA. The Individual and the SEP IRA can be combined into the Roth IRA, but ordinary income taxes would be owed on the amount moved (converted). Since the OP is 57, any taxes withheld from the amount converted would be subject to a 10% penalty in addition to the ordinary income taxes.AJ
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