I am 22 years old and looking at a roth ira. I want to invest the full amount each year. I was lookinng at the morningstar website and it stated that in 2010, I would only be able to contribute upto 2000 per year because the tax relief act expires. What do I do about this? Is this correct? If so it will really affect my retirement.... any comments wanted.
2006-12-26 04:24:01 · 6 answers · asked by Jason K 1 in Business & Finance ➔ Investing
Well, if Congress doesn't vote to make the act permanent, then yes, contributions will revert back to $2000. If Congress does take action, then you need to check the IRS website (www.irs.gov) to find the actual maximum contribution amount. So in 2010, its anyone guess on what's going to happen. I just hope the government will take action, instead of just sitting there complaining about other stuff.
As for whether it will affect your retirement, no one knows. If contribution limits goes down to $2000, then you have less money being saved. If it increases, that's good for everyone. Anyway, I hope you invest using the Dollar Cost Averaging concept. That means, you invest a certain amount on the same day of every month. By doing this, this will lower the cost per share you own because on some months, price per share maybe high, so you buy fewer shares. On other months, price per share maybe low, so you buy more shares. This is the Dollar Cost Averaging concept.
2006-12-27 06:30:54 · answer #1 · answered by Anonymous · 2⤊ 0⤋
Like anything else with the tax law take advantage of the rules as long as you can and then see what Congress decides to change to.
However, in this case the Pension Act that was signed last summer has made permanent the changes for IRA and Pension contributions that were brought in by the 2001 tax act. So the amount you can contribute will not go back to the $2,000 limit.
2006-12-26 12:40:02 · answer #2 · answered by waggy_33 6 · 1⤊ 0⤋
the amount you can contribute to you roth ira depends on your income. it has a phase out period at about 95,000 for single and 130,000 for married. these number are not exact so check into it. also a traditional can be converted to roth. if you plan on making more than 100,000 a year you might want to go with the traditional instead. roth is after tax contributions and if you are 59.5 years old when you withdraw money, you never pay taxes. traditional you must withdraw at 70 and pay taxes. the max amount you can contribute will most likely go up as inflation rises.
2006-12-26 14:56:54 · answer #3 · answered by I dont know but... 4 · 0⤊ 0⤋
There is nothing you can do about the expiration of an act other than get your representative to vote to extend it.
In the mean time, invest fully until you come to that point. After that, continue to invest the full amount able. Yes, it will affect your retirement. Not much you can do about contribution limits. The other thing to do is, if able to, contribute the maximum to your employer 401k.
2006-12-26 12:38:59 · answer #4 · answered by ricks 5 · 0⤊ 0⤋
Kep researching IRAs .
You would be better off with a traditional IRA because you will be able to reduce your taxable income and tax burden in the year of your contribution. A Roth IRA does not have any immediate tax benefits.
2006-12-26 12:41:14 · answer #5 · answered by Gone Golfing 2 · 0⤊ 1⤋
they are constantly changing the laws......don't worry about it for a second, just put as much as you can afford into that roth ira each year, and if you have more to invest, just invest it into a regular taxable mutual fund
by that time the yearly contribution will be $7000 a year probably.
2006-12-26 13:20:03 · answer #6 · answered by besthusbandever 4 · 0⤊ 0⤋