If you make just a little too much for a Roth IRA, how should you invest?

Answer 1

I would recomend one of a couple of choices...or both...if what you are after is the tax free withdrawals of the Roth then you can check to see if your company has a Roth 401k option as far as I know it has no income restrictions...if they don't offer one then you can max out an IRA...with your income level you wouldn't be able to deduct the contribututions; however, in 2010 you would be able to roll over your IRA to a Roth(they are allowing anyone to roll over IRA's to Roth's regardless of income in 2010)...you would only have to pay the income taxes on the growth of the money in the IRA if you can't take a current tax deduction....if you are somehow able to deduct the IRA contributions or if it is from a previous roll over then you would have to pay taxes on the whole abount to roll it to an Roth, but they will allow you to pay the tax bill over a 2 year period. So if you want the Roth tax treatment and make too much income you may still have some good options.

Answer 2

Yea, the entire ballgame is establishing younger. The key's that you want time for the "Magic of compounding curiosity" to kick in. You have to get to a well lump amount of cash as quickly as viable and at a targeted factor your financial savings skyrockets, now not such a lot due to the fact that of your endured additions on your financial savings however simply due to the fact that of the curiosity in this developing lump amount of cash. For illustration you do not get plenty of curiosity on $1784, but if you're forty seven and you've got $210,000 in a mutual fund and feature a well yr you're going to make HUGE cash that yr. Don't do what so much do and wait to begin saving while they're 32, you fee your self actually thousands of greenbacks. Mutual finances are through some distance the high-quality and most secure strategy to retailer and you'll do this by way of a Roth IRA. A Roth is only a "auto" that's to be had that allows for you to avoid wasting after tax bucks but if you're geezing and take it out, there's no tax at the moment. It's a great deal. If the corporation you're employed for allows for a financial savings/pension software that allows for for pre-tax wages to be invested then that is a great deal additionally and perhaps you'll uncover a strategy to do each. That reduces your taxable sales undoubtedly, however with those financial savings there will probably be a tax while you are taking them out. Stocks will also be very dicy, that's, man or woman corporation shares like Procter Gamble, GM and so forth. Most men and women with out powerful skills of the arena of making an investment are bigger off with mutual finances which might be simply conglomerations of man or woman shares inside in a single fund. They are professionally controlled and no less than in my enjoy hardly ever lose cash and at worst do not lose something however holiday even. Some can do very good, and you'll consistently transfer to an additional mutual fund if one is not acting.

Answer 3

Assuming you've already maxed out any 401k with matching funds from your employer, if you make too much to contribute to a Roth IRA, then I'd go mainly for mutual funds. The types would depend on your age (more risk if you're young, less if you're nearing retirement). Also investigate tax-free investments if you're in a high tax bracket, but watch out for AMT.

Answer 4

If your company offers a matching 401(k) plan I would max out the matching then max out your Roth. Matching is a quick return on your investment with no risk - exactly what you're looking for in an investment.

If your company doesn't match then max out your Roth first, then put the rest in the 401(k).

Finally, if your company doesnt' offer a 401(k) put your money in a mutual fund of your choice since there aren't any other tax deffered savings plans out there.

Answer 5

Remember that the Roth IRA income requirements are based on your modified adjusted gross income.....not your gross income.

Having said that, I'd put the money in a traditional IRA.

If you want to money to be available prior to age 59.5 then I'd select a tax effecient mutual fund in a non-retirement account.

Answer 6

Here's one suggestion:
http://www.fivecentnickel.com/2007/03/26/minimizing-our-taxes-with-sep-ira-403b-and-457b/

Although if you're making too much for a Roth, you could probably afford a financial advisor!

Answer 7

You have to "run the numbers" and figure out your best after tax returns among index funds, tax-managed funds, regular growth, value or blend funds, and individual stocks.