What is a Roth IRA? Where do you get one? How much money can you put into one?

Question

I read an article about Roth IRA being better than a 403B. It said you do not have to pay taxes on a Roth. I also am wondering if I quit my job, can I roll the $45K I have in my 403B into a Roth without a penalty?
I am seriously considering leaving my job.

The Lincoln Financial group manages my 403B.

Answer 1

A Roth IRA is an individual retirement account where your savings (or investments) grows tax-deferred. While its primary purpose is to let you build a nest egg for retirement, if you make withdrawals before age 59 1/2, you pay a 10% penalty UNLESS you are buying your first home (only $10,000 lifetime limit can be withdrawn), paying for higher education expenses (which can be you or your kids or your spouse), and a significant amount of non-reimbursed medical expenses. After age 59 1/2, all withdrawals can be withdrawn free of taxes.

As for your 403b, you can only move it into a Traditional IRA. In 2010, you may be able to move it into a Roth IRA. But for now, you can only move it into a Traditional and later move it into a Roth. You will pay taxes on the conversion from a Traditional IRA into a Roth, but its worth it since Roth IRAs allows tax-free withdrawals after age 59 1/2, while Traditional IRAs don't.

You can have both a Traditional and a Roth IRA. You can have as many as you want. But generally, you really only need one. If you have multiple IRAs, you have to treat all of them as one big IRA to figure out how much you can contribute in any given year. Currently you can only contribute $4000 ($5000 if you are age 50 and above). In 2008, the limit increases by $1000. So if you have a Traditional IRA and a Roth IRA, you can put in $4000 into one and $0 into the other or $2000 into both or however you want to divide your contributions.

I open my Roth IRA at Primerica Financial Services, A Citi Company. They offer quality mutual funds from various companies such as Legg Mason Partners, American Funds, Oppenheimer, Fidelity, Van Kampen, and several other companies. You can invest as little as $25/month. Other companies may require you to put in an initial deposit of $1000 or more to open an IRA account with them. At Primerica, you can invest $25/month or put in minimum deposit (usually $250) set by the mutual fund guideline (read the mutual fund prospectus).

Answer 2

Roth IRA's are a wonderful investment tool to save money for retirement. You are allowed to invest up to $4000/year and if you are over the age of 50 you may invest another $1000/year for a catch up. You may roll over your 403b and that does not count towards your $4000 investment.

The money is tax defered when you start drawing off it when you retire becaues you have already paid taxes on it when you put it in. An added benifit is that you get a nice tax deduciton on your contributions as well at tax time.

See any major bank and they can open a Roth for you!

Answer 3

An above poster is wrong.

With a Roth IRA you pay taxes now, and never again. When you retire you get it tax free.

There are income limitations on how much you can contribute. For most peopoe it is $4000 a year. You ahv until April 15th of the following year to make a contribution.

Answer 4

Roth is the name of the senator who introduced it. It involves putting away money you already paid taxes on from your check or other income in the current year. When you retire, you can use portions of money based on your age after 59 1/2 and the money plus all capital gains comes out tax free.

The limits are roughly $4,000 per year 2007, and I think $4,500 for 2008 and so on. they may raise the limits because of inflation and social security going under... If you make more than $110,000 per year, you can only invest in a traditional IRA.

Answer 5

Yes you can. The money won't be taxed when you pull it out later because it was taxed when you made it. Go thru a bank...