I am looking to open a Traditional IRA with T.ROWE through the automatic deduction...I am confused on how to pick an ira.
Do I just sign up for a Trad ira and thats it or do I sign up for a IRA like I did with my 401k plan were I picked 2 plans/funds to go into my 401 to equal a 100%....I hope this question makes sense.
2007-08-23 09:51:55 · 7 answers · asked by vanny 1 in Business & Finance ➔ Investing
The IRA is the container, you still have to put the liquids into the container by picking the funds and or investments that your IRA monies will be placed into. They will give you a list of investment choices that they will buy everytime money comes into the account.
2007-08-23 09:58:17 · answer #1 · answered by redwine 6 · 1⤊ 0⤋
Difference Between a Traditional and Roth IRA
A Traditional IRA is primarily an individual savings plan. Contributions are made up to a specified limit with the contribution tax deductible. Money invested and earned in a traditional IRA are subject to income taxes at time of withdrawal. Withdrawals can be made without penalty once you reach the age of 59 1/2 years of age and you must begin withdrawing from your account when you reach the age of 70 1/2.
A Roth IRA is also primarily an individual savings plan. Contributions can be made up to a specified limit on a non-deductible basis. This means, you can make a contribution to your Roth IRA but not take a deduction on you income tax for the contribution like you can with a traditional IRA. Withdrawals are tax free within certain limitations. Withdrawals can be made without penalty once your reach the age of 59 1/2 provided the funds have been in the account for 5 years. Unlike a traditional IRA, you can continue contributing to a Roth IRA even if you have reached the age of 70 1/2.
2007-08-23 16:58:24 · answer #2 · answered by That_ blue_ eyed_ Irish_ lass 6 · 1⤊ 0⤋
An IRA can be made up of all kinds of investments. You can have cash savings, individual stocks, or mutual funds among others. T.Rowe should offer a variety of funds that you can use to hold your IRA contributions. I would start with a balanced fund and stick with that until you build up a little money in the IRA. You can study the funds and perhaps at a later date, you can spread your risk out over more than one fund.
2007-08-23 16:56:48 · answer #3 · answered by united9198 7 · 0⤊ 0⤋
The traditional IRA designation only affects the tax status of the investment. You can still invest your IRA into one or multiple funds that T Rowe Price offers, subject to any limitations they put on you.
You should consult your financial advisor, if you have one, on which one(s) to invest in. Different funds have different objectives and risk levels.
The traditional IRA just means you won't pay taxes on the money now...but you'll be taxed on the principal AND the proceeds (interest) when you receive distributions (make withdrawals).
2007-08-23 16:57:39 · answer #4 · answered by Scotty Doesnt Know 7 · 1⤊ 0⤋
An IRA is a container. When you open it the funds go into a money market fund. You can then move funds between the money market fund and stocks or mutual funds. Any cash paid out such as dividends goes into the money market fund.
2007-08-23 17:02:43 · answer #5 · answered by Barkley Hound 7 · 0⤊ 0⤋
The easiest is the Traditional IRA, I work at a bank and open these a lot. Don't go confusing yourself with all the other types (ROTH, SEP{usually for employers anyway}).
2007-08-23 16:56:22 · answer #6 · answered by Navy Man 2 · 0⤊ 1⤋
You will have to pick what you want to do with the $$$ .
Mutual funds ? Stocks ? Bonds ?
Unlike the 401K with employer managed investments ,
You will now have to manage your own account .
Choose wisely , It can LOOSE value !
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2007-08-23 16:59:41 · answer #7 · answered by kate 7 · 0⤊ 0⤋