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| yellow heel |
 Posted: Fri Jul 29, 2005 1:10 pm Post subject: Traditional or Roth IRA with 401k |
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Investing Associate
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Hello everyone. This will be my first official question on this forum.
I am 27yo and I have been working for the same company for the past 5 years.
I have a 401k plan (with Fidelity) with the company that I max out every year (company matches 3% of salary).
Until recently, I have not heard of an IRA  . The more I read about it here, the more I wouldl like to invest in one. Ok, so here is my first question:
1. Should I invest in traditional or roth IRA?
I make between 80k-96k depending on how much overtime I do. I know I will come close to the limit if I do a lot of overtime. From what I have researched the limit for 2005 is $4000 (I also heard there is a penalty when you exceed this limit  ). Most of the articles that I have read recommends the Roth IRA (or seems like it to me). Which leads me to my second question:
2. Once I have decided which one to use, who should I use as my broker?
I have been looking into Scottrade.com and they seem pretty reasonable. I am a novice when it comes to investing.
Any advice that you guys can give is appreciated!
Thanks in advance! |
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| Dave Rathbun |
| Posted: Fri Jul 29, 2005 4:09 pm Post subject: Re: Traditional or Roth IRA with 401k |
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CFO
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| yellow heel wrote: | | 1. Should I invest in traditional or roth IRA? |
Roth, no question in my mind. The big difference between a regular and a Roth IRA is when you pay the taxes. With a regular IRA you pay taxes on withdrawals. With a Roth IRA you pay taxes on deposits. Since you're under 30, and have 30+ years until retirement, do you think your withdrawals will be bigger than your deposits? 
Assuming you put in 3K per year for 30 years you will put in a net of 90K. You will have paid taxes on that amount. Now the 3K you put in the first year will have compounded interest for 30 years. Tax free.  |
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| yellow heel |
| Posted: Sat Jul 30, 2005 9:50 am Post subject: |
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Investing Associate
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Thanks Dave.
Then roth it shall be 
Do you have any recommendations on the online broker?
or will any broker do? I just want some flexiblity so that once am educated enough in invest in stocks/mutual fund/bonds I can use the same broker.
Thanks for your help! |
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| MrInvestor |
| Posted: Sat Jul 30, 2005 11:33 am Post subject: |
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Investing Manager
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| Dave Rathbun |
| Posted: Sat Jul 30, 2005 4:03 pm Post subject: |
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CFO
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I use Harris Direct. According to an article in Smart Money (which they have thoughtfully posted on their site ) they were rated the #1 Discount Broker in a 2005 survey. They're not the least expensive, so they must have made up for it in other areas. I've not read the article but here's a link:
http://marketing.harrisdirect.com/harrisdirect/landing/smartmoneyarticle.pdf
FWIW, Scottrade was 7th (out of  on the survey. But their worst score was on the "banking amenities" so if you don't need a bank / broker but just want a way to trade that probably won't matter to you. |
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| yellow heel |
| Posted: Mon Aug 01, 2005 12:58 pm Post subject: |
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Investing Associate
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| Thanks! Before I dive into the online broker, I'd thought I'd drop by my bank's financial advisor to see what kind of investment options they have for IRA. My bank is B of A. Do you think I wll get ripped off if I went with a bank? |
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