Roth IRA questions (1 Viewer)

[Wade]

If I choose to recharacterize or pull out this years contribution for both the wife and I does it have to be done by years end or by April 15th of next year? What are the pitfalls of either option?

Know of any good web pages where I can read up on this matter?

Thanks

Wade

 

[Wade]

One more question.

Can we even have any other type of IRA if we were both contributing to our 401k plan at work?

As you can probably tell I don't know much about IRA's and probably shouldn't be messing with them.

Thanks again

 

[Scott Merryfield]

I do not know the answer the recharacterizing your contribution, but you can have other IRA's even if you contribute to a 401K program. A Roth IRA contribution does not come off your gross income, but any earnings from investments in the Roth are tax-free forever. You can contribute to a normal IRA, too, but your contribution does not come off your gross income (if you have access to a 401K plan), and the investment earnings are tax-deferred (you are taxed when you withdraw funds). Finally, a rollover IRA can be setup to rollover 401K or other retirement plans into a single account for tax-deferred earnings.

 

[Wade]

Scott,

Thanks for the response. I ended up answering my own silly question so I edited out the question I had here.

I'm ignorant when it comes to this stuff. That is why my wife and I are talking to a financial advisor this evening.

Wade

 

[Danny R]

You can contribute to a normal IRA, too, but your contribution does not come off your gross income (if you have access to a 401K plan),

I don't believe this is correct. Contributions up to $2000 per person can be made each year to a normal IRA that are tax free. You pay taxes on it only when you withdraw the money at some future point. It doesn't matter if you have a 401 plan or not. Those have their own limits.