Maxed out Roth IRA... put extra investments in Traditional IRA or no?

z28dreams · #1 12-02-2006, 06:16 AM

Hey all,

I'm a little confused here.

Right now I have a Roth IRA which I've maxed out for the year.

I have some more money I'd like to invest, and was wondering if it's a better idea to open a "normal" individual account at vanguard to add the mutual fund, or if I should put the rest in the "traditional IRA".

Explanations would be appreciated.

Edit: From what I'm reading it appears the $4k limit is for the combined Roth + Traditional IRA's, so basically my only option is to go with a normal account. Correct?

punkass · #2 12-02-2006, 09:38 AM

Yes, the limit applies for all IRA contributions, so you're done there.

Do you have a 401k? Maxed?
Savings adequate?

Nothing wrong with just having a personal account then.

z28dreams · #3 12-02-2006, 11:26 AM

[ QUOTE ]
Yes, the limit applies for all IRA contributions, so you're done there.

Do you have a 401k? Maxed?
Savings adequate?

Nothing wrong with just having a personal account then.

[/ QUOTE ]

Yes, I'm already putting the maximum 15% of my 401k into investments as well.

Currently I have roughly 1/2 my net worth in mutual fund type investments, and the other 1/2 in money market funds/checking accounts. I'm looking to tilt this back more towards investments right now.

imsobroke · #4 12-02-2006, 07:14 PM

[ QUOTE ]
[ QUOTE ]
Yes, the limit applies for all IRA contributions, so you're done there.

Do you have a 401k? Maxed?
Savings adequate?

Nothing wrong with just having a personal account then.

[/ QUOTE ]

Yes, I'm already putting the maximum 15% of my 401k into investments as well.

Currently I have roughly 1/2 my net worth in mutual fund type investments, and the other 1/2 in money market funds/checking accounts. I'm looking to tilt this back more towards investments right now.

[/ QUOTE ]

I'm confused by your "max 15% contribution" statement. You are allowed to put in a maximium 15k in 2006 to your 401k. It's not a flat percentage of your income or anything like that.

black_russian · #5 12-02-2006, 07:21 PM

Companies usually max out the percentage you can put in your 401K, maybe this is where the 15% is coming from.

imsobroke · #6 12-02-2006, 08:51 PM

Oh ok, thanks BR. I don't even come close to the max so I didn't know that there was an actual max % contribution.

z28dreams · #7 12-02-2006, 09:24 PM

[ QUOTE ]
Companies usually max out the percentage you can put in your 401K, maybe this is where the 15% is coming from.

[/ QUOTE ]

Yes, my company limits it at 15%

punkass · #8 12-02-2006, 10:46 PM

[ QUOTE ]
[ QUOTE ]
Companies usually max out the percentage you can put in your 401K, maybe this is where the 15% is coming from.

[/ QUOTE ]

Yes, my company limits it at 15%

[/ QUOTE ]

That sucks. My company has no limits, just the $15k federal limit. Which I come nowhere close to, since that would be a third of what I make.

Scotty O · #9 12-03-2006, 10:52 PM

Every should max out all qualified retirement accounts

1 - 401k
2 - Roth's
3 - IRA's

Wake up CALL · #10 12-04-2006, 07:51 PM

[ QUOTE ]
[ QUOTE ]
Yes, the limit applies for all IRA contributions, so you're done there.

Do you have a 401k? Maxed?
Savings adequate?

Nothing wrong with just having a personal account then.

[/ QUOTE ]

Yes, I'm already putting the maximum 15% of my 401k into investments as well.

Currently I have roughly 1/2 my net worth in mutual fund type investments, and the other 1/2 in money market funds/checking accounts. I'm looking to tilt this back more towards investments right now.

[/ QUOTE ]

If you are currently enrolled in a 401K (and still employed by that company) you cannot contribute to either a Roth IRA or a traditional IRA. Well I wrote cannot but you can however the tax consequences are high and there are no tax benefits, just detriments.