Roth IRA

[prohornblower]

[ QUOTE ]
It sounds like I should really be putting more into my 401k.

[/ QUOTE ]

Definitely. Your dollars are best-spent here. You get a 100% ROI right off the bat. After that, your dollars are best-spent in the Roth IRA. After that, if you want to keep going (which you likely don't NEED to), go back to the 401(k) and add up to the limit which is 15K or 15.5K something like that.

8% match is outstanding. What is your vestment period, though?

[Shanemex]

Sorry to hijack, but I have a pretty specific question about my Roth IRA and I can't seem to find the answer anywhere.

I have been contributing to my IRA even though all of my income unearned. I realized this earlier this year, and my broker told me I'd have to pay a 6% a year excise tax for each year until I take the money out. However, they also said that the gains from my investments would stay in my account. Therefore, I pay 6% a year on the money, but get tax free gains for life afterwards. So in theory, I could leave the money in there for 16 years, and then cash it out and pay a 96% fee. But in 16 years that investment should be worth at least 3 or 4 times that much. Normally the tax rates for these gains would have 15% or more, plus it would have slowed down my growth rate since I would have been paying taxes the whole way. So by this point I would be close to even, and I would still be getting the benefits for many years in the future (I'm 21).

In future years I'll probably look into ways of getting $4000 in earned income so I can contribute with no fees, but for the time being does my plan of just leaving my money in my IRA in spite of the fees seem solid?

[prohornblower]

KylePhilly, what is your company's 401k vestment period?

I'm guessing since the match is so high, that the period may be 3-5 years, which sort of sucks, depending on company turnover and your future prospects, etc. Some companies have an automatic vestment. But likely not those with an 8% match.

[kylephilly]

Hey,

Sorry haven't checked the thread in a while. The vestment period is 5 years. It is a very high turnover company due to the amount of hours we are expected to work at some points in time. All in all, been here a year and still very happy with the company but the vestment period doesn't kick in for a loooong while.

I am currently putting in the full amount that will be matched, I'm going to try and start putting about 200 a paycheck into my Roth, see how my cash flow is with expenses (rent, beer, etc) and see how it works out.

If you have any suggestions for good long term growth stocks in my roth ira please let me know, I'm pretty clueless when it comes to investing.

[prohornblower]

Ehhh, so that is sort of a downer. 5 years is quite a while for a young man to stay at a job. Still, put 8% in, of course. Even if you part ways before you are 100% vested, you will be glad that you put away 8% of your pay.

And when you are 4 years and 10 months in, be on your best behavior! [img]/images/graemlins/grin.gif[/img]

I'm not a big investor or anything, but my Roth consists solely of Vangaurd's Target Retirement 2045 fund. Some funds have high minimums (like 3k), so when I get enough in there, I'll be able to "branch out" a bit more, if necessary.