|
|
#11
10-05-2006, 03:30 PM
|
|||
|
|||
Re: question about investing IRA or saving towards Downpayment for hou
[ QUOTE ]
Funding the Roth would probably be the way to go if you can get a short term lease. Tax-free compounding for decades is typically the answer when faced with this decision. What makes this even more weighted toward contributing to the ROTH is the fact that you are willing to find a short term lease to wait and save up to get back to your desired downpayment. Most believe that the housing market will stagnate through the next 9 months. If you wait, you can probably get a much better deal on a home when the market is flooded in the late spring selling season. [/ QUOTE ] This is very much my thought process. [ QUOTE ] As for the posters saying you can take money out of your ROTH, this is true. Buy I'm not sure why you would want to do this when you have the means to save up for a downpayment. [/ QUOTE ] withdrawing immediately to take advantage of the the "first-time home buyer" clause would be almost the same as not putting in any at all for the 2006 yr. 
|
|
#12
10-06-2006, 08:24 AM
|
|||
|
|||
|
Re: question about investing IRA or saving towards Downpayment for hou
[ QUOTE ]
withdrawing immediately to take advantage of the the "first-time home buyer" clause would be almost the same as not putting in any at all for the 2006 yr. [/ QUOTE ] qft. It would be like taking money out of your left pocket and putting it into your right pocket. Plus you'd lose the interest income you could get on the money while it was floating to and fro your investment house. Good luck.
|
|
#13
10-06-2006, 09:20 AM
|
|||
|
|||
|
Re: question about investing IRA or saving towards Downpayment for hou
[ QUOTE ]
[ QUOTE ] withdrawing immediately to take advantage of the the "first-time home buyer" clause would be almost the same as not putting in any at all for the 2006 yr. [/ QUOTE ] qft. It would be like taking money out of your left pocket and putting it into your right pocket. Plus you'd lose the interest income you could get on the money while it was floating to and fro your investment house. Good luck. [/ QUOTE ] I am in this same situation, but my home purchase is one or two years off. Does it still make sense to open a Roth IRA and make the '06 contribution if I will be withdrawing in a year or two? In that case, should I not make the '07 contribution if I am buying that year?
|
|
#14
10-07-2006, 09:26 AM
|
|||
|
|||
|
Re: question about investing IRA or saving towards Downpayment for hou
You're going to have to invest your monies in something very low risk since you need the money soon. This means your return will be ~5-6%.
Assuming you contribute $4k for 2006, you're talking about $200 of income. When you go to withdraw your initial contribution of $4k, your Roth balance will be $200. This isn't going to fly at most investment houses. They will probably just make you cash it out and you'll have to pay the taxes and penalties. If you just keep it in a normal CD, you can just pay taxes as normal. My recommendation is as follows. If you know for a fact that you will be using those contributions as a downpayment on your home purchase, don't make the contributions. The time, expense, and hassle are not worth it. But, if there is a possibility that you won't have to withdraw the money, go ahead and make the contribution. You only get one shot at this contribution window. If you pass it up and then come into some additional money for a downpayment, you will regret not making the contribution. So, it's your call.
|
|
#15
10-07-2006, 11:15 AM
|
|||
|
|||
|
Re: question about investing IRA or saving towards Downpayment for hou
[ QUOTE ]
You're going to have to invest your monies in something very low risk since you need the money soon. This means your return will be ~5-6%. Assuming you contribute $4k for 2006, you're talking about $200 of income. When you go to withdraw your initial contribution of $4k, your Roth balance will be $200. This isn't going to fly at most investment houses. They will probably just make you cash it out and you'll have to pay the taxes and penalties. If you just keep it in a normal CD, you can just pay taxes as normal. My recommendation is as follows. If you know for a fact that you will be using those contributions as a downpayment on your home purchase, don't make the contributions. The time, expense, and hassle are not worth it. But, if there is a possibility that you won't have to withdraw the money, go ahead and make the contribution. You only get one shot at this contribution window. If you pass it up and then come into some additional money for a downpayment, you will regret not making the contribution. So, it's your call. [/ QUOTE ] you make a very solid point.
|
 |
|
|
Linear Mode
