I am considering how much money to contribute to my retirement accounts and part of the decision invovles whether this money can be used to purchase property.  If the money in my 401k, IRA, and Roth IRA is off limits, then it seems that I should contribute less because it will prolong the time before I have saved enough for a down payment on a house.  Does anyone have any advice on this matter?
211237
It's still your money even if it's in a retirement account, and you can pull it out as a loan (but you need to replace it or be penalized) or as a distribution, so yes you can use it for your downpayment.  It's an eligile source of liquid assets, from a lending perspective.\n\nYour retirement accounts are basically savings or investment accounts that give you a (very) slight reduction on your taxable income.  If you're buying a house, it's much more important than knocking a few thousand dollars off of your taxable income, so I wouldn't put it there, I'd just put in in a regular investment account.  Minimizing your tax liability is wise, but it's not necessarily the highest priority all of the time.\n\nYou can also change your IRA contributions amount anytime you want, or make a lump sum contribution prior to the deadline from your other investment or savings accounts in the total amount it would have been if you had contributed it paycheck by paycheck.  So you can have it, if you need it, and still have the option of taking advantage of the tax benefits.
204187
I'm not a financial advisor, so you should check on this, but I believe that you will pay early withdrawal penalties plus income taxes at your current base rate on whatever you take out for whatever reason before you are 59 1/2.\n\nYou can take a loan against it, but you'll  have to pay that back.  I think you can also divide the entire value by how many years you likely have left to live (from actuarial tables) and take annual "substantially equal payments" without penalty.  All in all, very, very bad idea to use 401(k) money before you are at least 59 1/2.  \n\nCheck the Motley Fool for sound advice on paying off your loans.
41668
IRA may not help to eliminate all the taxes. you can contribute only 4500(50+ age) towards IRA. Plus, after the age of 70 you cannot contribute towards IRA. Although there may be other optionsI do not see one
243182
Under IRS rules, you can only roll over a 401k into a Traditional IRA and wait at least one year before moving it into Roth IRA. Remember, 401k sitting in previous employers will not have any growth. It is a frozen account until you roll it over.\n\nIRAs are always a good plan to save for retirement. You can pick any mutual funds that is offered by a financial institution (most mutual funds require a minimum initial deposit of $1000). And can be tax free after age 59 1/2 when you start using it.
110203
You should be able to roll over a 401k into an IRA without a problem.  Those Prudential people just don't want to lose your business.  Your money guy at the new place should be able to take care of all this for you.  And if he can't, find a new money guy.\n\n(Unless you bought some sort of annuity with it.  I can't tell if you did.)
479503
I see some interesting responses on here.  I disagree with the reverse mortgage suggestion.  Up front it sounds great to take out a mortgage and never have to worry about paying it.  Needless to say interest continues to accrue and as this person suggested it will be paid from the estate.  Many times however it requires the estate to sell the home to do so.  I would only suggest a reverse mortgage as a last resort.  \n\nThis situation is a sensitive one as many factors come into play.  Such as what is the value of his 401K, what other sources of income does he have and what other savings vehicles are available to him.  Since he is in his 60's he can withdraw from his 401K without a penalty although he is still subject to taxation on the lump sum distribution.  This is why it is important to know what other sources of income he does have and are those other sources taxable. \n\nIf he his paying a high mortgage rate there is some benefit to paying off his mortgage, but not if this severely depletes his liquid assets.  It is a complicated question and needs a full financial analysis to see if it is beneficial.  \n\nI would however avoid that reverse mortgage option in this situation.
371755
All depends on your age and what % of your portfolio this represents.  The younger you are, the more aggressive you can be, the older/closer to retirement, the more conservative you probably will want to be.\n\n1st things, first, understand what you're investing in and how to do so.  Else, it might not matter as you might end up throwing it all away.  So study first, then invest!
529626
I'd also like to add that the funding of a Roth or any other IRA is by calendar year Jan1-Dec31. You may also make a contribution and designate it for 2006 anytime prior to the 2007 tax filing deadline on or about April 15th. The limit she can contribute for 2006 is $4,000 or the amount of earned income, whichever is less.\n\nVanguard, Fidelity, and T. Rowe Price are all good companies and your mother decides on what type of investments she wants based on her risk tolerance.
317790
Generally you can't deduct the expenses related to purchasing a house, except any points paid.  The extra expenses would be added to your basis (the book value of the property cost+expenses-selling costs) of the house.  You should be able to take a loan from your 401(k) without penalty, you just have to make the payments to the 401(k).
431872
I'm a CPA and the Roth beats the traditional in almost every situation.  Think of it this way.......which is better?  Tax Deferred or Tax-Free?  With the traditional IRA you eventually pay the piper.\n\nTwo possible exceptions:  In the 401(k) scenario with an employer match, always take the free money.  Secondly, if you are nearing retirement and we are expecting a down market over the next five years, that might be a scenario where the deduction rather than the tax-free growth might make sense.  Run the numbers if this latter situation applies to you.
198727
You should use 4000 to put into a ROTH IRA.  You can put another 4000 in a ROTH IRA for your wife.  If you are taking advantage of the tax deduction of mortgage interest, your interest rate is effectively 4%, so it probably makes more sense to invest rather than pay off your mortgage.\nYou might want to put your 2000 into municipal bonds which will give you tax-free income.
386659
That doesn't really change the net income that is taxable, as your withholdings are not your actual TAX. It is the state taxes that make a difference.\n\nSome other ideas - open a traditional IRA (a Roth won't do it).  There's no income limit on a traditional IRA and if you are married you can fund one for your spouse, even if they are not earning income (ie a stay at home mom).  For 2006 and 2007, you can fund up to $4000 a piece (in separate accounts, one for each of you) if you are 49 or younger, and up to $5000 each if you are 50 or older.\n\nThat directly reduces your taxable income.   Hopefully you're maxing your contribution to your employer's 401K, which is another great way to reduce your taxable income, while still retaining that money for your own use.  If you have a FSA or MSA, (Flexible Spending Account or Medical Spending Account) at work, you might also review your withholdings for next year to prevent this problem next year.\n\nYou can also donate appreciated stock or bonds to charity and deduct the full market value (even though you paid less for the stock), while avoiding the capital gains on that stock.\n\nI would play with tax prep software.  It is also possible that the AMT isn't going to make a big difference in your taxes due.   Knowing what that potential cost is, will help you make a better decision as to what you should do about it.
493074
Andreas is correct.  Matt K is confused.  Below the line means after AGI (adjusted gross income).  Some deductions are limited based on AGI.  Deductions not limited by AGI do reduce taxable income dollar for dollar.  Mortgage interest is not reduced based on AGI.  The only limit that may apply is a limit on overall itemized deductions if your AGI is greater than $150,500.  There is a limit on deductions if your mortgage is greater than $1,000,000 or more than $100,000 was used for purposes other than to buy, build, or improve your home.  If this applied, your interest would probably be more than $7600.
104045
Options:\n\nRoll the money into your mortgage (get a larger loan).  The interest rate will be lower then a 401k loan, and it's deductable.\n\nWhen you take out of a 401k, there is no penalty.  But you now don't have that money available earning interest/dividens.  \n\nIt's never recommend taking out a loan on 401k.  But if that's the very last source of money, it's better then taking a withdrawal on it.
652736
At 23, time is your best friend (hooray compound interest).  Your best bet is to (if you haven't already,) open up and max out your Roth IRA.  This allows you to allow that compounding to work in a tax-free manner after you deposit. See what a difference that can make here: http://www.dinkytown.net/java/RothIRA.html\n\nIf you work for a company that provides matching funds for your 401(k) or similar retirement account, be sure to get the maximum match - it's free money! (that has to come from your income, but you can use your $10K to buffer your cost of living while you max your contributions).\n\nNote, it'll depend both on your capital gains, and the tax efficiency of your investments, but when I ran the numbers for myself, I found that I was much better off using my 401(k) for investment even though I plan on early withdrawal: http://randomfoo.net/blog/id/4087\n\n(Over a longer time-horizon, the tax efficiency is going to make a huge difference, plus you can also drastically rebalance with near impunity, tax free)\n\nRegardless of the type of account you put your money in, you still have to decide what you're going to invest in.  There aren't guaranteed returns, but for your goals (growth until eventual financial independence, yes?) you're best bet is probably a good index mutual fund. (You'll want to do your own research on this - although index funds are by definition 'average' they tend to provide total returns (after expenses) that beat the vast majority of mutual funds.  Here's one article to help you get started on why that's the case: http://www.fool.com/mutualfunds/indexfunds/indexfunds01.htm\n\nYour best course of action as you save towards financial independence is to continue investing (dollar cost averaging) and to diversify as your capital grows (bonds, international, REITs, metals) and to try to keep an eye towards what your goals are.  A good book on the subject matter is "You Money Or Your Life" by Domniguez and Robin, which talks less about investing (they suggest an extremely conservative approach), but more about a good basic mindset/framework for thinking about money.\n\nIf your goal is early retirement (reaching the point where you can live off your investments) you may also want to take a look at FIRECalc, an interesting early retirement calculator: http://fireseeker.com/ and the related Early Retirement forums (lurking and reading the archives is a good way to dip a toe in the water, so to speak): http://early-retirement.org/forums/
323069
First, it is not always optimal for you to pay off your mortgage. It is one of the few non-recourse loans available to you, and that lets you keep the upside while giving the bank the downside (they get the house, but nothing else if things go bad). \n\nAlthough I do not recommend negative amortizing loans, I would recommend that you change your goal of "paying off your mortgage before retiring" to "maximize my after tax wealth." Depending on your real estate market, and the interest rate on your loan (after tax interest rate of course), etc, it may be optimal to take the equity out, invest it in a way such that you can still draw from it to pay the increased mortgage payments... (i.e. do not use the extracted equity to buy a new Porsche).\n\nAdditionally, make sure that BEFORE you do teh 403b (unless they match in which case do the minimum required to get the match asap!), take advantage of the ROTH IRA. It has many advantages over a traditional IRA (untaxed at retirement, no required distributions at retirement), and the only disadvantage I can think of is the fact that you don't get the tax deduction today (although even this one is not entirely true depending on your income level). However, if you assume that tax rates will be higher at retirement (we all want to retire rich, right?) then the ROTH dominates teh traditional. Also, income tax rates are at historically low levels today, I'm assuming that our trade deficits and national debt levels will require increased taxes in the future... the ROTH is indifferent and protects you from such a development :)\n\nForget Universal Life. Start with Term, if you have a reason for life insurance at all. The rule of thumb would say that disability insurance makes more sense for younger workers than life insurance... Another rule of thumb: trust very few insurance salesmen, and those that you do trust almost always tell you that you need more than actual.\n\nBest of luck, hopefully this bit on personal finance helps.\nAs they say, it's just my $0.02!
659018
Paula M is WRONG.\nYou can have all 3.  As VinTek said, your combined contributions in both Traditional and ROTH IRA cannot exceed $4000/tax year.  You can spread this $4000 across any number of accounts you want.\n\nROTH IRA is NOT NECESSARILY better than Traditional IRA as VinTek implied.  For tax purposes, if you want to bring down your AGI, and if you're eligible ( since you're married - filing seperately/Jointly...Your AGI etc. ), you may prefer Traditional IRA today instead of TAX FREE advantage of ROTH IRA down the line.\n\nIf you have patience, you might want to go thru' the link below:\nhttp://www.401khelpcenter.com/2006_limits.html\n\nAlso check out http://www.401khelpcenter.com/