Please explain IRA In Layman's terms?
826571
Individual Retirement Account, if your money is before taxes you can contribute to a traditional IRA, this means you earn interest on the untaxed money. You are taxed when you make take the money out at retirement. Roth IRA, you take money that has already been taxed and are able to draw from it at retirement, without taxes. This is rumored to have been named for Ira Cohen, an IRS actuary who was working with them back in 1974. You can go to just about any bank, credit union, or find a financial advisor to explain in detail all aspects, what is allowed, what is not allowes (such as drawing out your money before age 59.5).
524763
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.
1009135
You may be able to borrow some from your IRA account but I would not recommend it.  Typically it would be for a home purchase and not home improvements.  Honestly I am not certain so you may want to take a look at publication 590 from the IRA that details out the rules for the IRA in plain english (which helped me quite a bit!)
604703
Find a financial advisor you trust (through interviewing them).  They will provide good investment advice.  Both IRA's grow tax deferred (you don't pay earnings along the way).  The differences are that \n\nTraditional ira- tax write off on contributions, taxed fully when withdraw, can't withdraw b4 59.5yrs old w/o 10% irs penalty and taxed on everything\n\nRoth- all contributions are already taxed (can't use it as a write off), by the time you're 59.5 yrs old (and assuming you had the account at least for 5 yrs) everything is tax free.  You are also allowed to take out the principal at anytime w/o penalty.  Some other rules apply to fully withdraw w/o penalty (i.e. 1st home purchase, higher education, etc.)\n\nAgain, if you have little to no investment experience, DO NOT listen to those hot stock tips, Suze Orman, or whatever is on TV.  By the time you hear of those 20% returns, you're already too late (i.e. real estate).  Please, please work with a professional.
1148050
Go to Clark Howard.com. for the answer to this and many other questions dealing in the wise use of money!\n\nCiao,\n\nAngelo Fragapane\n\nRoth IRA 101 \nThe Roth IRA in a nutshell \nBy Kaye A. Thomas\nUpdated February 11, 2006\nGet a quick overview of the benefits and basic rules of Roth IRAs.\n\nThe Roth IRA was born on January 1, 1998 as a result of the Taxpayer Relief Act of 1997. It's named after the late Senator William V. Roth, Jr.\n    The Roth IRA provides no deduction for contributions, but instead provides a benefit that isn't available for any other form of retirement savings: if you meet certain requirements, all earnings are tax free when you or your beneficiary withdraw them. Other benefits include avoiding the early distribution penalty on certain withdrawals, and eliminating the need to take minimum distributions after age 70½.\n\nPlus and Minus\nThe chief advantage of the Roth IRA is obvious: the ability to have investment earnings completely escape taxation. The advantage comes at a price, though: you don't get a deduction when you contribute to the Roth IRA.\n    So which is more important? It depends on your personal situation, and also on what assumptions you want to make about the future. How long before you withdraw money from your IRA? What will your tax bracket be then? What earnings can you anticipate in the interim?\n    You can do lots of fancy analysis, but the bottom line is that most people are better off in the Roth IRA. The chief reason is that the Roth IRA is effectively bigger than a regular IRA because it holds after-tax dollars. If you can take advantage of this feature of the Roth IRA by maximizing your contributions you'll add greater tax leverage to your retirement savings.\n    There are two other significant advantages to the Roth IRA. One is that the minimum distribution rules don't apply. If you're able to live on other resources after retirement, you don't have to draw on your Roth IRA at age 70½. That means your earnings continue to grow tax-free. The other big advantage is the ability to take certain early distributions without paying the early distribution penalty. In short, the Roth IRA makes it easier to keep your money in, and also easier to take your money out.\n\nEligibility\nYou can establish a Roth IRA by making a regular contribution to a Roth IRA or by converting a traditional IRA to a Roth IRA.\n    You may be eligible to make a regular contribution to a Roth IRA even if you participate in a retirement plan maintained by your employer. These contributions can be as much as $4,000 for 2006 ($5,000 if you're 50 or older by the end of the year). There are just two requirements. First, you or your spouse must have compensation or alimony income equal to the amount contributed. And second, your modified adjusted gross income can't exceed certain limits. For the maximum contribution, the limits are $95,000 for single individuals and $150,000 for married individuals filing joint returns. The amount you can contribute is reduced gradually and then completely eliminated when your modified adjusted gross income exceeds $110,000 (single) or $160,000 (married filing jointly).\n    You can convert your regular IRA to a Roth IRA if (a) your modified adjusted gross income is $100,000 or less, and (b) you're single or file jointly with your spouse. You'll have to pay tax in the year of the conversion, but for many people the long-term savings outweigh the conversion tax.\n\nDistributions\nDistributions from Roth IRAs are tax-free until you've withdrawn all your regular contributions. After that you'll withdraw your conversion contributions, if any. Special rules apply when you withdraw your conversion contributions. When you've withdrawn all your contributions (regular and conversion), any subsequent withdrawals come from earnings. The withdrawals are tax-free if you're over age 59½ and at least five years have expired sinc
66432
good question.  401k's are excellent vehicles for preparing for retirement.  The greatest part about them is that usually your company gives you free money when you participate, called a match.  The way it usually works is that you decide how much, either dollars or a percentage of your income, you want to put in to the plan.  Then you decide which investments to pick (this can be tricky without knowing what they offer).  Ask the person offering the plan to help. Use a mix.\n\nWhatever you put into the plan is deducted from your income.  Heres an example:\n\nYour income:               $40,000\nContribution amt:   5%:    $2000 \nCompany match 50c per $:   $1000 \nup to 5%                    \n\nTotal contribution:        $3000\n\n(New taxable income:$38,000)\n\nIf you do this until normal retirement age of 60 and get a 10% return on your money over that time, you'll end up with almost $1,200,000.  \n\nSince now youre only taxed on $38,000, when you decide to retire and get your money you have to pay taxes on all the money you take out (not the whole $1.2 million unless you take it all at once).  If you take it out before your 59 1/2 you will have to pay an additional 10% penalty on whatever you take out. There are exceptions.\n\nThese are pretty much the pros and cons, but if you start now and stay consistent you'll be able to retire very comfortably.
73185
The source is an excellent intro to financial terms, especially the "dictionary" which covers acronyms and phrases.\n\nOff the top of my head:\n\n1. Time value recognizes that value changes with time.  A stock option (to buy or sell stock at a fixed price) is a wasting asset that may be worth less and less as the option date approaches and worth nothing if not exercised.  A contract to erect a building three years from now must recognize that the cost of materials and labor may change by then.\n\n2.  In financial, "discount" can mean that something has been taken into consideration.  The price of a stock today discounted the fact that earnings are expected to double by next year.\n\n3.  As a mortgage is paid off monthly at a fixed amount per month, the debt remaining is less with each payment reducing the interest (but not the interest rate) and more and more of the payments will go to reducing debt as the mortgage is amortized, reduced to zero over time.\n\n4.  Compounding means that if you receive interest on a bank savings account, you also receive interest on any previous interest received and kept in the account.  Compounding may be calculated daily on the account balance (interest posted) or perhaps semi-annually or annually depending on your agreement with the bank.  By extension, If the value of stocks in your IRA increase 10% per year, the value of the investment compounds (Take say $10,000 and multiply it by 0.10 for each year up to your retirement (and it continues to compound as you take out money during retirement).  This is the hidden value in SS personal savings accounts.\n\n5.  Net Present Value relates future value with the present value.  If you invest in IT (information technology) today, what will its future value be to your company, etc.?
485173
0% forever if the money is in a Roth IRA.\n\n0% if the money is in a Traditional IRA - until you are required to withdraw the money at age 70 or so and claim the gain as regular income (not capital gains)\n\n15% if held for a year or more.\n\n35% (approximately, depending on tax bracket) if held for less than a year.
54030
What type of investment is going to held in the IRA? Stocks, mutual funds, cds?\n\nThis not a pyramid scam. From what I hear they are a reputable company. \nYou should get an IRA for yourself, it whether it is with them or another company. The most important thing is the investments being held in IRA. You want to look at past performance of the investment as well as the consistency of the investment. Look for one with consistently good returns not necessarily the highest return last year.
1051808
Sign on to www.vanguard.com or call Vanguard Fuds at 1-800-662-2739 (have patience) and they will do it for you as a "roll-over IRA".  Inquire about the minimum amount they will accept for a "no-cost" plan.\n   Vanguard is a LARGE fund family with many no-load choices. and low operating costs.  The selection of "which individual fund", however will depend on your age, retirement goals, and risk you are willing to accept.   Good luck in your choice.
1157487
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/
991333
Please talk to your 401K/IRA administator.  The rules are complex and you shouldn't trust the information you get from a bunch of strangers on the internet.  Good luck!
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A Roth IRA is an investment of after-tax money.  The current contribution limit is 4K a year.  You may withdrawl the money you have contributed at any time, for any reason without taxes or penalty.  \n\nAfter 5 years you may also withdraw the earnings for qualified expenses such as a first home purchase or educational expenses without penalty.  There are no age limits on your ability to make contributions to a ROTH IRA.  \n\nThe big advantage for younger investors of the ROTH IRA is that young people often have lower incomes and tax rates, so they will come out far ahead putting in money that they only had to pay low taxes on.
284469
You don't need to pay tax when you redraw from Roth IRA when retired. Traditional IRA only let you defer taxes.
183155
I am not sure exactly what your question is asking.  If you retire at 55, but need to access your IRA money right away, you should look into IRS rule 72t.  There are a few different methods of doing this and you need to sit down with a tax advisor to make sure that you do it right.  Click this link for an article that has more info\nhttp://ktla.trb.com/business/yourmoney/sns-yourmoney-0403moneytalk,0,7524444.story\n\nGood Luck!!!
559652
Roth IRA eligibility phases out at the following levels:\n\n    * $150,000 to $160,000: Married Filing Jointly\n    * $0 to $10,000: Married Filing Separately (and you lived with your spouse at any time during the year)\n    * $95,000 to $110,000: Single, Head of Household or Married Filing Separately (and you did not live with your spouse)\n\nGenerally speaking, a Roth IRA is the best option for *most* people, since it allows for tax-free withdrawals.  This tends to outweigh the up-front tax benefits of the traditional IRA for most people.\n\nAs for where to open your Roth IRA account, Vanguard, T Rowe Price and Fidelity all have large families of no-load funds that you can use to best fit your risk tolerance.\n\nBefore you do any of this, I'd suggest that you make a small investment in a book which will give you a solid foundation on how to invest your money.  The one I generally give to high school graduates, college graduates and newlyweds is "The Only Investment Guide You'll Ever Need" by Andrew Tobias.  It actually comes close to living up to its billing and it's an easy read.\n\nIf you'd like to learn more or get other recommendations on how to educate yourself more, click on my name and send me a note.
985867
A roth account might be good or bad for you.  They're not good for everyone.\n\nA 401k or IRA is just a type of account, and has nothing to do with how much of a return you can get from your investment.  If you are investing in mostly a diverse mix of stock funds, you should expect a long term average return of 7-9%.  In some years you will get more (like 13%), and some years you will lose money).  In either type, you'll be investing in a mix of mutual funds.  The benefit of a roth IRA has to do with taxes.\n\nHere's the benefit:  With a 401k or traditional IRA, you pay no income taxes now on the money you put in.  You pay income taxes when you withdraw the money in retirement.  With a roth IRA, you pay the income taxes now, and pay no taxes on the money you withdraw in retirement. \n\nIf your income tax rate is lower now than it will be in retirement, you do not want a roth account.  If your income tax rate will be higher in retirement than it is now, then a roth account would be good for you.\n\nHERE'S HOW YOU SWITCH:\nYou "rollover" your 401k balance to a traditional (pretax) IRA.  That means you tell the company that has your 401k to transfer the money directly into an IRA.  As long as you don't receive a check payable to yourself, you'll pay no taxes or penalties.  You then "convert" the traditional IRA to a roth IRA.  This is something the company that handles the IRA does for you.  Basically, they take taxes straight out of the IRA and send them to the IRS.  This makes the money in the IRA after tax, or "roth" money.\n\nBUT...\n\nTo be able to transfer the money from the 401k to the IRA, you'll have to have already stopped working for the company.  AND your company might have the "roth 401k" feature, which allows you to contribute to your 401k plan with after tax money and have exactly the same benefit as the roth IRA.  ALSO if your company matches your contributions to your regular 401k, that will probably outweigh any benefit you could possibly get from the roth IRA.\n\nYou need to talk to the company that manages your 401k plan to find out what your options are.  And call a company that does IRAs to find out more details on the roth IRA to find out if it would be a good fit for you.  Try Fidelity or Vanguard.