You can have many IRAs. There are many reasons to consolidate them or keep them separate. I default to having a separate IRA for rollovers.
Yes, agreed on the rollover from the 401(k), it should be separate.
Robert, for example, you don't want to mix pre-tax money (from rollovers) with an after tax IRA. Thanks for mentioning that.
Scott, Steven and Surfsled, we have you guys on deck!
A separate account for rollovers may allow you to roll it to a 401(k) in the future. It may have better legal protections in your state.
Richard, thanks for the clarification. I still believe in a balanced portfolio for this taxable amount. We usually don't make specific investment recommendations in this format. At least I do not as I can't reach out to you, it the recommendation runs into trouble. Love vanguard funds, I would start there.
Richard, I would recommend looking at the entire mix when incorporating these funds into your plan.
Scott can you clarify your question? In your last sentence you mention a "401(k) IRA." A 401k plan is simply called a 401k, it's not an IRA.
Often times, I see cases where individuals may benefit from generating taxable income in the years around retirement.
So, it could be that distributions from IRAs, etc., are appropriate. It takes reviewing the entire mix of your assets and accounts.
Scott, if you still have room to make an additional contribution to your 401k plan, then by all means do that since you have maxed out your Roth. If there's no more room, then now is a fine time to start a diversified long term investment portfolio. Check out Vanguard - they have some very good asset allocation funds that allow you to diversify well even with a modest investment.
Scott, the 401(k) question depends on if you are already contributing, your age and a bunch of other factors. If you are not funding your 401(k), you probably should at least as much as you need to get your employer match. if this is going to be after tax money, I like index funds. You might have a problem with diversification and meeting fund minimums. Vanguard has a series of funds that they call LifeStrategy funds. You might check them uot.
Scott, I typically look at 401(k)'s first, up to the company match, and then review your options. Agree with Frank, there are many factors.
Scott, how old are you? ROTH IRAs are terrific vehicles and congratulations for choosing it. Do you have emergency money set aside? That is a very important piece of the investment pie. Before you add to 401(k), make sure you have the emergency money for 6 months of NET income needs.
For our new shift of advisers, here is Carlos' original question: Have student loan debt of 40k grand. Should I save for retirement or pay off debt? 43 yrs old. current assets: 11k savings, 30K Roth IRA. 100k equity on home.
Steven, I believe in passive allocations, so am not the best to give a tactical answer. I would always have an international target.
Scott, if you had a loss of job, had to replace car, and furnace, and the market dropped 50%... would you have access to funds?
Steven, I think Kiplinger editors will agree with me that market timing is a bad idea and buying individual stocks is an equally bad idea for most people. Investing in Europe can be a part of any portfolio diversification but in little pieces. Start with your big U.S companies and suppplement with foreign and smaller companies. Look for a good Europe fund and go for it...but not too much.
Scott, the reason you keep emergency money in a savings account or short term bond fund is so that you do not need to sell stocks at a potentially bad time (down market).
Carlos, don't completely give up on savings for retirement - it's difficult to catch up later in life. Even if you max out your contribution to your Roth IRA every year, you should have enough to work down your student debt.
Albert and AppleZ, you're on deck.
I met too many who counted on home equity, credit, or other means for emergencies. I would perhaps look to have something safe in case.
Surfsled, I would typically look at this by preparing a mock tax return. It often can be advantageous or not to tap an IRA.
Scott, holding cash may seem like a wasted opportunity, but you need to match the purpose of funds with the associated risk that it covers. Emergencies are an immediate risk and you need cash to cover immediate risks. Inflation and longevity are long term risks, and you need long term investments to match up with those types of risks.
Carlos, a new crop of advisers here now. It may not be an all or nothing decision. You could do both, some into paying principal of loan off and some into retirement.
Surfsled, if you take SS at 62 instead of waiting, you are going to get a 25% reduction in your benefit and it is permanent. Avoid doing that if you can. If you live to your normal life expectancy, you will draw more out of the system by waiting.
By 84 I assume the deferral on the SS makes a lot of sense. But, it is a multifaceted decision, involving your other resources.
Surfsled, this is a complex question. It depends on how much assets you have to draw from over the next 4 years if you wait on SS at age 66. As Frank said, if you take it early (62), you will lose 25% of your benefit.
Albert, I think it makes sense to maintain a diverse mix of Roth / pre-tax / taxable assets. I can't advise on where the market goes.
Albert, when a client asks me this, I run some cash flow projections. It depends on your age, tax brackets and other things. One area where it seems to consistently pay off in the long run is when a person has to take minimum distributions and doesn't need the money for living expenses. I would be a good idea to speak with a planner and havehim/her run some projections for you.
My guess what is more likely than taxing Roth distributions is counting that as income to reduce deductions, or increase SS taxability.