Comments on: Investment Tips – Fund a Roth IRA

By: Derek Chamberlain

Derek Chamberlain — Mon, 01 Sep 2014 16:54:40 +0000

AP,
Things are a bit tricky when it comes to IRAs. A ROTH IRA lets you withdraw the money early because you are paying with AFTER tax money. So, any CONTRIBUTIONS can be withdrawn without penalty.

For a NORMAL IRA, you will pay the penalty for early withdrawal. Does that make sense?

By: AP

AP — Mon, 01 Sep 2014 07:37:18 +0000

Hey Derek,

I checked on Scottrade site and it says that Withdrawals prior to age 59½ may incur a 10% IRS penalty as well as income taxes!

Your article says that we can easily withdraw our contribution amount without penalty!

I am a little confused. Could you please clarify? Thanks!

By: Derek Chamberlain

Derek Chamberlain — Thu, 23 Jan 2014 15:26:44 +0000

I’ve heard mention several times the best way is to:
1) fund 401K up to employer match
2) Max out Roth IRA ($5,500 per spouse)
3) fund 401K up to limit (currently $17,500 per spouse)

Not sure if that helps with your decision making or not. Some folks find they need to back down on the 401K to the employer match and fund the Roth IRA vs. maxing out 401K and missing out on the Roth IRA all together. Good luck and thanks for commenting!

By: Brock @cleverdude

Brock @cleverdude — Thu, 23 Jan 2014 14:30:07 +0000

This is something we’ve been looking at for some time. I have a funded pension account and 401K contributions through my employer (with matching funds), but we want to get a Roth going as well. Great tip!