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73 votes
Accepted

How can someone profit from a horse as an investment?

The ROI on a racing stallion can be astronomical. American Pharoah's stud fee started at $200k per live breeding (and they can breed a tremendous number of times each season). Dressage, polo, rodeo, ...
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  • 62.9k
57 votes

I have $3500 in Rollover IRA. Should I withdraw it early and pay off my credit card debt?

Do not use your IRA to pay off this debt! If the penalties are indeed as high as you state, it's like paying almost 50% interest on your debt! Your $3500 balance is real money. You can consolidate ...
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  • 23.7k
49 votes
Accepted

Why is half of your IRA Required Minimum Distribution forfeited if you do not make minumum withdrawals by 70.5 years of age?

According to the link below, it does appear that you must take an RMD, or Required Minimum Distribution, from your IRA at age 70½, or face a 50% penalty of the RMD AMOUNT that has NOT been taken, ...
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  • 2,710
48 votes

Should I open a Roth IRA or invest in the S&P 500?

Your question indicates confusion regarding what an Individual Retirement Account (whether Roth or Traditional) is vs. the S&P 500, which is nothing but a list of stocks. IOW, it's perfectly ...
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  • 48.7k
47 votes

Should I withdraw from my IRA to pay off my credit card debt?

If it was me, I'd cut my lifestyle and be done with the debt. You make a great income and I assume you take home around 6000/month. The IRA is not very much and you will probably need it in ...
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  • 74.9k
42 votes
Accepted

Does the 'A' in IRA stand for "Account" or "Arrangement"?

It means both. The IRS currently calls them Individual Retirement Arrangements, as seen on the titles of Publications 590-A and 590-B. However, in the tax code, they are called Individual Retirement ...
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35 votes

How can someone profit from a horse as an investment?

Horses can generate income from winning horse races. The owner of the winner of the 2018 Kentucky Derby took home $1.24 million while second place received $400,000. Horses can be put out to stud, ...
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34 votes

What is so good about IRAs?

For the reasons you cite may prefer the Roth IRA where you pay tax on the money contributed now, but future withdrawals are tax free. However there is a benefit to pretax plans such as traditional ...
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  • 74.9k
33 votes
Accepted

My company is suspending its 401K match; what is the best thing to do with my money?

Based on your comment, I see no reason to stop all contributions to your 401k except for the following reasons: Your investment choices in the 401k are horrendous (bad funds, high fees) or the ...
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  • 7,998
28 votes
Accepted

When do you actually pay taxes on Roth IRA contributions?

There's no additional income tax burden created when you decide to make Roth IRA contributions, your Roth IRA contributions are taxed at the same time all your income is taxed. If you earned that $...
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  • 62.9k
27 votes

Why is half of your IRA Required Minimum Distribution forfeited if you do not make minumum withdrawals by 70.5 years of age?

You elected to defer paying taxes by contributing to an IRA. Lawmakers simply want to make sure that they collect those taxes by requiring you to either withdraw the money (incurring a tax liability) ...
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26 votes

Is it worth investing in 401(k) if a company doesn't do matching?

Besides the employer match, a 401(k) plan has other benefits that IRAs do not have: A 401(k) is convenient. The investment is automatically taken out of every paycheck. This encourages setting an ...
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22 votes

Is there a case against having an IRA?

At your income level you can't make deductible contributions to a traditional IRA and you can't contribute directly to a Roth IRA, but you can make a backdoor Roth contribution. In a Roth IRA your ...
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  • 62.9k
21 votes

I am failing to see the purpose of a Traditional IRA for someone who already has access to a 401(k)

Your assumptions are flawed or miss crucial details. An employer sponsored 401k typically limits the choices of investments, whereas an IRA typically gives you self directed investment choices at a ...
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  • 20.1k
19 votes

Should I use IRA money to pay down my student loans?

That's unlikely to be a good move. After the penalties, you would have roughly $40k-$45k to apply to your debt. But then what? You'd still have $100k of debt, with no change in your income ...
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  • 23.8k
17 votes

My company is suspending its 401K match; what is the best thing to do with my money?

It depends much upon your plans for the future and other financial information. My advice would be to make sure you are out of consumer debt and have a healthy emergency fund in place. You could ...
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  • 74.9k
17 votes

What is so good about IRAs?

So you only benefit if you are in lower tax bracket when you withdraw With a traditional IRA, you benefit the most if you are in a lower tax bracket when you withdraw, but you still benefit some if ...
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  • 28k
16 votes

What are reasonable administrative fees for an IRA?

Zero. Zero is reasonable. That's what Schwab offers with a low minimum to open the IRA. The fact is, you'll have expenses for the investments, whether a commission on stock purchase or ongoing ...
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16 votes
Accepted

Best starting options to invest for retirement without a 401k

First, check out some of the answers on this question: Oversimplify it for me: the correct order of investing When you have determined that you are ready to invest for retirement, there are two ...
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16 votes

Should I withdraw from my IRA to pay off my credit card debt?

At the risk of getting down-voted on my first post to this site, I've got to point out a couple of things here that can help. I personally got in a little over my head with debt about a decade ago. ...
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  • 3,419
16 votes

What can we do when we are stuck in a conservative 401(k)?

401(k)s are designed to provide easier access for average workers to save for retirement, and provide an incentive for employers to provide plans that help by either matching contributions, or ...
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  • 113k
15 votes
Accepted

If Roth IRAs are not reported on income tax returns, how does the IRS police them?

You do not report the Roth IRA on your 1040 because it has no implication to your current tax situation (as you fund it with after-tax dollars). Your IRA custodian(s) would report the contributions ...
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  • 34.6k
15 votes

Advice for college student: Should I hire a financial adviser or just invest in index funds?

Couple of clarifications to start off: Index funds and ETF's are essentially the same investments. ETF's allow you to trade during the day but also make you reinvest your dividends manually instead ...
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  • 14.8k
15 votes

IRA to pay credit card debt

Since I am over 59 would I be exempt from the 10% penalty? Correct, but you will pay tax on the distribution. Depending on any other income and how much you withdraw, that tax could be as low as 10%...
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  • 113k
15 votes
Accepted

Does a Roth IRA offer any explicit benefits over a Traditional IRA?

Your math is correct. As you point out, because of the commutative property of multiplication, Roth and traditional IRAs offer the same terminal wealth if your tax rate is the same when you pull it ...
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  • 14.8k
14 votes
Accepted

How is the IRA contribution limit determined?

The adjustment is made by the IRS, at the direction of the US Code allowing for this deduction. Title 26, section 219 regulates the deductions related to retirement savings, and 219 (b) specifies ...
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  • 34.6k
14 votes
Accepted

Why would I ever invest in a traditional IRA over a Roth IRA

Your confusion is that that answerer is not comparing a $5500 Roth IRA contribution to a $5500 Traditional IRA contribution. Rather, they were comparing a $3600 Roth IRA contribution to a $5000 ...
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  • 15.6k
13 votes
Accepted

Why do tax-advantaged retirement accounts have contribution limits?

If there were no contribution limits, you could shelter practically all of your income from income tax. The government would not have sufficient tax revenue. Hence, there are limits which ensure some ...
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  • 31.4k
13 votes

Withdrawing IRA early to pay off large credit card debt?

If your credit card's interest rates are not more than your 35% (25% for your tax bracket and 10% penalty), there is no way I would consider this. If you boil it down to the numbers, you are asking ...
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