72
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, ...
- 69.1k
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 ...
- 24k
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, ...
- 2,735
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 ...
- 50.6k
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 ...
- 76.1k
41
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 ...
- 115k
34
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, ...
- 5,095
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 ...
- 76.1k
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 ...
- 8,456
30
votes
My employers "401(k) contribution" is cash, not an actual retirement account. What are my options?
Based solely on the quote you posted, it sounds like they are just giving you a 6% "bonus" at the end of the year instead of a 401(k) match. Maybe they intended to set up a 401(k) plan but ...
- 131k
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 $...
- 69.1k
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) ...
- 32.7k
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 ...
- 115k
24
votes
I would like to donate my IRA to a certain charity. Will that charity be able to withdraw the money from the IRA tax free?
The charity will not be able to withdraw anything from your IRA, it is yours. Only you can withdraw from it.
In order to donate the amount you first need to withdraw it. It will be reported to you as ...
- 166k
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 ...
- 69.1k
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 ...
- 20.2k
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 ...
- 76.1k
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 ...
- 29.4k
17
votes
Accepted
How can I withdraw money from Inherited IRA and credit it to last year?
You cannot backdate a withdrawal from an IRA. The backdating of contributions is explicitly allowed in the IRC (See 26 USC 219(f)(3)), but there's no such provision for withdrawals (See 26 USC 408(d))....
- 166k
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. ...
- 3,719
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 ...
- 131k
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 ...
- 15.1k
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%...
- 131k
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 ...
- 15.1k
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 ...
- 35.7k
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 ...
- 16.9k
14
votes
Accepted
Inherited Retirement (IRA) Account (non-spouse)
The SECURE act in 2019 changed the rules on inherited IRAs (if you are not the spouse). See, for example, AARP's blurb. Before there was a set of rules to calculate Required Minimum Distributions ...
- 296
13
votes
I have $3500 in Rollover IRA. Should I withdraw it early and pay off my credit card debt?
Do not use this money to pay off debt.
As others have stated, this would be a huge waste of money.
Further, how do you have that money invested inside your IRA? The stock market is up roughly 50% ...
- 2,602
13
votes
Accepted
Where can I transfer rollover IRA funds to without it becoming income?
You will need to move it to a Traditional IRA if you want to avoid incurring any taxes in the current year. A Roth IRA is for after tax money.
Also, you need to be very careful about how you do the ...
- 53k
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