Wednesday, March 14, 2007

Roth IRA Contribution...

I'm reluctant to mention that I've made a contribution to my ROTH IRA for the year of 2006. It's because it will only be $1000 as opposed to the potential max of $4000. I'm keeping our goal of purchasing a house within a year or two in mind when I make decisions like these.

With this contribution along with my 401 (k) contributions, this will be approximately 7% of our income put away for retirement. Not bad I suppose, but that's running on partial retirement steam, we could do much better.

And unfortunately my wife's new employer restricted her from letting her open a 401 (k) until she was with the company for 6 months. Now that she's finally reached that time limit, they are in the middle of transitioning to a new retirement planner, so they aren't opening new accounts yet. They expect everything to be completed in another couple of months or so.

Though I guess that isn't so bad since I'm banking that money that's not contributed, it's going towards "the goal." Oh well, better something than nothing I always say...

3 comments:

Anonymous said...

Hi there- Just because you have only $1000 right now to put into a Roth IRA for 2006, doesn't mean you can't send in $25 a week or when you have some extra dough. I like to get in big chunks too, but I am the king of sending in small amounts.

I just purchased my first condo and even though I was saving for that, you can't stop throwing money into your Roth. Even if during the "house saving time", you only do $25/$50 every 10-15 days, its better than nothing.

Marshall Middle is making a million dollars said...

That's a thousand more than most people.

limeade said...

I think a bigger point is being missed. One of the huge advantages to having a Roth is the fact that you can withdraw your contributions at any time without penalty. This is because your contributions have already been taxed. It's the dividends and gains that you can't withdraw without penalty.

I put money in my Roth knowing that I'm going to withdraw it to purchase a rental. I'm not saying to put all your down payment money in since you need to factor some risk in, but it's something to keep in mind.

-limeade
http://fiscalmusings.blogspot.com