Opening an IRA for my husband
March 19, 2015 5:59 AM Subscribe
I'd like to open a spousal Roth IRA for my husband, but I'm unsure of the basics. Please help!
Does he need to open it and then we set it up so that I'm funding it? Or can I open it in his name? Does it need to be designated as a spousal IRA at whatever institution we open it, or are we basically just opening a regular Roth IRA? My Roth IRA is currently with T Rowe Price and their website says they offer spousal IRAs but it just takes you to the page to set up a new account for yourself.
I'm also looking for recommendations on where to open it. I'd like it to be somewhere with access to low-cost mutual funds/index funds. Most importantly, I wouldn't be funding this with a large initial investment (and a lot of places have minimum opening requirements of $1,000 or more) so I'm looking for a place that waives the opening requirement if you set up direct deposit of a certain amount every month. (T Rowe Price used to do this, but it doesn't look like they do anymore.) Thanks!
Does he need to open it and then we set it up so that I'm funding it? Or can I open it in his name? Does it need to be designated as a spousal IRA at whatever institution we open it, or are we basically just opening a regular Roth IRA? My Roth IRA is currently with T Rowe Price and their website says they offer spousal IRAs but it just takes you to the page to set up a new account for yourself.
I'm also looking for recommendations on where to open it. I'd like it to be somewhere with access to low-cost mutual funds/index funds. Most importantly, I wouldn't be funding this with a large initial investment (and a lot of places have minimum opening requirements of $1,000 or more) so I'm looking for a place that waives the opening requirement if you set up direct deposit of a certain amount every month. (T Rowe Price used to do this, but it doesn't look like they do anymore.) Thanks!
Best answer: Answering the second part: Fidelity's Roth accounts require a $2,500 minimum or a $200/mo deposit. Sharebuilder doesn't have any minimum opening requirements at all, but it does charge a fee for every monthly deposit/investment, which takes a chunk out that doesn't feel like much but really is. That said, some of the no-transaction-fee accounts only offer ETFs and funds with a higher expense ratio, so you're going to lose a cut one way or the other.
Given that you want a Roth, which is post-tax money, It might be better to squirrel away the monthly amount into a highish-interest savings account until you have enough for a minimum initial deposit. That would give you more flexibility, and you'd likely end up ahead compared to a investment account starting from zero that takes perhaps $5-10 in transaction fees for every monthly deposit.
posted by holgate at 6:27 AM on March 19, 2015 [1 favorite]
Given that you want a Roth, which is post-tax money, It might be better to squirrel away the monthly amount into a highish-interest savings account until you have enough for a minimum initial deposit. That would give you more flexibility, and you'd likely end up ahead compared to a investment account starting from zero that takes perhaps $5-10 in transaction fees for every monthly deposit.
posted by holgate at 6:27 AM on March 19, 2015 [1 favorite]
Best answer: Lowest opening minimum I found when I did this (For a SEP-IRA, not Roth) was Vanguard, which had a $1000 buy in for some of their index funds. I stuck a percentage of my paychecks in a savings account until I had the minimum and then just contributed from there (no transaction fees or anything like that even if I'm just putting a few dollars in).
posted by bradbane at 7:27 AM on March 19, 2015 [2 favorites]
posted by bradbane at 7:27 AM on March 19, 2015 [2 favorites]
Best answer: Schwab has a $1000 minimum but it is waived if you set up monthly transfers of $100 or more. Some types of trades have a transaction fee, but many mutual funds are exempted (and some ETFs as well).
posted by nat at 7:37 AM on March 19, 2015
posted by nat at 7:37 AM on March 19, 2015
Best answer: The I in IRA stands for "individual." So the IRA belongs to your husband regardless of where the money comes from. The term spousal IRA is a little misleading. It just means that the spouse is not required to have earned income themselves for eligibility. The contribution can come from the earnings of the other spouse as long as you are married and file a joint tax return. The IRA custodian and the IRS don't distinguish a spousal IRA or even know where the contribution came from other than your joint tax return. Your husband simply opens an IRA account at a custodian in his own name and you write a check to contribute to it.
Vanguard will allow you to open an IRA with a $1000 minimum but only for their Target Retirement funds. All other funds have a $3000 minimum. Make sure you opt for all email statements to avoid the $20 annual fee.
At Fidelity I think you can start an IRA with as little as $500, but you should check if there are annual fees. They have pretty good telephone customer service so call and find out. If you stick to their Spartan index funds, the expense ratios are as good as Vanguard, which has much higher minimum IRAs.
Another possibility is Schwab, who waive their minimum if you contribute $100 per month. Just be careful to select the lowest expense index funds. Don't let them upsell you to managed funds.
posted by JackFlash at 11:22 AM on March 19, 2015
Vanguard will allow you to open an IRA with a $1000 minimum but only for their Target Retirement funds. All other funds have a $3000 minimum. Make sure you opt for all email statements to avoid the $20 annual fee.
At Fidelity I think you can start an IRA with as little as $500, but you should check if there are annual fees. They have pretty good telephone customer service so call and find out. If you stick to their Spartan index funds, the expense ratios are as good as Vanguard, which has much higher minimum IRAs.
Another possibility is Schwab, who waive their minimum if you contribute $100 per month. Just be careful to select the lowest expense index funds. Don't let them upsell you to managed funds.
posted by JackFlash at 11:22 AM on March 19, 2015
Response by poster: Thanks you guys, this is all really helpful! I think we'll start with Schwab.
posted by skycrashesdown at 1:53 PM on March 19, 2015
posted by skycrashesdown at 1:53 PM on March 19, 2015
Additional info, possibly helpful? My credit union has a person whose job it is to help people with investments. She helped me and my husband get set up with IRAs, and answered all my squillions of questions.
posted by TheClonusHorror at 7:24 PM on March 20, 2015
posted by TheClonusHorror at 7:24 PM on March 20, 2015
« Older Current best practices for updating social media... | Any informed assessments of Allied Insurance? Newer »
This thread is closed to new comments.
We do ours through Fidelity, and there's no minimum contribution.
There's information about contribution limits and tax stuff over here.
posted by hought20 at 6:23 AM on March 19, 2015 [1 favorite]