IRAs, how do they work?
April 10, 2018 6:56 PM Subscribe
I understand the difference between traditional and Roth IRAs... and not much else. Where should I put my money and what the heck am I supposed to do with it once it's in there?
I'm currently contributing to a 403(b) with employer matching, at the maximum amount that the company will match. I'm in my early 30s. I currently have enough in savings to contribute the maximum amount to an IRA for both 2017 and 2018, so I'd like to get this figured out before tax day. However, I've been putting off dealing with this for a few months because every time I start to do research I get overwhelmed and avoid dealing with it. I understand the basic pros and cons of traditional vs. Roth IRAs, but when it comes to figuring out where to open an account and comparing fees and especially deciding on an investment portfolio my brain starts to tune out. Most of the sites that get recommended on the internet as "investment 101" like r/personalfinance and Nerdwallet have not been particularly helpful for clarifying some of my questions.
How much do you put into a traditional vs a Roth IRA when you're not expecting to be in a different tax bracket when you retire? Right now my salary puts me in the middle of my current tax bracket, and the amount of money I would need to be making to push me into the next one is laughable considering that I work in a relatively low paying field. Most of the articles I read suggested putting money into both a traditional and Roth IRA under these circumstances, but provided little to no guidance as to what percentage of the money should go in each IRA. One article did say that now is a good time to put money into a Roth IRA because of the GOP tax cuts - is this accurate and if so, would it make more sense to put all of my money or just a large portion into a Roth IRA?
Where should I open an account? It feels like there's an endless number of pros and cons with regards to fees and services. I'm looking for good customer service, reasonable fees, and some level of assistance with choosing investments. I'm relatively risk averse but I don't want the money to just sit there, and ultimately I don't really understand how to allocate assets accordingly. Basically, I need a provider that will make this process as stupid-proof as possible.
I'm currently contributing to a 403(b) with employer matching, at the maximum amount that the company will match. I'm in my early 30s. I currently have enough in savings to contribute the maximum amount to an IRA for both 2017 and 2018, so I'd like to get this figured out before tax day. However, I've been putting off dealing with this for a few months because every time I start to do research I get overwhelmed and avoid dealing with it. I understand the basic pros and cons of traditional vs. Roth IRAs, but when it comes to figuring out where to open an account and comparing fees and especially deciding on an investment portfolio my brain starts to tune out. Most of the sites that get recommended on the internet as "investment 101" like r/personalfinance and Nerdwallet have not been particularly helpful for clarifying some of my questions.
How much do you put into a traditional vs a Roth IRA when you're not expecting to be in a different tax bracket when you retire? Right now my salary puts me in the middle of my current tax bracket, and the amount of money I would need to be making to push me into the next one is laughable considering that I work in a relatively low paying field. Most of the articles I read suggested putting money into both a traditional and Roth IRA under these circumstances, but provided little to no guidance as to what percentage of the money should go in each IRA. One article did say that now is a good time to put money into a Roth IRA because of the GOP tax cuts - is this accurate and if so, would it make more sense to put all of my money or just a large portion into a Roth IRA?
Where should I open an account? It feels like there's an endless number of pros and cons with regards to fees and services. I'm looking for good customer service, reasonable fees, and some level of assistance with choosing investments. I'm relatively risk averse but I don't want the money to just sit there, and ultimately I don't really understand how to allocate assets accordingly. Basically, I need a provider that will make this process as stupid-proof as possible.
If you want to make a 2017 contribution that is deductible, you need to do it RSN (real soon now). Go to a local credit union and open an IRA there. You can leave it as cash for a period of time until you answer the other questions to your satisfaction.
The answer to "Where should I put my money?" and "What should I do with it?" is different for every person, but those questions apply to any investment, not just to IRAs. Find someone that you feel you can trust to help with the answers. As Rash says, expect to pay for the assistance.
At your age, you have about four decades to go before you have to start taking distributions. Don't make assumptions now about what your tax bracket will be then. Congress has not stopped tinkering with the tax system. The point of the IRA, either flavor, is that you are hoping that your funds will grow over that time without you having to pay tax on the growth as you go along, even if you buy and sell assets.
posted by megatherium at 7:34 PM on April 10, 2018 [1 favorite]
The answer to "Where should I put my money?" and "What should I do with it?" is different for every person, but those questions apply to any investment, not just to IRAs. Find someone that you feel you can trust to help with the answers. As Rash says, expect to pay for the assistance.
At your age, you have about four decades to go before you have to start taking distributions. Don't make assumptions now about what your tax bracket will be then. Congress has not stopped tinkering with the tax system. The point of the IRA, either flavor, is that you are hoping that your funds will grow over that time without you having to pay tax on the growth as you go along, even if you buy and sell assets.
posted by megatherium at 7:34 PM on April 10, 2018 [1 favorite]
You can set up an account with Vanguard in minutes - bank transfer of funds in takes about 3 business days. Once you have more than $10,000 in, I believe annual fees are 0.4%. At your age you should be in a total stock market index fund, such as VTSMX
posted by Pressed Rat at 7:40 PM on April 10, 2018 [8 favorites]
posted by Pressed Rat at 7:40 PM on April 10, 2018 [8 favorites]
I'd put 50% into each type of IRA. One often-overlooked advantage of Roth IRAs is that you can take much larger one-time withdrawals in retirement without triggering taxes.
As a concrete example: Let's say that, for your 62nd birthday, you decide you want to take 20% of your retirement savings and go on a $200,000 around-the-world cruise. To withdraw that kind of money from a traditional IRA means $200,000 in taxable income, while withdrawing that same amount from a Roth IRA means $0 in taxable income.
Vanguard is generally well-regarded as an IRA provider. If you go to their website, you can sign up and create an account immediately, give them your bank account information, and have it funded (hopefully) by Monday, which is your last day to make 2017 contributions.
Taxes were higher in 2017 than they are in 2018, so money going into a 2017 IRA saves you more off of your taxes than does money going into a 2018 IRA. On that note, if you've already filed your 2017 taxes and make a traditional IRA contribution, you'll need to file an amended tax return to get the tax benefit from it. To save that hassle, it might be worth it to contribute to a 2017 Roth and a 2018 traditional, despite the small difference in tax benefit (~$100 or so, probably)
Vanguard has a simple page that helps you choose investments. A mix of the four funds featured on that page will be fine as long as the entire economy doesn't collapse.
You don't have much time for 2017 contributions. If you want to make them, get started tonight.
posted by Hatashran at 7:42 PM on April 10, 2018 [2 favorites]
As a concrete example: Let's say that, for your 62nd birthday, you decide you want to take 20% of your retirement savings and go on a $200,000 around-the-world cruise. To withdraw that kind of money from a traditional IRA means $200,000 in taxable income, while withdrawing that same amount from a Roth IRA means $0 in taxable income.
Vanguard is generally well-regarded as an IRA provider. If you go to their website, you can sign up and create an account immediately, give them your bank account information, and have it funded (hopefully) by Monday, which is your last day to make 2017 contributions.
Taxes were higher in 2017 than they are in 2018, so money going into a 2017 IRA saves you more off of your taxes than does money going into a 2018 IRA. On that note, if you've already filed your 2017 taxes and make a traditional IRA contribution, you'll need to file an amended tax return to get the tax benefit from it. To save that hassle, it might be worth it to contribute to a 2017 Roth and a 2018 traditional, despite the small difference in tax benefit (~$100 or so, probably)
Vanguard has a simple page that helps you choose investments. A mix of the four funds featured on that page will be fine as long as the entire economy doesn't collapse.
You don't have much time for 2017 contributions. If you want to make them, get started tonight.
posted by Hatashran at 7:42 PM on April 10, 2018 [2 favorites]
How much do you put into a traditional vs a Roth IRA when you're not expecting to be in a different tax bracket when you retire?
If you're in the 15% tax bracket now, I'd put it all in a Roth IRA. The extra temporary money you might get from a pre-tax conventional IRA could easily be eaten up if taxes go up in the future (easily possible). Even at the 25% bracket, I'd probably still go entirely in the Roth. Chances are good that the Roth will outperfom, and even if it's not clear which will be better, Roth's have an important benefit that traditional IRAs do not - you may remove the principle of the IRA at any time without penalty. This makes for a really good safety net if you get in major financial trouble down the line. It's never a good thing to have to pull money out of retirement savings, but just being able to withdraw what you put in and not owe a dime beats having to pay an early withdrawal penalty plus taxes.
Where should I open an account?
You can make life simple and just open a Vanguard target fund. It's an extremely solid company with low fees and a fund that requires no thought on your part. As you age, it will automatically shift into less risky investments. If you want to be slightly more hands on (and from what you've written, you probably don't), you can manually set up the three fund portfolio and handle rebalancing it yourself. It'll save you a bit of money but require your time and effort. And with the fund minimums, you would have to go three fund over a few years and then start rebalancing.
posted by Candleman at 7:43 PM on April 10, 2018 [1 favorite]
If you're in the 15% tax bracket now, I'd put it all in a Roth IRA. The extra temporary money you might get from a pre-tax conventional IRA could easily be eaten up if taxes go up in the future (easily possible). Even at the 25% bracket, I'd probably still go entirely in the Roth. Chances are good that the Roth will outperfom, and even if it's not clear which will be better, Roth's have an important benefit that traditional IRAs do not - you may remove the principle of the IRA at any time without penalty. This makes for a really good safety net if you get in major financial trouble down the line. It's never a good thing to have to pull money out of retirement savings, but just being able to withdraw what you put in and not owe a dime beats having to pay an early withdrawal penalty plus taxes.
Where should I open an account?
You can make life simple and just open a Vanguard target fund. It's an extremely solid company with low fees and a fund that requires no thought on your part. As you age, it will automatically shift into less risky investments. If you want to be slightly more hands on (and from what you've written, you probably don't), you can manually set up the three fund portfolio and handle rebalancing it yourself. It'll save you a bit of money but require your time and effort. And with the fund minimums, you would have to go three fund over a few years and then start rebalancing.
posted by Candleman at 7:43 PM on April 10, 2018 [1 favorite]
At your income level, you can't afford professional assistance. Fortunately, for the average person, professional assistance is not worth it. In fact, it's generally a scam. Understand up front that any broker offering to advise you on your money is actually trying to sell you something, and I bet you can guess without my telling you whose interests he will have at heart.
People really struggle with this, but, I promise you, if you think your tax rate is going to be the same at retirement as it is now, Roths and traditional IRAs are an exact wash in terms of the ultimate total of after-tax money in your pocket. The issue, of course, is that we can't confidently predict the future. Since the bulk of your retirement savings is in a pre-tax account (the 403(b)), there is something to be said for hedging a bit against tax rates going up generally by putting the remaining money into a Roth. That is, having those post-tax dollars available would be a bit of a cushion in a world where your 403(b) distributions are being taxed at a higher rate than you might expect. But the important thing to understand here is that, as you can't predict the future, neither decision is on its face a foolish one.
What would be foolish is paying a lot of fees. Fees are the great risk for someone at your income level.
What seem like small amounts (only 1%) can end up having a big effect on your ultimate results, so you should spend as little as you can possibly get away with. Fortunately, that's pretty easy. Everyone recommending Vanguard is right. You don't say what your other investments are, so it's hard to put an investment in the context of the rest of your portfolio, but you should be fine picking the Target Retirement date that matches your intentions. It will cost you about .2-.3% a year. You should not pay much more than that, wherever you go. (Vanguard also has a $20/year account maintenance fee which will be waived if you agree to e-documents.) Opening an account is easy, but you only have a handful of days left to make a contribution for 2017, so you should start now. Put it in and leave it.
I'm sure you know this, but just in case: your total contributions (if you open both a traditional and a Roth IRA) cannot exceed the maximum. You can't put the maximum into both. Note also that, for those participating in an employer plan, traditional IRAs begin to phase out deductibility around $65,000 AGI, so if you're earning more than that, there really isn't any advantage to a traditional IRA over a Roth (in fact, nondeductible IRA contributions can be a big paperwork headache).
posted by praemunire at 8:30 PM on April 10, 2018 [6 favorites]
People really struggle with this, but, I promise you, if you think your tax rate is going to be the same at retirement as it is now, Roths and traditional IRAs are an exact wash in terms of the ultimate total of after-tax money in your pocket. The issue, of course, is that we can't confidently predict the future. Since the bulk of your retirement savings is in a pre-tax account (the 403(b)), there is something to be said for hedging a bit against tax rates going up generally by putting the remaining money into a Roth. That is, having those post-tax dollars available would be a bit of a cushion in a world where your 403(b) distributions are being taxed at a higher rate than you might expect. But the important thing to understand here is that, as you can't predict the future, neither decision is on its face a foolish one.
What would be foolish is paying a lot of fees. Fees are the great risk for someone at your income level.
What seem like small amounts (only 1%) can end up having a big effect on your ultimate results, so you should spend as little as you can possibly get away with. Fortunately, that's pretty easy. Everyone recommending Vanguard is right. You don't say what your other investments are, so it's hard to put an investment in the context of the rest of your portfolio, but you should be fine picking the Target Retirement date that matches your intentions. It will cost you about .2-.3% a year. You should not pay much more than that, wherever you go. (Vanguard also has a $20/year account maintenance fee which will be waived if you agree to e-documents.) Opening an account is easy, but you only have a handful of days left to make a contribution for 2017, so you should start now. Put it in and leave it.
I'm sure you know this, but just in case: your total contributions (if you open both a traditional and a Roth IRA) cannot exceed the maximum. You can't put the maximum into both. Note also that, for those participating in an employer plan, traditional IRAs begin to phase out deductibility around $65,000 AGI, so if you're earning more than that, there really isn't any advantage to a traditional IRA over a Roth (in fact, nondeductible IRA contributions can be a big paperwork headache).
posted by praemunire at 8:30 PM on April 10, 2018 [6 favorites]
One other note - unless your 403(b) is a Roth, you already have pre-tax retirement savings, so if you do want some of both, you can still go with a Roth IRA and have a mix of the two.
posted by Candleman at 10:10 PM on April 10, 2018
posted by Candleman at 10:10 PM on April 10, 2018
Use Vanguard. It’s not worth it to pay for financial advice unless you have more than $100K.
Open up a Roth IRA. Honestly, there’s nothing wrong with a Traditional IRA either, but Roth’s are great because you can withdraw the principal (IE not the growth/returns/“interest”) at any time with no penalty.
Once the Roth IRA is open, invest your funds in a Vanguard Target Date 20XX fund, where 20XX is around when you plan to retire. These funds are great for investors like you & me because they are essentially “set it and forget it.” Every few years, Vanguard tweaks the find ratio so that you’re carrying the appropriate amount of risk/potential for where you are on your path to retirement.
It’s April 10. You need to start this *tomorrow* if you want this to be complete by tax time. You have enough time, but definitely call tomorrow. Their phone service is great and they answer even my stupidest of questions with kindness. You can do this!
Btw: good job saving up for retirement! Future-you will thank you.
posted by samthemander at 11:30 PM on April 10, 2018 [2 favorites]
Open up a Roth IRA. Honestly, there’s nothing wrong with a Traditional IRA either, but Roth’s are great because you can withdraw the principal (IE not the growth/returns/“interest”) at any time with no penalty.
Once the Roth IRA is open, invest your funds in a Vanguard Target Date 20XX fund, where 20XX is around when you plan to retire. These funds are great for investors like you & me because they are essentially “set it and forget it.” Every few years, Vanguard tweaks the find ratio so that you’re carrying the appropriate amount of risk/potential for where you are on your path to retirement.
It’s April 10. You need to start this *tomorrow* if you want this to be complete by tax time. You have enough time, but definitely call tomorrow. Their phone service is great and they answer even my stupidest of questions with kindness. You can do this!
Btw: good job saving up for retirement! Future-you will thank you.
posted by samthemander at 11:30 PM on April 10, 2018 [2 favorites]
Also! Remember that there are two approaches in life: optimizers and satisficers. This applies to investing too.
Optimizers tweak every little nuance of everything so as to get every investment “perfect.” They spend time, energy and money to ensure their dollars work 100% as hard as they can.
Satisficers seek out things that meet their needs, and then decide to go with the first option that meets their needs... and then don’t worry about it anymore. They put their money in places that are generally considered smart investments and let it grow slowly over time, without frequent changes to optimize their portfolio. They see financial growth, although perhaps not as much (or perhaps more financial growth!) as the optimizers - much like how driving 70mph might get you to work 2 minutes earlier than driving 60mph, but also increases your stress/risk.
My point is, don’t let worries about “Roth vs traditional” be the barrier that holds you back. Just make a choice for this year and live with it - by saving the money in an IRA, you’re already satisfying your basic needs, and everything else is just an optimization.
posted by samthemander at 11:38 PM on April 10, 2018 [3 favorites]
Optimizers tweak every little nuance of everything so as to get every investment “perfect.” They spend time, energy and money to ensure their dollars work 100% as hard as they can.
Satisficers seek out things that meet their needs, and then decide to go with the first option that meets their needs... and then don’t worry about it anymore. They put their money in places that are generally considered smart investments and let it grow slowly over time, without frequent changes to optimize their portfolio. They see financial growth, although perhaps not as much (or perhaps more financial growth!) as the optimizers - much like how driving 70mph might get you to work 2 minutes earlier than driving 60mph, but also increases your stress/risk.
My point is, don’t let worries about “Roth vs traditional” be the barrier that holds you back. Just make a choice for this year and live with it - by saving the money in an IRA, you’re already satisfying your basic needs, and everything else is just an optimization.
posted by samthemander at 11:38 PM on April 10, 2018 [3 favorites]
Don't worry about splitting the money in between the two types of accounts. Most people just pick one or another and if their circumstances change (or if they'd like to diversify a bit) they just change the next year's contribution.
And I too recommend the target retirement date funds. "Risk averse" for a person in their 30s means one thing but when you plug that phrase into Google you'll get a ton of recommendations for people in their late 50s and 60s who are going to retire soon and don't want to get screwed by an unfortunately timed market downturn. You, on the other hand, have the gift of time, and can be confident that the market will have time to recover before you retire.
posted by acidic at 12:12 AM on April 11, 2018
And I too recommend the target retirement date funds. "Risk averse" for a person in their 30s means one thing but when you plug that phrase into Google you'll get a ton of recommendations for people in their late 50s and 60s who are going to retire soon and don't want to get screwed by an unfortunately timed market downturn. You, on the other hand, have the gift of time, and can be confident that the market will have time to recover before you retire.
posted by acidic at 12:12 AM on April 11, 2018
Depending on your income, you may not be able to contribute tax deductable to an IRA when you are already contributing to another tax deductible vehicle such as your 403b. Deductible contributions to IRA as are phased out at certain income brackets for those already participating in a retirement plan through their work including 401K and 403b.
posted by TestamentToGrace at 4:57 AM on April 11, 2018
posted by TestamentToGrace at 4:57 AM on April 11, 2018
Another vote for Vanguard target retirement funds. Vanguard has low costs/fees (which matter as they will eat into your earnings). The target retirement funds are really “set it and forget it” — they auto-rebalance themselves from stocks to bonds as retirement gets closer. They are market index funds, meaning they track the performance of the market as a whole. Over the long term, you can’t beat the market as a whole*, so an index fund is ideal. Plus their website is very usable, to check performance, change contribution level, etc.
*Source: Naked Economics by Charles Wheelan
posted by snowmentality at 5:08 AM on April 11, 2018
*Source: Naked Economics by Charles Wheelan
posted by snowmentality at 5:08 AM on April 11, 2018
If Vanguard is too intimidating, what about opening account(s) with a robo-advisor like Betterment or Wealthfront? Wealthfront gives the first $15k managed free (using referral links, which are easy to find from a quick search) so you could essentially have them balance your portfolio in low-cost funds with an easy interface for years without thinking about it.
posted by mosst at 6:42 AM on April 11, 2018
posted by mosst at 6:42 AM on April 11, 2018
If Vanguard is too intimidating, what about opening account(s) with a robo-advisor like Betterment or Wealthfront?
A target date fund is literally set and forget. All you do is say what year you hope to retire in to select the correct fund and put more money in when you can. VFIFX's expense ratio is 0.15% which includes the management aspects. Robo-advisors might have some benefit to people in post-tax accounts with tax loss harvesting, but paying 0.25% management fee is not advantageous without it. It seems like a small amount but it will add up to quite a bit over the ~30 years that OP has until retirement.
posted by Candleman at 8:49 AM on April 11, 2018 [2 favorites]
A target date fund is literally set and forget. All you do is say what year you hope to retire in to select the correct fund and put more money in when you can. VFIFX's expense ratio is 0.15% which includes the management aspects. Robo-advisors might have some benefit to people in post-tax accounts with tax loss harvesting, but paying 0.25% management fee is not advantageous without it. It seems like a small amount but it will add up to quite a bit over the ~30 years that OP has until retirement.
posted by Candleman at 8:49 AM on April 11, 2018 [2 favorites]
nth-ing Vanguard target date funds. Very easy to set up and very small fees. You can just park it and forget about it. I don't think that the Roth vs. Tradition decision is terribly important for you. I'd probably go with a Roth, but you won't go wrong either way.
posted by agog at 12:48 PM on April 11, 2018 [1 favorite]
posted by agog at 12:48 PM on April 11, 2018 [1 favorite]
step 1: call or go online with your bank today or tomorrow, ask to open a Roth IRA for 2017 tax year, fully fund it ($5500).
this will complete the IRA funding before this tax year's deadline without changing your taxable income and forcing you to redo your taxes. Get yourself some breathing room.
posted by the man of twists and turns at 2:23 PM on April 11, 2018
this will complete the IRA funding before this tax year's deadline without changing your taxable income and forcing you to redo your taxes. Get yourself some breathing room.
posted by the man of twists and turns at 2:23 PM on April 11, 2018
step 2: open an account with Black Rock, Vanguard, Charles Schwab or another low-cost provider. Fully fund it via bank transfer for year 2018 (another $5500), and also roll over the IRA from your bank. Bank and fund company can help you with that part.
Long story short, an IRA (Individual Retirement Account) is a designation for tax purposes. You can hold lots of different things in a designated IRA: savings account, CDs, stocks, bonds, mutual funds, REITS, gold (don't do that), cash - the IRA treatment is for tax categorization and comes with a few rules.
The main difference between traditional and Roth IRAs is that traditional accounts are not taxed when the money goes in, but are taxed when the money comes out; the money put in is deducted from your taxable income. Roth accounts are taxed when the money goes in, and not taxed when it comes out; the money put in is NOT deducted from your taxable income.
There are other rules too: money can't be removed until the year you turn 59 and 1/2, except in a few specific circumstances, and you MUST start removing money from a traditional IRA the year you turn 70 and 1/2. And things about inheritance and all that which I won't get into.
How much do you put into a traditional vs a Roth IRA when you're not expecting to be in a different tax bracket when you retire?
I like using Roths for future planning purposes but in your situation it doesn't matter much. Rule of thumb: low bracket now, higher later = Roth. High bracket now, lower later = Traditional. Same bracket all the way through? Coin flip.
One article did say that now is a good time to put money into a Roth IRA because of the GOP tax cuts - is this accurate and if so, would it make more sense to put all of my money or just a large portion into a Roth IRA?
Depends on your individual tax situation. From what you've said, sounds like your tax liability might be low this year, and you have the money saved, so I'd recommend a Roth for 2017 and 2018. Really think takes will go lower?
Where should I open an account? It feels like there's an endless number of pros and cons with regards to fees and services. I'm looking for good customer service, reasonable fees, and some level of assistance with choosing investments.
see above. The thing you can control is 1) tax exposure and 2) fees. Look for options with fees below 1%, preferably below 0.2%
Most providers will offer something called a "Target Date" fund, which will have a name like "Target 2035" or "Life 2050." The year you pick is the year you want to retire around. The funds are managed to adjust their risk/return balance as that date gets closer.
and ultimately I don't really understand how to allocate assets accordingly. Basically, I need a provider that will make this process as stupid-proof as possible.
Lots of good advice here, and in this thread.
posted by the man of twists and turns at 2:46 PM on April 11, 2018
Long story short, an IRA (Individual Retirement Account) is a designation for tax purposes. You can hold lots of different things in a designated IRA: savings account, CDs, stocks, bonds, mutual funds, REITS, gold (don't do that), cash - the IRA treatment is for tax categorization and comes with a few rules.
The main difference between traditional and Roth IRAs is that traditional accounts are not taxed when the money goes in, but are taxed when the money comes out; the money put in is deducted from your taxable income. Roth accounts are taxed when the money goes in, and not taxed when it comes out; the money put in is NOT deducted from your taxable income.
There are other rules too: money can't be removed until the year you turn 59 and 1/2, except in a few specific circumstances, and you MUST start removing money from a traditional IRA the year you turn 70 and 1/2. And things about inheritance and all that which I won't get into.
How much do you put into a traditional vs a Roth IRA when you're not expecting to be in a different tax bracket when you retire?
I like using Roths for future planning purposes but in your situation it doesn't matter much. Rule of thumb: low bracket now, higher later = Roth. High bracket now, lower later = Traditional. Same bracket all the way through? Coin flip.
One article did say that now is a good time to put money into a Roth IRA because of the GOP tax cuts - is this accurate and if so, would it make more sense to put all of my money or just a large portion into a Roth IRA?
Depends on your individual tax situation. From what you've said, sounds like your tax liability might be low this year, and you have the money saved, so I'd recommend a Roth for 2017 and 2018. Really think takes will go lower?
Where should I open an account? It feels like there's an endless number of pros and cons with regards to fees and services. I'm looking for good customer service, reasonable fees, and some level of assistance with choosing investments.
see above. The thing you can control is 1) tax exposure and 2) fees. Look for options with fees below 1%, preferably below 0.2%
Most providers will offer something called a "Target Date" fund, which will have a name like "Target 2035" or "Life 2050." The year you pick is the year you want to retire around. The funds are managed to adjust their risk/return balance as that date gets closer.
and ultimately I don't really understand how to allocate assets accordingly. Basically, I need a provider that will make this process as stupid-proof as possible.
Lots of good advice here, and in this thread.
posted by the man of twists and turns at 2:46 PM on April 11, 2018
This thread is closed to new comments.
posted by Rash at 7:23 PM on April 10, 2018