Early Withdrawal

Question: Serge M answered my Roth IRA question minutes ago and I would like to ask an additional question about his?

answer…however this user does not allow e-mail. Soooo…in case Serge is out there or in case someone elsse might know I’d appreciate it. My question was re: my Roth IRA losing $200 in the last 6 mos due to the lousy economy and Serge said not only to keep it in (to avoid early withdrawal penalties) but to actually ADD to it every year. My question now is “Can you explain that?” I fear putting more money into an account that is declining now and wanted to wait until times got better economy wise before I added to it – but again, I know so very little about the stock markets. I could use an education about the basics as to why i should add more rather than put it in an interest baring (3.5%) account now. Is there a link even that might explain that? Thanks in advance to any and all who can guide me.

Answer: IRAs are some of the best investments out there.

Your IRA should average 10% or more over the next decade.

What the previous writer was describing is called dollar cost averaging.

They are correct, by funding your IRA on a regular basis, it removes the concern about trying to time the market.

A good book on the subject is called Smart Money.

It explains everything in detail.

Remember, one of the first rules of investing is to understand what you are investing in.

A little bit of research and study will pay big dividends in the furture.

Hope this helps.

Lessons in Disaster Part 1

Question: I am 61 year old. can I transfer my IRA to roth IRA tax free?

I know there is no penalty if I start withdrawing after 59-1/2
and I have to pay tax on withdrawal of my traditional IRA.
But if I just transfer from traditional IRA to ROTH IRA is it
taxable?

Answer: You can convert all or part of your regular IRA to a Roth IRA. You will pay tax on the amount you convert, but no penalty. I recommend that you look at it each fall and convert part of the IRA based on your other taxable income. You don’t want your conversion to put you in too high of a tax bracket.

By the way, your adjusted gross income must be under $100,000 (excluding the conversion) in order to convert any of the regular into a Roth. That $100,000 limit goes away for 2010.

Jim Kirby, CPA/PFS, CFP, CFS

Self-Direction — Why do YOU Want “Checkbook Control” of YOUR Retirement Funds?

Question: Get answers from millions of real people.?

We have approx. $360K left in IRA, lost 40% in last 2 1/2 months, receiving “72T” payments each month ( wife is 58 and I’m 62 ,I want to Cash In or minimize our losses immediately, how can we do this i.e. Taxes, etc. ?

Answer: You have lost nothing unless you do sell. Why would you cash out an IRA now that its assets happen to be at their all time low? Hang on to what you have and wait until everything goes back up. We have had lots of crashes bigger than this one and have always come back.