put it in a virtualbank or ING Direct account till you decide what to do, 0.10% is ridiculous

As IRA season approaches, remember to clearly indicate the TAX YEAR of the contribution with your payment (e.g., on the check memo line) and VERIFY that it is recorded correctly by your financial institution. Some institutions (TD Waterhouse... grrr) default the contribution to the calendar year in which it is made, which may cause you to miss an entire year's worth of contribution room.

SeattleNative said:

<< kharvel: generally speaking, you can't borrow money from an IRA or use an IRA as loan collateral. As noksagt stated, you have a very limited ability to make a short-term withdrawal but be very, very careful about the rules governing! Otherwise, you can face a very steep tax penalty. >>

Sorry if this question is an ignorant one, but I just started researching retirement accounts, please go easy on me

1. In the case of a Roth IRA, you can withdraw ANY amount of your actual contribution at ANY time (after five years), and up to 10K in interest accrued IF it's going towards your first home (after five years).
2. It's a no-brainer if you are a student and have minimal income, to open a Roth IRA vs. other IRAs because of tax considerations.

Do I have the right idea? TIA!

Edited for clarification

This thread is being updated. We have had many discussion threads on IRAs in recent months which I want to link to the FAQ. Stay tuned

Does anyone have any experience with Self-Directed IRAs?

Even more specifically, has anyone ever used the funds in their self-directed IRA to buy investment/rental properties?

I've tried searching this site and the internet using google but I haven't been able to find anything specific on self-directed IRAs and real estate investing.

SN, Here is a great site that goes into a lot of detail on Roths: http://www.fairmark.com/rothira/index.htm

(Thanks to PugRanch for listing this site in one of the Roth threads)

An interesting thing happened this year. Our 401K plan capped deduction at 10% for people earning 90K and above in the year. So the max 401 contribution for FY 05 will be 9K if you earn 90K.

Is this person going to lose out on tax deductions or can he also start an IRA to get full tax deduction?

Has someone here has come across this situation

N

needdealsnow said:Is this person going to lose out on tax deductions or can he also start an IRA to get full tax deduction?

What do you call a tax deduction here? If you are covered by a 401K plan (regardless of the cap) your tIRA deductibility is phased out. I think you cannot deduct any of it with 90K income...

needdealsnow said:manuel said:Nope. Being capped in one's 401k has no affect on one's eligibility for a IRA.

Happens to people all the time, I'm capped at 9%.

I am confused. You are saying that being capped in 401K does not impact one's eligibility for IRA. Do you mean that one can contribute to an IRA even when you are contributing to a 401K? Do you get tax deductions on contributions made to the IRA as well?

N

Yes. However, if you're eligible for 401(k) then the amount you can contribute to a traditional IRA is constrained by your AGI. I think it's phased out completely at 45k. Roths are only phased out completely at 110k.

DamnoIT said:Say if a person is gonna put 1k in a Vangaurd Roth IRA however they have already done thier taxes, would this do anything to your income/tax return for this year? I know that 1k is trival so should I wait till after the 15th to do it? I like thier target retirement options, makes it a pretty no brain decision.

You should probably amend your return to reflect your contribution - you may be eligible for the saver's credit, and I think they need to have a record of when you started making contributions so that they can determine your eligibility for early withdrawals.