I am only 28, so I feel like I am ahead of most people at my age. My wife and I just saw the financial adviser today actually and we are doing pretty good. but start now if you can, even if its a 100 bucks a month or something.

I’ve been looking at personal finance blogs for the last several months (since I graduated from college in May) and this is excellent information that I will look into.

I currently have no retirement savings — all of my savings have been going into an “emergency fund”; my job is not steady and I’ve feared opening an IRA because of losing access to money in case of emergency (or lack of employment).

I know that withdrawing money from a Roth is a less than ideal choice, but for me, when I assumed I’d have to wait a couple of years to open one, this is fantastic news.

One more thing, make sure you don’t have any custodial fees or closing fees.

If the money is in a Roth IRA, how will I be able to get it out quickly if I need it? Would there not be a lot of paperwork involved, and then a delay in processing it? That is what worries me.

We both have 401k’s through our respective jobs, and currently her contribution is 20% and mine is 25%. I also get a 4% contribution from work. So this year right now we have put about 23k away in our 401k’s so far.

I know there are like 40 variables at play, but I guess the question is, should we be cutting the 401k back and maxing out the Roth instead first? I know that 401k really drops our taxable income a lot, so that gives us more money that is not going to ‘The Man.’

I couldn’t agree more. However, if the alternative to is not fund the Roth, then I think the approach outlined above is far superior.

Nice write up. I wonder if any of my clients read blogs.

However, I have been telling clients that if you have a savings account and not a ROTH, then you are throwing money away.

Clients want me to find them ways to save money on taxes, but when I do that, they don’t listen. Go Figure!

The maximum contribution for 2007 is $4,000 and 2008 is $5,000.

Your contribution is determined by your income.

This was made for the middle class as the rich and wealthy currently cannot contribute to a ROTH.

Here is a hypothetical example.

Let’s say you are married and have $18, 0000 in the bank that earns 5% simple interest a year.

In one year, you would have earned $900 in interest. If your total tax rate is 40%, then you pay $360 leaving a net of $540.

Now if this was in a ROTH account, that $900 interest would be tax free!

Using the $18,000, you can ladder the CD.

Open up 3, 6,9,12 months CD with $2000 for a total of $8,000.

One month later, open up another 3, 6,9,12 months CD with $2000 for a total of $8,000.

This leaves you $2,000 in the money market, $16,000 in CD’s, and accessibility to the money every 3 months if needed.

Don’t need the money, let the CD’s renew and earn compounded interest.

People should put money into ROTH with a mindset of saving for retirement and not saving for emergencies because if you take the money out for emergencies, then what will you have for retirement?

I’ve been contributing after the year is over for the past few years, but managed – mainly thanks to 401K reducing my income. This year, I’ll definitely be in phase out range even without additional gains; if I end up selling any of the stocks or getting distributions from a mutual fund, I’ll likely be over. Still undecided about putting money in the IRA instead and hope for the government not to change its mind in 2010.

If you opt for a bank account, then you lose out on your 2007 contribution limit (forever!). That’s just short-sighted. Instead, stick the money in a Roth, invest it in something conservative like a money market mutual fund, and then keep on saving. If you luck out and don’t need the emergency funds, then you’re ahead of the game by having taken advantage of you 2007 contribution limit and you can eventually move these funds into a more aggressive vehicle. If you do end up needing it, then you can withdraw it and use it just like you would have if the money was in the bank.

This is not a ‘tap into your retirement’ mindset. Rather, it’s a ‘jumpstart your retirement if at all possible’ mindset.

yup, you can fund your Bank of America IRA with a Mastercard or Visa to incude bank cards by MC or V. The only question not answered on BofA’s site is what kind of charge is it on your credit card–that is, POS cash advance, debit, or cash advance. If cash advance in any form, then it isn’t a good idea since you immediately start to accrue interest on cash advances plus you don’t earn any “cash back” from your credit card. If it is a regular debit charge, then it is worthwhile if you have a 0% credit card. If you are going to pay the amount debited in full each month, then sounds like a winner deal. If you are going to carry a balance, even if it is a low interest card, then you aren’t doing yourself any favors and have a chance of losing more money than you will make.