Advantages of rolling to an IRA

**pyriel** · 04-26-2005, 10:10 PM

I've been looking at this thread and I don't see anyone jumping in to talk about IRA so I thought i'd give it a try. I love my kids so it is only appropriate that my sole wish at the end of my life is to leave my entire savings (whatever is left) to my two children, Pyriel and Gavreel. My wife and I hope that our real estate and our retirement checks will carry us throughout our retirement years and not to touch our TSP and ROTH IRAs. We plan on transferring our TSP into a traditional IRA then to ROTH IRA when we retire. For now, I'd like to talk about the advantages of rolling TSP, 401k, 403b, etc to an IRA later down the line when we retire.

1. Stretch Distribution for beneficiaries 2. Smoother state planning 3. More investment choices 4. ROTH conversion ability 5. Annuity investment 6. Greater flexibility, availability, and control 7. Account consolidation 8. Plan portability 9. Access to professional advice.

Out of the 9 advantages, #1, 2, & 4 appeals to me.

1. Stretch distribution for beneficiaries would allow my kids to stretch the IRA contribution throughout their lifetime; thus allowing the fund to grow with the power of compounding interest. Heck, they may even turn it over to their kids later.

2. Smooth estate planning also appeals to me IRA asset can easily be more coordinated with my overall estate plan than asset in a company plan. funds in a company retirement plan are subject to federal law, which for the most part requires that I name my spouse as beneficiary-unless my spouse signs a waiver. An IRA rollover does not avoid the spousal waivers but once the funds are in my IRA, I am not required to name my spouse as beneficiary. (please don't get me wrong. I love my wife and what I am saying is for explanation purposes only.)

#4 The ability to switch over to a ROTH IRA is probably the best option. Imagine being able to transfer all of our IRA funds to ROTH and our beneficiaries will never have to pay taxes ever. If they do the stretch distribution, this may provide them additional $$ throughout their lifetime. And if they play their cards right, they can even do the same with their children.

I am grateful that people within this board are striving to learn as much as they can about their retirement options however, I feel that there is not alot of thought about what is beyond our retirement and how our non planning now will affect the funds (that we work so hard all of our life) that we plan to leave behind to our beneficiaries.

Pyriel

**lovegardening** · 04-27-2005, 12:50 PM

Which IRA funds would YOU recommend? There are so many and everyone here talks about which ones they have and I cant make up my mind which ones to pick...Any good suggestions would help, of course I do my own investigation on all the funds before I invest. Just need a little help with suggestions.

**pyriel** · 04-28-2005, 02:37 AM

lovegardening wrote:

Which IRA funds would YOU recommend? There are so many and everyone here talks about which ones they have and I cant make up my mind which ones to pick...Any good suggestions would help, of course I do my own investigation on all the funds before I invest. Just need a little help with suggestions.

Sorry but I don't recommend any fund. Rolo and Milkman seems to have some good adviceon that one. Good luck...

**azanon** · 05-31-2005, 06:21 PM

I've been looking at this thread and I don't see anyone jumping in to talk about IRA so I thought i'd give it a try.

That's because we talk about them in Retirement Planning. What's with all the excessive, and redundant forum topic headings?

**pyriel** · 05-31-2005, 08:11 PM

azanon wrote:

I've been looking at this thread and I don't see anyone jumping in to talk about IRA so I thought i'd give it a try.

That's because we talk about them in Retirement Planning. What's with all the excessive, and redundant forum topic headings?

Hmmm.... Az is right. IRA was already being discussed in retirement planning.

**azanon** · 06-01-2005, 08:20 PM

Yeah, guess i could have put that in the "suggestions" section, but my preference on forums isfor amore clean, and condensedmboard as opposed to one that has has too many subtopics. Its nice to just go to one area and find out about everything that has to do with "retirement planning", which would naturally include discussions about IRAs.

IMO, there's just not enough people active on these boards (yet) to justify the number of topics we have.

**lovegardening** · 06-02-2005, 02:08 PM

lovegardening wrote:

Which IRA funds would YOU recommend? There are so many and everyone here talks about which ones they have and I cant make up my mind which ones to pick...Any good suggestions would help, of course I do my own investigation on all the funds before I invest. Just need a little help with suggestions.

I thought I posted this under IRA talk, talking about individual investment accounts...I guess I misunderstood the concept...sorry....I asked about this under retirement accounts also. I didnt know asking a simple question would offend people to the point of complaining. I wont even bother using this site anymore....

**mlk_man** · 06-02-2005, 03:03 PM

Way to go az...........................:x

**Spaf** · 06-02-2005, 03:32 PM

lovegardening wrote:

Which IRA funds would YOU recommend? There are so many and everyone here talks about which ones they have and I cant make up my mind which ones to pick...Any good suggestions would help, of course I do my own investigation on all the funds before I invest. Just need a little help with suggestions.

I have been checking companies with IRAs for over a year. They all seem to have the pre-2000 market mentality. Some of their returns are Yukey! I can make better returns putting it in a tin can. However,if you have multi-millions you could have a fund manager that might take a look see, between vacations.

You might try looking to see what USAA has to offer on IRA investments. They seem to at least want to look out for us little guys. And they will talk to us, without making you feel like a blooming idiot or a panhandler.

Sorry...lovegardening...I just have a bad attitude with the experience I've had with "financial companies". Theirmath is too fuzzy for me!

If U find a good one, give areply!

Regards :? Spaf

PS: My online discount broker offers IRAs. I should look into what they have to offer!

**Birchtree** · 06-04-2005, 01:03 AM

Lovegardening,

If you are interested in opening a new IRA instead of doing a rollover, then I would suggest a Roth IRA. You can contribute $4000 and since you are of the Woodstock generation you would qualify for a $1000 catchup contribution in 2006. The limit starts at $5000 in 2008. It will add up quickly and without many complications.

I would suggest notbothering with mutusl funds - buy only individual stocks, they will provide you with quarterly dividend reinvestment dollar cost averaging prospects. This is really the simple approach and less complicated when you are ready to take money out- you will have mucho flexibility. You can borrow when necessary without penalty and can start taking money out at 59 and one half, or you can leave all funds to an heir.

All online outfits offer these programs with reduced fees for purchases and dividend reinvestment is free. I would take a look at Sharebuilders - $4 per trade.

**pyriel** · 06-04-2005, 07:15 AM

lovegardening wrote:

lovegardening wrote: I thought I posted this under IRA talk, talking about individual investment accounts...I guess I misunderstood the concept...sorry....I asked about this under retirement accounts also. I didnt know asking a simple question would offend people to the point of complaining. I wont even bother using this site anymore....

Hey lovegardening, I believe Az is pointing at a different issue. Not necessarily specific to your question. In a way, I kind of agree and disagree with him. But this is what usually takes place when you are on a board. Keep firing away with those questions... There are many people here that will be more than willing to help you and that is to include Az. Az doesn't post much here but when he does, he usually makes a lot of sense. Birchtree is another fella that are always upbeat even if the market is down. His contrarian permabull view is what is keeping me planted in stocks. However, I just don't have his stamina to stomach this ups and down so on Monday I will be.....:u

**Birchtree** · 06-04-2005, 05:04 PM

Lovegardening,

Me too. Here is another tip regarding IRA roll over. If you want to roll from TSP to a traditional IRA you can be selective on the amount you roll - and you can take your time. However when you reach 70 and one half you will be required to take a RMD, which is a required minimum distribution. The positive fact is that starting this year the RMD is not added to your modified AGI (adjusted gross income) so the taxes you pay when you roll from IRA to Roth IRA will be reduced. Again you can be flexible on the timing and the amount. The only outstanding problem when rolling to a Roth is that your AGI must be under $100,000 for a married filing jointly. All this requires future planning and income monitoring.

If your employer in the future ever allows a transfer of your retirement funds from a defined benefits program to a defined contribution program, I would give it some serious consideration - it would allow you to set your own AGI in your coming years. The AGI impacts everything you do in finance. This option will probably offered sooner or later - it would be just like being in the TSP - along with the possible benefits of earning more for retirement.