Thread: ROTH IRA VS. TRADITIONAL IRA Part 2

It depends.

If the income generated from this account is likely to exceed the present income level that you are at, it would be wise to go the Roth route and take the tax hit now, since the rate paid would be less than if you deferred it (since greater income in the future would yield a higher tax bracket). However, if the income will be equal to or less than the present, then a traditional IRA would work just fine.

As of now, you can only roll over your TSP into a Traditional IRA and not a ROTH.

BUT, you should be able to roll it over into the Traditional then roll the Traditional over into a ROTH.

Here's a fact sheet:

http://tsp.gov/uniserv/forms/oc91-16.pdf

God Bless:^

Rod is right, a friend of mine is currently rolling over 3 retirement funds that she has collected through the years into a Traditional IRA with Scottrade. Then she is going to roll that over into a Roth. There is no time frame to do this. Once the money is in the Traditional, you can roll it into a Roth at anytime.

Good Luck

M_M

mlk_man wrote:

Rod is right, a friend of mine is currently rolling over 3 retirement funds that she has collected through the years into a Traditional IRA with Scottrade. Then she is going to roll that over into a Roth. There is no time frame to do this. Once the money is in the Traditional, you can roll it into a Roth at anytime.

Good Luck

M_M

Hey Mike, should we think we can make more $$$ off of a ROTH mutual fund rather than simplykeeping it in our TSP?

I've often wondered about this. What do you think?

Rod wrote:

Hey Mike, should we think we can make more $$$ off of a ROTH mutual fund rather than simplykeeping it in our TSP?

I've often wondered about this. What do you think?

I personally can make, am making, four times as much in my Roth accounts than TSP..........

mlk_man wrote:

Rod wrote:

Hey Mike, should we think we can make more $$$ off of a ROTH mutual fund rather than simplykeeping it in our TSP?

I've often wondered about this. What do you think?

I personally can make, am making, four times as much in my Roth accounts than TSP..........

Oops, sorry, it averages out to about 5 times actually.............

mlk_man wrote:

mlk_man wrote:

Rod wrote:

Hey Mike, should we think we can make more $$$ off of a ROTH mutual fund rather than simplykeeping it in our TSP?

I've often wondered about this. What do you think?

I personally can make, am making, four times as much in my Roth accounts than TSP..........

Oops, sorry, it averages out to about 5 times actually.............

That's really great. If you don't mind me asking, what mutual fund are you with?

Rod wrote:

That's really great. If you don't mind me asking, what mutual fund are you with?

Profunds ultra and ultrashort funds. There are different ones, take your pic.

Just pic wisely................:^

http://biz.yahoo.com/p/fam/profunds.html

mlk_man wrote:

Rod wrote:

That's really great. If you don't mind me asking, what mutual fund are you with?

Profunds ultra and ultrashort funds. There are different ones, take your pic.

Just pic wisely................:^

http://biz.yahoo.com/p/fam/profunds.html

Thanx!:^

Guys,

Remember about converting. The reason you can roll over the TSP to only a traditional IRA at first is because they are similiar vehicles (the money went in pre-tax). You all already know this. Two things to consider for the Roth IRA conversion after that. I have converted Traditional IRA to Roth so this is from experience.

1-There is a tax consequence for rolling it over. All the money that went in pre-tax (I don't believe the gains, just the principal) is taxed at your current tax bracket. You may want to converta littleyear by yearto spread out the tax burdern.

2-You must be married filing joint on your tax return to have a Roth and you can't convert anything into a Roth unless your AGI is below $100K, I believe.

please check me on this but I think this is mostly correct. Let me know.

One question:

Can you convert your TSP into a traditional Roth at anytime? Am I getting that from your posts? If so, interesting.

Mike,

Is the new system working pretty well for the Profunds Ultra small cap/Ultra short small cap right now? just curious.

Joel

Mike, Rod and others,

Correct that you can rolla traditionalinto a Roth anytime, providing your combined AGI (annual gross income)is under 100K! Also, you must be married filing joint on your tax return and you incure a huge tax bill (unless you have a small amount to roll over)when you roll from traditional to Roth. It may be a better idea to do it a little at a time, so you can spread out the tax burden (taxed at your current tax bracket) These things must be considered before you roll over a traditional IRA to a Roth. I've done this with a small amount of $ (less than 5K) already. I hope this helps.

Mike,

I guess you started your Scottrade acct? I thought that wasn't until next year? How is the new system with it? I also would guess that while in the S fund, you have been in Profunds Ultra Small cap and while in G, you go to Profunds Ultra Short Small cap? Just curious.

Joel