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Video instructions and help with filling out and completing Simple ira roth

Instructions and Help about Simple ira roth

Hey Dustin Tibbets here financial adviser with jazz wealth managers how you doing today I hope everything is good with you I want to talk about making a financial plan and I don't want to make this boring look a lot of people talk about making financial plans and it becomes this long drawn-out process and we gotta write down on pieces of paper check out do the couch see where all our money is going it doesn't have to be that complicated I want to go over four different things that we can do to start and couldn't sort of build this financial plan and I want to do them in order because I think this is important well the first part of any good financial plan is knowing where your money goes and while most people would say you need to create a budget I totally think that's wrong look if you're not excited about making a financial planner you have no idea where to get started then how are you supposed to sit down and figure out where all your money's going so it jazz wealth we tell all of our clients watch your money for a while give it 30 days go through one major holiday we have Easter coming up so maybe that's the holiday but watch your money for 30 days maybe even a little bit longer while you're doing that we use nest egg which is a product that we offer here to our clients completely for free and what that does is as you link your bank accounts it will track your spending for you you can tweak it and add sort of little custom notes of things if you like but basically it'll do the work so all you have to do is set it up and let it roll it's kind of like mint in a way but we don't sell your personal information and you won't get any advertisements from us not only that that's just the starting point the nest egg that we have actually is a full financial planning software we can do everything from your child's education the money that you want to leave when you pass on from this world one day so the first thing is we've got to understand where our money's going but don't make this a headache let's keep this simple let's find some way to track our spending for X number of days at least one month and then let's go from there we're gonna create a budget once we know where our money is going the reason I say this and I've said this in many other videos is because this actually gets you excited right who gets excited sitting down and going well we you know we spent like $200 at the gas station and so much at Chipotle or whatever you get excited when you see the number and you go through a time period we.


What is the difference between a 401k and IRA?
A 401k and an IRA are both tax-advantaged accounts that incentivize saving/investing for retirement.  They both restrict withdrawals from the account in exchange for deferring or excluding taxes.  There are Traditional and Roth options for both accounts which is a different question altogether (I have an answer here for IRAs but it is applicable to 401ks as well: Alexander Yuan's answer to Individual Retirement Account (IRA): Is a Roth IRA better than a traditional IRA?).  If something is just labelled a 401k or IRA, it is assume to be a Traditional type account.The quick rundown of the differences are the following: you have more flexibility investing in an IRA, you have a higher contribution limit for a 401k, and your employer potentially matches contributions in your 401k (basically gives you free money in the account).  But let's go into some more detail.401kA 401k plan is an employer sponsored retirement plan.  Not all employers offer one, but many large companies do.  Most offer only a Traditional 401k, but there are some companies with Roth 401k options.  The employer chooses which type of account to offer and has it set up with a plan manager.  There are usually specific funds available for you to invest in within the account.  You usually just fill out a form to assign how much of your paycheck you would like to put into the account and how to divide it up into the different options.  There are some restrictions on withdrawing the money put into this account but you get tax benefits in return.  These restrictions and benefits depend on with type of contribution you make (Traditional vs Roth).  The annual contribution limit is fairly high (in 2022 it is $18,000 if you are under 50 years old, $24,000 if you are over 50).  The big advantage to contributing to your 401k is employer matching.  Your employer may match your contribution which means as you put money into the 401k, your employer will also give you money to put into the account.  For example, if your company has 100% matching up to 4% of your income and you make 100k annual salary, you can contribute 4k and your company will put in 4k. This effectively makes your annual salary 104k with 8k being paid to you through your 401k. If the company's matching was only 50%, they will put in 2k when you put in your 4k in the example above. However, the company matched amount usually vests over some period of time which means if you leave the company, you only get the amount you are vested in. For example, if your company has a vesting schedule of 4 years evenly distributed, then in the first example above with 100% matching, you would get claim to an additional 1k each year. You are also always 100% vested in your own contributions. So let's take that example and say you don't contribute anymore after the first year. If you leave after 3 years with the company, you would be entitled to 3k of the 4k match from your first year as well as your own 4k contribution plus whatever gains that 7k earned in the account.Individual Retirement Account (IRA)An IRA is an individual retirement account, meaning you will have to set it up yourself.  You will need to reach out to a broker (Charles Schwab, Fidelity, TD Ameritrade, etc.) to set up an account and you decide whether you want to open a Traditional or Roth type.  You manually move money into the account which has a smaller annual contribution limit ($5,500 in 2022. $6,500 if you are over 50) relative to the 401k.You get the same restrictions and tax benefits in the IRA for the same type of contribution (Traditional vs Roth), but there are income limits to making these contributions.  The main benefit of using an IRA is investment flexibility: you aren't restricted to the investments made in the account.  You can invest in individual stocks or mutual funds or index funds of your choice.
How much can you contribute to both a Roth IRA and a SIMPLE IRA in the same tax year?
Mike and Wray are correct and offer some great information in their posts. Just to reiterate, yes you may contribute the max to both a Roth and a SIMPLE assuming you fall below the MAGI limit.Also, if you are married you might be able to open a spousal IRA/Roth for your spouse if you are under the aforementioned MAGI limits. Thus, even if your spouse isn't working you can open a Roth or traditional IRA and make a deductible contribution to his/her account. Assuming you fall below the phaseout limits and your spouse qualifies, you could contribute an additional $5K (deductible).
Is it better to have two underfunded Roth IRAs or one "maxed-out" Roth IRA?
There’s no inherent advantage to having 2 Roth IRA’s versus 1, but contrary to the advice in previous answers, there are at least 3 very good strategic reasons why it could be wise for you to do so:The biggest reason is if you’re investing your IRA in any alternative assets that could open you to the risk of committing a prohibited transaction. By isolating assets of that type into their own account, you’re also isolating the damage that could result in the event of a PTAs you age, a consideration will be what will happen to your IRA after you pass away. If you have multiple beneficiaries, it may be easier to leave separate accounts to each beneficiary rather than leaving one account that must be divided after you pass away.If you have an IRA at a conventional brokerage like Charles Schwab or eTrade or Vanguard, you’ll never be able to invest in anything but stocks, bonds or mutual funds. In other words, you’re wholly restricted from investing in very common and very desirable asset classes like precious metals or real estate. Should you choose to diversify a portion of your assets into non-Wall Street assets, you’d need to have a second IRA with a self-directed IRA custodian that can accommodate such a need.(Apologies for the large volume of links to my website in this post. This is because the topic of this question is at the core of what we help our readers with.)Happy Investing!Bryan EllisSelf Directed Investor Society
What is the best way to invest into stocks? And how can I do it?
Welcome to the Stock Market!You are starting from scratch. Be humble and be ready to listen and learn. There are about 100 things to do and 100 things Not to do in stocks. The things not to do can be even more important than the things to do so be very cautious here. I'll give you a few pointers to set you on your way. Stocks, like other financial avenues, and the way we invest is arbitrary, which is to say, the system and method we use here is not a fixed science but more of an Art form, depending on factors like goals and personal preferences.Firstly, open your account at TD Ameritrade • it’s the best online broker for lots of reasons, but mostly because they have the most excellent 24/7 customer service and access to your account.Request check writing and open a margin type account. Non - margin accounts are Not eligible for trading. Put in the biggest check you can muster, possibly your whole paycheck or more to start. There is no minimum.You will select a stock next and buy shares. Have your TD broker go through placing a buy and sell order so you know how. Look and study at least 100 stocks and Buy only one. Buy the best and highest price stock you can. Don't invest in garbage. Do Not buy penny stocks. Contrary to popular belief Coke, Mcdonalds, Phillip Morris, Microsoft, AMZN , Apple and Netflix were never penny stocks. People did buy them for penny's per share only due to stock splits, but the stock shares were never lower than about $30.00 per share (a good minimum price stock for you to choose to buy).So now let's look at classic Pitfalls and Principles that top wise investor - traders all agree on and you will be on your way. I have carefully chosen 15 golden nuggets for you. Pay attention and learn.Pitfalls to avoid: (5)The law of diminishing returns: You need to understand that you can't trade blows with the market. You need to be accurate. You need to be correct about 70% of the time (or more) to be successful. You can't throw darts at a board. Even If you gain %50 on your first trade, if you lose 50% on your next, your account will look like this. 1: $10,000.00 to $15,000.00 2: $15,000.00 to $7,500.00 What? Do this several times and your account will be on its way to oblivion.Don't buy garbage: Buy quality. Minimum share price can be $50 to $100 a share or more. Buy stocks that have allready proven themselves over a 10 year chart.Yes to Visa, see?Yes to NFLX , see?No to rite aid, see?No to Wi pro, see?The 10 year chart needs to go from bottom left to top right. Two of these stocks make money over time and two do not. See?3: Don't buy penny stocks: Penny stocks have something wrong with them. Don't invest in garbage because they are cheap. I'd rather you buy 1 share of AMZN than 400 shares of that crappy penny stock. penny stocks are stocks that are under $5.00 per share. They haven't proven themselves. Look at stocks like Apple, Philip Morris, AMZN, GOOG, PCLN or NFLX. They just go up and up! Penny stocks might be cheap but they lose money. Fact! Be smart.Would you put your hard earned money in this? It doesn't look promising.4. Timing: Don't buy the peak and sell the dip: Most good stocks have a noticeable or deliberate dip (get In or buy) and they have a peak( sell or wait for it to dip before you buy in again). Often times ,when a stock swings up the novice investors are getting in and the big traders are selling. Don't be a chump.Can you trade this chart below?What if your life depended on it. Buy the dips and sell the peaks.What if you bought FB (Facebook) with each strong dip, how well would you be doing now?5: Don't invest in ‘ideas or products you like’: I'm gonna save you lots of heart ache right here. Most stocks don't actually make money. Only the cream of the crop top - stocks have good share growth and give good return. There are so many reasons for this. Most businesses fail. There could be problems from the employee to the CEO that affect stock price. So instead of investing in a bright idea or a product you like, start with stocks that have a great 10 year chart - proving stock performance and buy only those.Yes to BUD (Budweiser)!Get great share growth and also add on a nice 3.25% dividend for icing on the cake. BUD is a great company. Fact!No to GM (General Motors). Even though GM does pay at 4.31% dividend, there is no share growth over 8 years. Fact! I was there in 2022 when GM stock went to Zero and long time investors lost their shirt! Fact! There is no room for a debate here. GM is a terrible company. I don't care if you like GM cars or even if the Cars are good. GM will Not give you share growth. It's not designed for that. I have already watched GM for the last 25 years so don't try to argue. Sry if you liked GM and I just hurt your feelings. I'm here to make money and to teach, not waste time so i'm showing you the real. The important thing is that you can see the chart and determine that one stock goes up and the other does not. Do this with all stocks you select.Principles that work: (10)Buy quality: Look at lots of stocks and buy only the best. If the stock price is high - all the better.You can't loose too much money on AMZN. How could you?2: Make often and consistent deposits: There is a common fallacy in the stock market. It's the belief that you can deposit $5,000.00 then trade that into millions. People think they are the next wolf of Wall Street. This is not responsible. The way you build your account into sizable respect is through often and consistent deposits and then your stocks performing exponentially. Most people actually lose money once they begin trading or investing (fact). Don't expect to make money right out of the gate. Commit 3–5 years into learning the stock market. It's not an easy endeavor.3: Timing: Buy the dips and sell the peaks: see Pitfall #4. Be patient for your quality stock to dip before buying. Be prepared to sell the peaks if you trade and not the other way around.4: Patience: With patience you can rule the market. I've mentored lots and I teach that I'd rather you bite your hand off than to make poor compulsive mistakes trading, not wait for the right time to trade, buy a penny stock, or buying crap. Practice patience in the market. It pays off.5: Put in the time and the dedication: Commit time to learn the market. Read up and or do seminars. Seek out a mentor who trades to show you the ropes and to avoid pitfalls. Start a journal to track and study your trades. Write neatly so you can have this lifetime resource to look over and to embolden you.6: Don't put your money to impossible earnings: I teach that greed is risk. Be careful. Be happy to eek out 20% return each year. You will beat the bankers. Only after you can do this consistently, will you deserve to make the: 10 fold, 20 fold and 30 fold returns over time. Lots of traders try to double their money or get 20% return only in one month. Lots of traders fail at this. Greed is risk. Don't get greedy. Plan on small but safe gains rather than risky aggressive huge gains. Review the law of diminishing returns.7: Put some money aside from your profitable trades: I knew a soybean trader that put everything into his trading account. He was talented and grew his account to over a million in only a few years. I got a call a while later - He went broke on only a few poor trades. He had nothing to show for all his years of work and for getting his account to a million. So with each winning trade ,I want you to take out 10% of the profit and put it into an IRA that you don't trade. Buy some silver coins or put some money into your kids college fund. Regardless, if you make some success over time always put some away, at least 10%. Have something to show for all your hard work. Don't be like that soybean trader and risk everything on your very next trade.8: Benefit from dividends: Consider a good dividend stock. Over time dividends add up. Most stocks pay every quarter (every 3 months ) per share but some stocks pay dividends every month.How would you like to earn 3.63% dividend each year plus great sharegrowth. PM is one of my all time favorite stocks.EMD is another one of my faves. Not much share growth but how would you like 7% dividend per year and it pays each and every month? Do compound interest on that over the long haul.9: Benefit from stock splits: One of the most powerful tools I have learned other than covered call writing is stock splits. I have seen accounts go 30 fold over so many years and even more from stock splits. A stock splits and your shares double but then the price is halved. Then the magic happens and the stock climbs up to its original price over time. You just doubled your money! Take another stock split and then another. I have seen the same stock split 5–10 times over the years. Double your money ten times and see what you have. Get that 30 fold return on your account! The trick is that you don't know when a stock is going to split beforehand but only after, so invest in stocks that have lots of splits. That's the best way. By the way, penny stocks don't split (reverse stock splits don't count) stay away from those.10: Go long term: Here is another common fallacy - that people make money hand over fist weekly or monthly in the stock market. This is not the case. True wealth that lasts, takes decades to muster. Don't try to trade your account into fortunes in a short time. This is a pipe dream. Greed = Risk! - Instead learn to build your portfolios over time with dividends, stock splits , share growth and light trading only - if there is magic, it's right here (reread this sentence). The more you trade the more difficult it is. Be patient. Don't put your money to impossible earnings. Take some money off the table from your profitable trades. I do not advise day trading. It's super difficult. I do not advise trading call options. Your position can move to zero and fast. Steer clear of penny stocks. Don't be in it for the fast buck. It's so much more difficult. Be very selective. Save like its a religion- put consistent deposits into your stock market account. Look at 100 stocks before you choose 1. Go long term…easy!The gold is in long term share growth. NFLX multiplied its shares 14 times with only 2 stock splits (a 2 for 1 split in 2022 and a 7 for 1 split in 2015). Be prepared for more.I'm not talking to all of you. Most of you novice traders won't even understand this at all. Many experienced traders will disagree with my points here. So I'm talking to only the few of you inbetween. Be safe. Trade safely.Good luck! I just poured my heart out!Follow, message and upvote. I have more.
I recently opened a Fidelity Roth IRA and it says my account is closed and I need to submit a W-9 form. Can anyone explain how this form relates to an IRA and why I need to fill it out?
Financial institutions are required to obtain tax ID numbers when opening an account, and the fact that it's an IRA doesn't exempt them from that requirement. They shouldn't have opened it without the W-9 in the first place, but apparently they did. So now they had to close it until they get the required documentation.
Do I need to fill part 2 of form 8606 for backdoor Roth IRA?
A “backdoor Roth IRA contribution” consists of two parts: 1) a nondeductible Traditional IRA contribution, and 2) a conversion from Traditional IRA to Roth IRA.You will need to report the nondeductible Traditional IRA contribution on Part I of Form 8606 for the year that the contribution was counted under (which is not necessarily the year of the contribution since you can choose to count a contribution before April 15 as for the previous year).You will need to report the conversion to Roth IRA on Part II of Form 8606 for the year the conversion happened in (this is the exact calendar year, you can’t choose to count it under a different year).
Why should I max out my Roth IRA?
Let’s start with the two main reasons you’d want an IRA - Time and taxes.The sooner you start putting money into an IRA, the sooner your money can start benefitting from compound interest.Einstein actually referred to compound interest as the eighth wonder of the world. It can seriously grow the value of your money. If you’d like to see what compound interest can do for your savings - check out qplum’s compound interest calculator.Time is the first reason, and the second one is taxes. It’s important to have a tax-advantaged account because taxes can seriously cut into your savings. You want to get the right IRA so you pay as little in tax as possible.Roth IRA’s are great because you pay tax on the money you put into it immediately.Paying taxes earlier rather than later is good for a couple of reasons.First, taxes tend to go up, not down over time.Second, people tend to move up in tax brackets over the course of their careers.Since there are income restrictions on Roth IRA’s, I’d definitely want to max out my contributions. Fill it up now, and enjoy the tax free withdrawals later.You can read more about the different IRAs, contribution limits and how to identify which one is better for you here:[1] What is an IRA[2] Differences between Traditional IRA & Roth IRA[3] Invest in Roth, Traditional, SEP IRA | qplumHope this helps. Feel free to message me with any questions.Disclaimer: All investments carry risk. This is not a solicitation to buy/sell securities. This is not an offer of personal financial advice or legal advice. Past performance is not indicative of future performance.
What timing is allowed for converting a Simple IRA to a Roth IRA?
Two thoughts:A. Reconsider converting to a Roth. For most people, it just doesn’t make sense. Most people will have a lower tax rate in retirement because they will have a lower income in retirement.B. If you insist on doing the Roth conversion, then try to spread the tax bill over two tax years. Take half in late December from the SIMPLE and put it in money market. [Defer the other half of the distribution until you have an answer to your tax question.]You will have 59 days from the date of your December distribution to get an answer to your tax question. If the answer is favorable, then deposit the December distribution into the Roth before 60 days have elapsed. Then distribute the other half of the SIMPLE directly to a ROTH. Half the tax bill will be due April 2022 and the other half will likely be due April 2018.If the answer to your tax question is not favorable, then put the December distribution back in the SIMPLE or into a traditional IRA before 60 days have elapsed and there will be no tax or penalty.Important note: you are only allowed to do this 60 Day maneuver once in any 12 month period.I hope these ideas are useful, but I am not an accountant and I do not know your particular situation. You would be well advised to get competent professional advice.
How much I need to save to max out my Roth IRA if I make 28k a year?
A Roth IRA is $5,500 a year (unless you qualify for the old-age provision.)The contribution period runs from January 1st to April 15th of the following year, so you could work on your 2022 Roth for the next month or so.
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