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Video instructions and help with filling out and completing simple ira investment options

Instructions and Help about simple ira investment options

Today I'm going to talk about the Roth IRA investment options but it's not just about the options or the choices inside the Roth IRA it's really about getting the Roth IRA to work as hard as possible for you if there's your first time at our channel or you haven't subscribed click on the subscribe button at the bottom my name is Travis sickles certified financial planner with sickle and/or financial advisors so the first thing that we want to know is how the Roth IRA works so the Roth IRA is a type of account then you can put your securities your stocks or bonds or mutual funds or ETFs inside of it so what it does it goes in after tax so after you get your paycheck that money that's after tax so the money that you have goes into the Roth IRA it grows tax-deferred comes out tax-free so what does that really mean you're putting after-tax money into the Roth IRA so it's already been taxed so let's say you earn a dollar and we take fifteen percent out for taxes that's 15 cents so 85 cents goes into the Roth IRA now if that 85 cents doubles over whatever time frame you want to choose it doubles so it becomes a dollar 70 now that growth that 85 cents in growth can come out tax-free including the other 85 cents so the full dollar 70 will come out without any tax consequences after age 59 and a half if you pull it up before age 59 and a half the growth could be taxable with a 10% penalty so you really don't want to take out the growth before you hit retirement age or 59 and a half so when we hear tax-free we think that's a good thing I want tax-free everyone wants tax-free we want to pay the least in taxes as possible but it's also important to understand that it doesn't reduce your tax liability today that's where the traditional IRA is the 401ks come in that is reducing your taxable income today where the Roth IRA will help you reduce it in reach now there's a good chance right now before retirement that your taxes are going to be higher than they will be in retirement but of course we don't have a crystal ball we don't know where tax brackets will be but generally speaking if everything stays the same then there's a good chance that you'll have less taxable income in retirement something to consider of course that's not always the case but you want to make sure that you're aware of it and we're talking about the Roth IRA you also want to know that you can only put in $5,500 every single year unless you're 50 or older then you can throw in another thousand bringing it to 6500 so there's another way that you can break it down if 5500 systems too much you


I need help filling out this IRA form to withdraw money. How do I fill this out?
I am confused on the highlighted part.
How can I get my annuity out of an IRA and return to regular investments within my IRA?
A friend of mine waited until the penalty was substantially reduced then terminated the annuity in her IRA. She then contacted Schwab and had them perform an IRA transfer to them. She took the cash and invested it appropriately in dividend stocks. First year total return was 13%.
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 2015 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 2015, $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.
What is a simple IRA and how can I invest in one?
SIMPLE IRA - WikipediaOnly an "eligible employer" may establish a SIMPLE IRA. An eligible employer is one with no more than 100 employees. An employer who has already established a SIMPLE IRA may continue to be "eligible" for two years after crossing the 100 employee limitOrTraditional IRA vs. Roth IRA: Understand the Differences |
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).
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.
How should a 22-year-old in India invest his/her money?
First I would like to congratulate you that at 22 years of age you are thinking of investing your money. Kudos to that.My opinion might not blend in with everybody, but I encourage you to read thoroughly. I would try to answer all questions in detail.OK let's begin with wise words I learned a while back.Investing is a plan, not a product.Let's say you plan to invest in real estate. When you finalize on one piece of property, you also finalize factors likeHow much are you willing to pay?Would you buy the property right now?What is the exit strategy (holding long term or sell in 6 months?)Does the investment fit in with your overall plan/goal?Get it now? You plan the investment.It took me a while to get this, but it is really empowering to understand this principle. It is wise to divide investing in 3 plans.Plan to be securePlan to be comfortablePlan to be richLet's take each of these in detail.Plan to be secureHere I would agree with Harsha Hulageri, buy a big term insurance policy and don't look at market linked insurance plans (ULIPs). Set aside some money and trust that your financial planner will do a good job with it. Also, set aside some money (~3 month's salary) as an emergency fund. Once you set this up, this should be an automatic plan that doesn't require your time or effort.Everyone should have a plan to be secure.Now, before going to the second or third plans, ask yourself this question.."Do I want to be comfortable or do I want to be rich??"This is a very important question as it will probably determine what you do while following your plan. It's similar to setting up your goal before buying a gym membership. You may choose to have a light jog on the treadmill, or work out heavily with weights. You choose what you do.Now read on, I hope after reading you will make a more informed decision about which plan is right for you.Plan to be comfortableThe plan to be comfortable should be pretty straightforward for everyone. If you are a salaried personnel, then you save a portion of your income. You use 80cc to minimize your taxes, invest in diversified mutual funds, SIPs, or recently infrastructure bonds, or specific stocks if you have a good education.You also have a financial planner who can give you advice for specific funds, or who can tell you to rupee cost average your investment. You also make some money of "hot tips". If you follow this plan, you should live and retire comfortably.There is nothing bad/wrong about choosing this plan, just as there is nothing wrong with going to the gym for a mild jog. It's an individual choice.Most individuals would find themselves in the comfortable zone. I encourage all of those people to read further as well.Plan to be richExtracted from a book:Q: "What's your advice for the average investor??"A:  "Don't be average"Why? Because the average investor is a slave to the market. Average investors make money when the market goes up and lose it when the market goes down.Average stock traders don't make money. (They don't lose, but don't make it either)When the market crashes, the average investor loses the maximum.So let me tell you a secret about investing.Successful investing is not about the investment, it's about the investor.This is perhaps the least understood concept of investing. This is the reason why people ask questions like "Where should I invest my money?" and the most accurate answer to the question is the question.."I don't know, are you a good investor?"Let me give you an example.What happened during 2008-2010 in stocks worldwide? Everyone knows they crashed right? Everyone who was invested in stocks lost money right??WRONG!John Paulson, a hedge fund manager, made more than 15 Billion $ for his company in 2007. (That's a billion with a B). That money is almost equal to 80,000 crores.Hedge-Fund Manager John Paulson's Greatest Trade EverMany claim that he made around 4-5 Billion Dollars of personal money during (2007-2010). That's more than 20,000 crore rupees.While this was claimed the greatest trade ever, the point I am making is that it is entirely possible to make money when the market is going up and down.So what are the differences between average and rich (above average) investors?Simply stating, successful investors have 3 E's that average investors don't have.EducationExperienceExcessive CashEducationA successful education starts with a good mindset. A successful investor has much more education than the average investor.A successful investor is committed to getting better and better with their education.How do you define commitment?Do you know that friend of yours who plays the guitar? Do you know who else plays the guitar?Joe Satriani  (Joe Satriani)One of the differences between them is their commitment to playing.So how is the mindset of a successful investor different from an average investor? Let me draw a diagram to better explain.In the world of business, there are 4 kinds of peopleEmployeesSelf EmployedBusiness OwnersInvestorsSimply put, average investors think from the left side on the diagram and rich investors think from the right side of the diagram.Does that make a lot of difference, you may ask?The answer is yes.Let me put forward a few myth busters to put it in perspective.(Avg Investor): My house is my biggest investment.(Rich Investor): A house is a liability(Avg Investor): Diversification reduces risk(Rich Investor): Diversification is de-worsify-cation (Warren Buffett quotes)(Avg Investor): Stock market is risky(Rich Investor): Risk comes from not knowing what you are doing(Avg Investor): Avoid risk(Rich Investor): Take more control and manage risk(Avg Investor): Mutual funds are good investments(Rich Investor): Mutual funds are good investments when you sell them (That is why big companies sell mutual funds)PS: If you think mutual funds are not risky, try going to a bank and ask for a loan to buy mutual funds, you'll be laughed out.(Avg Investor): Real estate never comes down (extremely popular in India)(Rich Investor): All markets go up and down(Avg Investor): Saving money is good(Rich Investor): Saving money pays maximum ~8% before tax, inflation is ~10%, so saving money is a guaranteed loss. (Inflation India 2012)I could go on, but hopefully you get the point.I am not saying what the average investor is saying above is bad advice, but it is average advice. As I mentioned, average investors make money when the market goes up and lose it when the market goes down. And if you have been reading till here, then you might be interested in making money whether the market goes up, down or sideways.Also, if you find yourself arguing against the Rich Investor statements, that means you too are thinking from the left side of the quadrant.So, how do I educate myself for being a rich investor?BooksTapesWorkshopsMentorsRemember, successful people have coaches, amateurs don't. Sachin Tendulkar may be the best batsman in the world, but he still has a coach.In case you are wondering, then investing is a subject that you may never be perfect in. Just like there is no perfect batsmen in cricket (everybody gets out), there is no perfect investor. But the more education you have, the better your chances are.ExperienceThis should be a no-brainer. How do you get experience? By applying what you learn. Start small as mistakes will happen. If you stay on track it will become easier and easier. It might feel like trying to eat with your opposite hand. In the beginning, you will spill your food, you will be frustrated and probably won't be satisfied, but in time you will learn it eventually.Excessive CashThis is the tricky part, but if you have educated yourself well, and have gained good experience, then excessive cash (or some cash) should already be rolling.A note on the ultra richThe rich investors invest in assets (stocks, bonds), but what do the ultra rich invest in?The ultra rich don't buy assets, they create assets.This is the secret how the richest people in the world created their wealth. They created an asset which millions and millions of people want to buy. Bill Gates created Microsoft, Larry Ellison created Oracle, Warren Buffet created Berkshire Hathaway.Final WordsQ: "How should a 22 year old Indian graduate invest money?"A: "I don't know, are you a good investor?"All right, you have my attention, now how do I get started?Cool, this is what I would recommend.Knowledge begins with words.What does that mean? Let's take an example.Many times when you travel, you meet people or are around strangers and you hear them talk. Most of the time you can guess their professions. Have you wondered how?It's by the words they choose and say.I evaluated the students and the grades are good.(Teacher)My boss is not a good person.(employee)I shorted that stock as the P/E ratio was high.(stock market trader)That patient had to be given a muscle relaxant.(Doctor or medical professional)So the lesson here is that if you want to excel in any field, you must learn (hopefully master) their words.And you know what, words are free! (yeeiiiii)So tell me if you understand any of these words.P/E ratioVolatilityBull MarketBear MarketCAGRY-o-Y growthIf not, then this is your first step, to learn and understand these words.How?Read your business newspaper.Listen to the market news.Use google.Psssttt!! Let me tell you a secret. Most of these complex sounding words are actually simple concepts.Really???Let me tell you the job I had previously.I was Production support analyst for a retail POS application for a telecommunication company which sold products in multiple verticals.Only the job title is complex.So why do all these finance companies and news channels use these fancy titles and words?Cause they want to sound smart, and want to sell you stuff.Do you know that most mutual funds don't outperform the market over the long term. (What that means that 6 year old niece can invest in the market and perform better that most mutual funds)Do you know that mutual funds are one of the riskiest investments you can make. (You put up all the money, take all the risk and don't get 100% of returns) Diversifying mutual funds is like taking multiple brands of multi vitamins. (No good end result)So when you start learning words, you'll understand the bullshit most TV channels and financial advisers preach as "investment advice" is really sugarcoated salesmanship.So when the next time you read an investment advice column and say, "That's nonsense", Congratulations, you are making progress.Don't get me wrong, mutual funds aren't bad. They are average investments for average investors. And as we know, average investors make money when the market goes up and lose money when the market goes down.But if you are reading this, that means you don't want to be average.So I encourage you to take the next step in your education and start learning words. I'll try to help as much as I can.Comments and questions are welcome.