Best place (simple) to open ROTH ?

[TheRatPack]

We contribute to an employer based IRA, but where is a good place to open a ROTH? We wanted to put some money in it since we're maxing out the employee matching on the others.

It seems everyone offers a ROTH these days, from car insurance companies to regular banks.....then there are companies online like Fidelity. I'd like something simple, without fees or minimal fees....etc. Am I dreaming LOL

 

[HeyIt'sMe]

My DH & I both have Roth IRAs at T. Rowe Price that we started a couple of years ago. The accounts were very simple to open online.

T. Rowe price funds are no load funds, they have low expense ratios and the investment minimums are low. Some of the other investment companies required a large investment upfront but T. Rowe Price has their 'automatic asset builder' which requires just a minimum of $50 invested per month (per fund).

 

[Soben]

We contribute to an employer based IRA, but where is a good place to open a ROTH? We wanted to put some money in it since we're maxing out the employee matching on the others.

It seems everyone offers a ROTH these days, from car insurance companies to regular banks.....then there are companies online like Fidelity. I'd like something simple, without fees or minimal fees....etc. Am I dreaming LOL

Vanguard is great. They have very low fees and offer target date funds that are easy! I have auto transfer and it's "set it and forget it"

 

[ceecee]

I have several at banks and our credit union. Watch that they don't charge you a fee...one bank had a $45 a year maintenance fee.

 

[PatsMom]

First check on exactly what type of employer plan you have. You mentioned it is an IRA - if it is a traditional IRA that the company is just making deposits for you, you may be restricted on how much you can contribute to the Roth. I expect you are probably referring to a SIMPLE IRA which would have no effect on Roth contributions but you should make sure.

There are some income limitations on Roth contributions. Make sure your AGI is within those limits before you contribute. You can withdraw excess contributions up until tax filing time without penalty but it is slightly messy to do.

Any discount brokerage should have a fairly simple process for opening accounts. Vanguard is easy, but I believe they charge maintenance fees on small accounts. If you have other accounts there, they do consider total household balance. Fidelity, Schwab and TD Ameritrade are also simple to open and they offer a variety of low cost, no transaction fee funds. Both Schwab and Fidelity have index funds that have very competitive expense ratios. Not sure about TD as I haven't had much to do with them.

Target date funds tend to be expensive - make sure you consider not only the fund's expense ratio, but the expense ratio's of the underlying funds as well. Target date funds are a "fund of funds".

 

[furb & dez]

First check on exactly what type of employer plan you have. You mentioned it is an IRA - if it is a traditional IRA that the company is just making deposits for you, you may be restricted on how much you can contribute to the Roth. I expect you are probably referring to a SIMPLE IRA which would have no effect on Roth contributions but you should make sure.

There are some income limitations on Roth contributions. Make sure your AGI is within those limits before you contribute. You can withdraw excess contributions up until tax filing time without penalty but it is slightly messy to do.

Any discount brokerage should have a fairly simple process for opening accounts. Vanguard is easy, but I believe they charge maintenance fees on small accounts. If you have other accounts there, they do consider total household balance. Fidelity, Schwab and TD Ameritrade are also simple to open and they offer a variety of low cost, no transaction fee funds. Both Schwab and Fidelity have index funds that have very competitive expense ratios. Not sure about TD as I haven't had much to do with them.

Target date funds tend to be expensive - make sure you consider not only the fund's expense ratio, but the expense ratio's of the underlying funds as well. Target date funds are a "fund of funds".

This is all good advice.

Note that almost everyone will charge a yearly maintenance fee (how do you expect them to make money? They're not charities!). Also, regardless of what type of IRA (traditional or Roth), there is a yearly maximum you can contribute (last time I checked it was $5000, or $6000 if you are 50 years of age or older).

That $5000 (or $6000 for over 50s) goes for all accounts... so if you've already contributed $4000 to your traditional IRA, you would only be able to contribute $1000 to your Roth.

My only real piece of advice: Don't take a Random-Internet-Stranger's advice lmao, talk to your tax advisor.

 

[TheRatPack]

We don't have a tax advisor. We have a Simple IRA at work. We are simple people and just want a simple do it yourself Roth IRA with no frills and minimum fees. I don't want to hire a tax advisor or a financial planner.....is that really necessary? Maybe we'll just have more taken from our check and forgo the separate account for a Roth if it's that difficult to do on your own.

 

[furb & dez]

We don't have a tax advisor. We have a Simple IRA at work. We are simple people and just want a simple do it yourself Roth IRA with no frills and minimum fees. I don't want to hire a tax advisor or a financial planner.....is that really necessary? Maybe we'll just have more taken from our check and forgo the separate account for a Roth if it's that difficult to do on your own.

*chuckle* The problem is that anything to do with the tax code isn't "simple." I would again strongly advise you to seek a professional, to avoid a situation where you might end up paying more taxes (or a tax penalty).

 

[runwad]

We don't have a tax advisor. We have a Simple IRA at work. We are simple people and just want a simple do it yourself Roth IRA with no frills and minimum fees. I don't want to hire a tax advisor or a financial planner.....is that really necessary? Maybe we'll just have more taken from our check and forgo the separate account for a Roth if it's that difficult to do on your own.

Yes it really is that simple. I have a roth ira at vanguard, you just have to pick what kind of mutual fund you want to invest it in or even a target date fund. Call them up they are very helpful and will answer any questions you have and walk you thru the whole process.

 

[golfgal]

We don't have a tax advisor. We have a Simple IRA at work. We are simple people and just want a simple do it yourself Roth IRA with no frills and minimum fees. I don't want to hire a tax advisor or a financial planner.....is that really necessary? Maybe we'll just have more taken from our check and forgo the separate account for a Roth if it's that difficult to do on your own.

I would say yes, everyone should sit down with a financial advisor at least once every couple years. They can help direct you with your investments and help you figure out what is the best plan for you. Just by you saying you want simple and will maybe forgo the separate account is a good reason you should sit down with one. They can explain the differences, pros/con's, etc. and again, set up a good, solid plan for you. Roth's if you qualify, are a great tool to have in your portfolio. They are after tax contributions so when you go to withdraw the money, you don't pay tax on those disbursements. It is a good way to off set the tax hit when you take money out of your 401K (or SIMPLE IRA).

Also, they will help you with how to allocate your funds in your accounts and they keep track of your accounts, rebalance as needed, etc. They will also make sure you are adequately insured for life, disability, long term care (if appropriate), etc. The quickest way to NOT be prepared for retirement is to NEED one of these policies and not have one.

There is a lot more to retirement planning then just sticking some money into a retirement account.

 

[TheRatPack]

We both have the recommended insurance policies (life and disability). We spoke to our bank this morning and their financial person is going to call us and set up a time to meet. I figured since it's a service of our bank we might as well use it, although not sure that we'll invest in their offerings...just really don't know.

We really just wanted to add to our already growing retirement funds the best way we could, but still being simple....I don't want to learn all the trading stuff just to invest. I know education is power, but again.....I don't want to have to be a certified financial advisor before I can put my money somewhere LOL I also don't want to choose unwisely and end up broke either.....but putting it all in CDs to be safer seems a bit too slow growth at my age LOL

 

[dejr_8]

Another vote for Vanguard. With Vanguard, we have our traditional IRAs, Roth IRAs, 401K roll overs and an education IRA. We haven't had any problems setting up accounts.

 

[PatsMom]

We don't have a tax advisor. We have a Simple IRA at work. We are simple people and just want a simple do it yourself Roth IRA with no frills and minimum fees. I don't want to hire a tax advisor or a financial planner.....is that really necessary? Maybe we'll just have more taken from our check and forgo the separate account for a Roth if it's that difficult to do on your own.

Since I am a financial planner, I obviously think that everyone should have a financial planner they work with! Many charge on an hourly basis and will just help you with your overall allocation, forecasting how much you need to save for retirement, an analysis of which type of retirement plan might be best for you.

If you have SIMPLE IRAs at work the only limit you need to worry about is the AGI limit for contributions. For joint filers, you can make a full contribution up to $169,000 of AGI in 2011. You can contribute $5,000 plus a $1,000 catch up if you are over age 50.

Not all discount brokerages charge maintenance fees on small accounts - especially retirement accounts. Some waive the fee if you sign up for monthly deposits. Some have no fee anyhow. You can get all the details on their web sites.

Watch out for bank "services". They are frequently offering funds that have sales loads. If your bank does have a financial planner available to you at no charge and who isn't selling product, you could have a great resource.

This is not intended to be financial advice - I have to disclaim because of my profession.

 

[TheRatPack]

Oh I'm sure my bank is selling a product....just like any other bank LOL I figured I'd at least ask the basic questions presented here though about minimums/maximums...etc. My husband needs to increase his deductions at work for his Simple IRA, although we're already at the max of employer matching there....so a Roth just seemed like a good choice. We want to just invest the max, $5000.00 for each of us and avoid monthly contributions if that's even an option. I see so many where you can sign up for monthly deductions from your bank account...etc and really if we can just save up all year and give them $5000.00 each year (does it have to be after April each year though since you can contribute up until then every year?).

Anyhow...thanks for all the advice My grandparents retired with a small employer retirement plan but they'd put most of their money in simple accounts and CDs which built quite a bit over the years. They were frugal and it's worked out well for them....I just don't want to be caught off guard when I'm their age.

 

[PatsMom]

You have until your tax filing deadline to make contributions. But if you make monthly deposits, the custodian will most likely default into crediting each month's deposit in the year it was made. So when they are figuring your 2011 contributions, they would end with December, even though you can contribute until April. This is one of the inconveniences of monthly deposits.

If you make a lump sum contribution, you just write on the check which tax year the deposit is for. Or if you do an electronic funds transfer, most brokerages will allow you to specify tax year of the contribution.