Retirement 
9
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2011 Roth IRA Conversion Rules

In 2010, the income limit for Roth IRA conversions famously disappeared. Many people, who had been forced to get a traditional IRA because of higher income could convert that traditional IRA to a Roth version. It is still possible, in 2011, to convert your traditional IRA to a Roth IRA. Additionally, you are still able to rollover a 401k into a Roth IRA without the intervening step of rolling your 401k into a traditional IRA, and then converting the traditional IRA to a Roth.

However, there is a key difference: You can’t spread out the tax payments associated with your Roth IRA conversion. Before you decide whether a conversion to a Roth IRA is a good idea, consider the tax implications, and how you might be affected by making the move.

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 Retirement 
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401k or IRA: Which Should You Fund First?

One of the questions that many people have as they plan for retirement is whether they should fund a 401k or an IRA first. And, of course, the answer depends on what you are trying to accomplish with your retirement fund.

IRAs and 401ks have some different advantages and disadvantages, and it is up to you to determine what is most likely to be the best course of action for you. As you try to figure out what to do with your retirement money, here are some things to consider:

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 Investing 
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Be Wise to Investment Taxes

When it comes to investing, there are two things you can control – how much you pay in fees and how much you pay in taxes. With fees, it’s pretty straightforward because fees are disclosed up front. A brokerage charges you $x per trade, a mutual fund company pulls x% in expenses, and both are required by law to make those very clear.

Taxes are slightly different. The tax code can be complicated and it doesn’t help that there are so many different “types” of investment accounts from 401(k)s to Roth IRAs to your plain vanilla brokerage account. When it comes to investing, what you buy and where can be just as important as what you buy.

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 Retirement 
11
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2011 Retirement 401K, IRA, Roth IRA Contribution Limits

Every year around this time the IRS releases updated retirement contribution and tax bracket information for the coming year. We probably won’t see much by way of tax bracket information since Congress has its work cut out for it, but earlier this month they released contribution and deduction limits for retirement account contributions for 2011. As you’d expect, not much changed since inflation was minimal.

There were no changes to the contribution limits and some phaseouts saw their ranges increase slightly.

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 Retirement 
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Why You Should Convert IRAs in 2010

Nest Eggs!Can you believe it’s November already? As our thoughts go to preparing that gluttonous Thanksgiving meal and the feasts yet to come during the holidays, one thought you might want to spend a few cycles on is whether you want to convert your Traditional IRA to a Roth IRA in 2010, rather than 2011. If you’re unfamiliar with this whole subject, I invite you to check out this Roth IRA conversion mini-roundup to familiarize yourself with the process.

This post will discuss the idea of whether you should convert your IRA to a Roth IRA this year, in 2010, or if you should wait until next year.

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 Investing 
12
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2010 Roth IRA Conversion Mini-Roundup

As 2010 winds down, you might be considering a Roth IRA conversion. 2010 is different than other years because the income restriction on conversions has been lifted. Last year, if you had an adjusted gross income over $100,000 then you couldn’t convert a Traditional IRA to a Roth IRA. While this limit may seem high, remember that the limit applies to both singles and married couples. Many more tax filers who are looking to convert are married filing jointly with an AGI above $100,000. The 2010 conversion loophole lets those taxpayers convert (whether or not you should convert is a totally different story).

Zapeta emailed me the other day asking me if I could do a mini-roundup of all the 2010 Roth IRA conversion posts I’ve written and so here it is!
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 Investing 
10
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How Often Should I Rebalance My Investment Portfolio?

After writing this morning’s Betterment review and reading about their rebalancing feature, I started thinking about rebalancing. Betterment rebalances your portfolio after each quarter and if your actuals deviate from your allocation by more than 5%. In other words, they rebalance on a schedule and when the deviation exceeds a certain level (5%). When you read about rebalancing and when you should do it, many places often just point to a calendar date – rebalance every quarter, every six months, or once a year.

What is Rebalancing?

Rebalancing is the act of adjusting your actual investment allocation so that it meets you desired investment allocation. If you want to be 80% stocks and 20% bonds, you need to rebalance your investments periodically since both will likely perform differently over time. How often and when you rebalance is a matter of debate but as is the case with any type of investing (or gambling), it’s about the odds, your plan, and sticking with the plan as long as it’s worth sticking to!

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 Retirement 
20
comments

What is the Best Roth IRA Broker?

Every week I get at least one email from a reader asking me which broker is the “best” for their Roth IRA. The number of emails jumps exponentially after the new year and, fortunately, falls after April 15th! You have until April 15th, 2011 to decide if and how much you will contribute to your Roth IRA for 2010. If this is the first year you’re contributing to a Roth IRA, you’ll also have to pick who you want to watch over your money.

Before you decide where to put your money, you really need to decide what you want to invest in. If you want to invest it in mutual funds, you’ll be best served going with the company that runs the funds you like. The two big names in the mutual fund space are Fidelity and Vanguard. If you really like their funds, I recommend you open a mutual fund account directly with them because you will be able to buy and sell shares for free.

If individual stocks are more your thing, then you’ll want to pick a broker that offers services you like at a cost that’s affordable. Discount brokers are all the rage these days, with sub-$5 stock commissions and all the research you could ever want. My personal opinion is that as long as you can satisfy the minimum balance requirements and the fees aren’t expensive, the broker is less important. I personally like TradeKing because their customer service has been rated one of the best and I’ve never had issues with it myself (I use their online chat feature all the time). They aren’t necessarily the cheapest anymore, there are a few even cheaper, but there’s a bit of an inertia effect there (I have my stocks there and I don’t trade much, so I don’t want to go through the process of moving them).

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