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Roth IRA Contribution Limits, Tradeking, Emergency Fund

March 19th, 2007

NCN

I recently setup two Roth IRAs with Tradeking.com. After some debate, I have decided to withdraw $8000 from my savings account so that I can fully fund both IRAs for 2006. While I dislike the idea of depleting my emergency fund, I HATE the idea of missing out on 2006’s contributions. If you’ve ever wondered, here are the Roth IRA contribution limits for the next few years:

YEAR	AGE 49 & BELOW	AGE 50 & ABOVE
2006	$4,000.00	$5,000.00
2007	$4,000.00	$5,000.00
2008	$5,000.00	$6,000.00
2009	Plus $500	Plus $500

The limit for 2006 is $4000. (The fiscal year for contributions runs from April to April, so I have until April 17, 2007 to make my 2006 contributions.) My wife has a Roth, I have a Roth, so our COMBINED 2006 contribution limit is $8000. I sent in $800 last week, and I just transferred $7200 from my ING Direct account to my checking account. I will now send two checks for $3600 apiece to Tradeking, one for each Roth IRA.

I will work VERY, VERY hard to re-fund my ING Direct Savings account. I will treat this depletion of my savings account like a “debt” to myself. I will use my trusty “debt reduction” techniques to “re-pay” myself.

(If you are thinking about opening a brokerage account, I really like Tradeking. I’ve found that their customer service is pretty awesome. Read this post over at My Money Blog about how to get $100 for signing up with Tradeking.com.)

Posted in $48000, Retirement, Savings

12 Comments »

ESA Contributions Made And Invested

March 14th, 2007

NCN

I firmly believe in planning for the future. I have two children, ages 7 and 3. I realize that in 10 years, my oldest will be going to college. I feel that it is (partially) my responsibility to pay for her college education. I choose to use an ESA to save for college. ESA stands for Education Savings Account. (These accounts are also known as Coverdell Education Savings Accounts.) To read about the three main types of college savings accounts, check out this page over at TD Ameritrade. I use TD Ameritrade for my ESA. WHY? I opened an account for my daughter with them back in 2002, when I new very little about personal finance, so I’ve decided to stick with them. I really just don’t want to deal the hassle of moving the account. I have fully funded my daughter’s ESA for fiscal years 2006 and 2007. (The annual contribution for those years is $2000.) I sent a two checks from my bank account, one labeled “2006 Contribution” and the other labeled “20007 Contribution”. After waiting for the checks to clear and be deposited to the account, I sat on the money for a few days. I pulled the trigger at 10AM and purchased some more shares of RSP, an ETF which tracks the S&P 500. For more info about RSP, you can click this link to read about it over at Yahoo Finance. (I am NOT endorsing this ETF! I know very, very little about investing, and that’s why I’m purchasing a basic ETF.) Now I have to turn my energies towards my Roth IRAs and (maybe) my son’s ESA. My son is only 3, so I feel that I have a few more years before I have to REALLY begin to worry about his college savings.

Posted in $48000, College

2 Comments »

Three Topics In One Post: Taxes, Roths, Fees

March 13th, 2007

NCN

I have 3 “mini-posts” that I’ve decided to consolidate into one “bigger-post”.

I mentioned some time ago that I was ready to file my taxes. Do to the fact that I’ve been very, very busy, I am just now getting around to actually filing. For more information about the free service that I’ll be using to file my taxes online, read this post that I wrote in February.

Roth IRA updates. I received my account verification documentation from Tradeking.com. My wife and I now have Roth IRAs. I am super-excited! Now I have to make a decision. What happens if the calendar creeps towards April 15th and I have not managed to fully fund both Roths for 2006? Should I dip into my emergency fund? I don’t know what would bother me more: missing a year of fully funding my Roths OR using my emergency fund for a “non-emergency”. Here’s to hoping that I don’t have to make this difficult choice!

Fees. For the first time in 2 years, I paid a bank fee. My bank charges $2 if I make a withdrawal from another bank’s ATM. In a moment of anti-NCN behavior, I left home without my cash envelopes. I had to make a quick trip to another town about 45 minutes from where I live, and when I arrived, alas, I had no cash. Thus, I was forced to use a competitor’s ATM. So, I’m out $3.50. Dork!

Posted in $48000, Cash, Taxes

12 Comments »

Saving $48,000 This Year: First Roth Contributions Made

March 9th, 2007

NCN

I deposited my paycheck today and I just sent my first Roth IRA contributions. For more information about my goal of saving $48,000 this year, read this post. My total IRA contributions for 2006/2007 (for two accounts) will be $8000. I sent $400 to each account, for a total contribution of $800. (Normally I would save the entire amount in my ING Direct account and THEN transfer it to the two Roth IRA accounts, but I want to test out the new accounts to be sure that depositing the contributions goes off without a hitch.) I love saving money. It actually gets to be a little “addictive”. I’ve been reading several investing books (and visiting many of the investing sites listed at pfblogs.org!) trying to learn as much as I can about investing. I’ve never really liked buying individual stocks. My 403b account is rather aggressively distributed, so I’ll probably pursue a rather “tame” investment strategy inside of the two Roth IRAs. In fact, I’ll probably just buy more shares of RSP, an S&P500 ETF that I’ve purchased in the past. As always, whenever I make up my mind, I’ll let you know.

Posted in $48000

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Saving $48,000 This Year: Roth IRAs, Goal Change, Updates!

March 8th, 2007

NCN

I will be depositing my paycheck Friday and sending in my first ever Roth IRA contributions. I recently opened two Roth IRAs, one for myself and one for my wife. The maximum contribution for fiscal year 2006 is $4000 per Roth IRA. Fully funding our Roth IRAs for 2006 AND 2007 would take $16,000. Wow. That’s a pretty big number. But, considering that I have “missed out” on several years of retirement funding, I HATE the idea of not fully funding 2006 AND 2007. Also, technically, I have until April of 2008 to fund 2007’s Roth IRA account, but I like the idea of starting 2008 with a “clean slate” of NEW goals. I have yet to decide exactly how much I am going to send to each Roth. I will talk it over with my wife and “update” you guys tomorrow. (I’m thinking that I will send $500 to each Roth…)

Speaking of “Goals”, I had created a “trying to save or invest 60% of gross income” goal. I’ve decided, for tracking purposes only, to change the name of my goal to “Saving $48,000″. I can “breakdown” my $48K goal into “mini-goals” and I can track my progress throughout the year. Here’s my progress SO FAR: