ROTH IRA/ Housing Purchase

[(former)FormerSanDiegan]

You can withdraw $10,000 penalty free (and this can include earnings) for a first time home purchase. This is penalty-free if you’ve had the Roth for more than 5 years and can include earnings. The 10K limit applies to each individual, so if there are two of you you could take 20K out.

Most likely you have $10K of contributions and shouldn;t even bother with the paperwork of indicating the use as first-time home purchase. Remember you can take out your contributions at any time penalty-free for any purpose. The exception is that funds that are contributed as a ROllover need to be vested for 5 years before doing so.

For those of you who are eligible (less than 160K or so for Married filing joint), a ROTH IRA should be your first choice for excess funds after getting the match from an employer 401K.

[Raybyrnes]

FSD
“For those of you who are eligible (less than 160K or so for Married filing joint), a ROTH IRA should be your first choice for excess funds after getting the match from an employer 401K.”

I always go back and forth on that one. Becaeu I ahve had the luxury of being able to max out both the 401K and the Roth I ahve not had to choose between the 2. But if I understand you correctly your advice would be as follows.

Contribute up to the matching contribution in 401k.
Next contribute to Fully funding ROTH IRA.
If ROTH IRA is Fully Funded consider going back to fully funding 401K.

Do this as opposed to first maxing out the 401K and then trying to fund ROTH IRA.

Do I understand this correctly or am I missing something.

[Raybyrnes]

FSD
“For those of you who are eligible (less than 160K or so for Married filing joint), a ROTH IRA should be your first choice for excess funds after getting the match from an employer 401K.”

I always go back and forth on that one. Becaeu I ahve had the luxury of being able to max out both the 401K and the Roth I ahve not had to choose between the 2. But if I understand you correctly your advice would be as follows.

Contribute up to the matching contribution in 401k.
Next contribute to Fully funding ROTH IRA.
If ROTH IRA is Fully Funded consider going back to fully funding 401K.

Do this as opposed to first maxing out the 401K and then trying to fund ROTH IRA.

Do I understand this correctly or am I missing something.

[Raybyrnes]

FSD
“For those of you who are eligible (less than 160K or so for Married filing joint), a ROTH IRA should be your first choice for excess funds after getting the match from an employer 401K.”

I always go back and forth on that one. Becaeu I ahve had the luxury of being able to max out both the 401K and the Roth I ahve not had to choose between the 2. But if I understand you correctly your advice would be as follows.

Contribute up to the matching contribution in 401k.
Next contribute to Fully funding ROTH IRA.
If ROTH IRA is Fully Funded consider going back to fully funding 401K.

Do this as opposed to first maxing out the 401K and then trying to fund ROTH IRA.

Do I understand this correctly or am I missing something.

[Raybyrnes]

FSD
“For those of you who are eligible (less than 160K or so for Married filing joint), a ROTH IRA should be your first choice for excess funds after getting the match from an employer 401K.”

I always go back and forth on that one. Becaeu I ahve had the luxury of being able to max out both the 401K and the Roth I ahve not had to choose between the 2. But if I understand you correctly your advice would be as follows.

Contribute up to the matching contribution in 401k.
Next contribute to Fully funding ROTH IRA.
If ROTH IRA is Fully Funded consider going back to fully funding 401K.

Do this as opposed to first maxing out the 401K and then trying to fund ROTH IRA.

Do I understand this correctly or am I missing something.

[Raybyrnes]

FSD
“For those of you who are eligible (less than 160K or so for Married filing joint), a ROTH IRA should be your first choice for excess funds after getting the match from an employer 401K.”

I always go back and forth on that one. Becaeu I ahve had the luxury of being able to max out both the 401K and the Roth I ahve not had to choose between the 2. But if I understand you correctly your advice would be as follows.

Contribute up to the matching contribution in 401k.
Next contribute to Fully funding ROTH IRA.
If ROTH IRA is Fully Funded consider going back to fully funding 401K.

Do this as opposed to first maxing out the 401K and then trying to fund ROTH IRA.

Do I understand this correctly or am I missing something.

[(former)FormerSanDiegan]

Raybyrnes.
Contribute up to the matching contribution in 401k.
Next contribute to Fully funding ROTH IRA.
If ROTH IRA is Fully Funded consider going back to fully funding 401K.

Do this as opposed to first maxing out the 401K and then trying to fund ROTH IRA.

Yes that would be my general advice. Of course, it’s best if you can max out both the 401K and Roth. We did this for about 5 years and are now glad we did.

Note, however, there could be extenuating circumstances on an individual basis …
With the ROTH you do not get an immediate tax break. It’s possible that some extra dollars put into your 401K instead would help you drop below some key thresholds for phase out of deductions, or eligibility for certain credits or deductions, or may influence the amount of AMT. However, for most folks making under the Roth limits these probably are not significant.

[(former)FormerSanDiegan]

Raybyrnes.
Contribute up to the matching contribution in 401k.
Next contribute to Fully funding ROTH IRA.
If ROTH IRA is Fully Funded consider going back to fully funding 401K.

Do this as opposed to first maxing out the 401K and then trying to fund ROTH IRA.

Yes that would be my general advice. Of course, it’s best if you can max out both the 401K and Roth. We did this for about 5 years and are now glad we did.

Note, however, there could be extenuating circumstances on an individual basis …
With the ROTH you do not get an immediate tax break. It’s possible that some extra dollars put into your 401K instead would help you drop below some key thresholds for phase out of deductions, or eligibility for certain credits or deductions, or may influence the amount of AMT. However, for most folks making under the Roth limits these probably are not significant.

[(former)FormerSanDiegan]

Raybyrnes.
Contribute up to the matching contribution in 401k.
Next contribute to Fully funding ROTH IRA.
If ROTH IRA is Fully Funded consider going back to fully funding 401K.

Do this as opposed to first maxing out the 401K and then trying to fund ROTH IRA.

Yes that would be my general advice. Of course, it’s best if you can max out both the 401K and Roth. We did this for about 5 years and are now glad we did.

Note, however, there could be extenuating circumstances on an individual basis …
With the ROTH you do not get an immediate tax break. It’s possible that some extra dollars put into your 401K instead would help you drop below some key thresholds for phase out of deductions, or eligibility for certain credits or deductions, or may influence the amount of AMT. However, for most folks making under the Roth limits these probably are not significant.

[(former)FormerSanDiegan]

Raybyrnes.
Contribute up to the matching contribution in 401k.
Next contribute to Fully funding ROTH IRA.
If ROTH IRA is Fully Funded consider going back to fully funding 401K.

Do this as opposed to first maxing out the 401K and then trying to fund ROTH IRA.

Yes that would be my general advice. Of course, it’s best if you can max out both the 401K and Roth. We did this for about 5 years and are now glad we did.

Note, however, there could be extenuating circumstances on an individual basis …
With the ROTH you do not get an immediate tax break. It’s possible that some extra dollars put into your 401K instead would help you drop below some key thresholds for phase out of deductions, or eligibility for certain credits or deductions, or may influence the amount of AMT. However, for most folks making under the Roth limits these probably are not significant.

[(former)FormerSanDiegan]

Raybyrnes.
Contribute up to the matching contribution in 401k.
Next contribute to Fully funding ROTH IRA.
If ROTH IRA is Fully Funded consider going back to fully funding 401K.

Do this as opposed to first maxing out the 401K and then trying to fund ROTH IRA.

Yes that would be my general advice. Of course, it’s best if you can max out both the 401K and Roth. We did this for about 5 years and are now glad we did.

Note, however, there could be extenuating circumstances on an individual basis …
With the ROTH you do not get an immediate tax break. It’s possible that some extra dollars put into your 401K instead would help you drop below some key thresholds for phase out of deductions, or eligibility for certain credits or deductions, or may influence the amount of AMT. However, for most folks making under the Roth limits these probably are not significant.

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