SAHM with "old" Roth IRA

[Emmeline II]

I have a Roth IRA from when I was working. In Jan we can finally start contributing again, but I'm wondering if we should contribute to both or only one?

[mightymoo]

Originally Posted by i'mmykid'$mom

I have a 401K from when I was working. In Jan we can finally start contributing again, but I'm wondering if we should contribute to both or only one?

We rolled my 401k over into an IRA. We don't contribute to it, just to DH's 401k. The reason to do that is in an IRA I am not limited by the company I no longer work fors choice of investment options. Can you contribute to a 401k if you no longer are working at that company? They always talk about rolling them over (even into new 401ks), I'm not sure if you can. Call the company that holds it (fidelity, etc) and ask.

If you can contribute to it, these are the things to consider that I can think of. Could having money in your name (rather than all in DH's) might be better for you in a divorce scenario (not that I'm suggesting that might happen, but it just occurred to me.) though I don't know, maybe it won't matter. I assume you are his beneficiary, so if he died you'd get all the money anyway. I would say that definitely contribute to his up to the matching portion (if his company offers one), then after that consider which has the best investment options available.

[Emmeline II]

Oops! I have a Roth IRA not a 401K. I was wondering because I have seen a couple of posters mention contributing to their dh retirement "vessel". I guess that if it is a 401K through their dh's company that makes sense. It would probably help to know if that is the case, the poster never had their own 401K, or didn't know that a non-working spouse can now open a Roth IRA if their spouse has one .

[Herausgeber]

I'm still somewhat confused by your question.

I'm big on SAHPs having retirement savings in their own names, as a security issue as well as a way to recognize that the work they are doing does indeed have value.

[Emmeline II]

Originally Posted by Herausgeber

I'm still somewhat confused by your question.

I'm big on SAHPs having retirement savings in their own names, as a security issue as well as a way to recognize that the work they are doing does indeed have value.

I was just wondering why some posters were contributing to the working parent's retirement plan and not to one of their own as well; if there was some advantage.

[TiredX2]

Originally Posted by i'mmykid'$mom

Oops! I have a Roth IRA not a 401K. I was wondering because I have seen a couple of posters mention contributing to their dh retirement "vessel". I guess that if it is a 401K through their dh's company that makes sense. It would probably help to know if that is the case, the poster never had their own 401K, or didn't know that a non-working spouse can now open a Roth IRA if their spouse has one .

Even if your spouse doesn't have an IRA the non-working spouse can open one. The "worker" just needs to make enough to cover it.

I fully funded my IRA this year and didn't make a dime.

[CJ 5]

IF your Roth IRA wasn't a rollover and it was just one you opened I would say stick with it. I have read a great book called something like the lazy investors guide. I highly recomend it for a very reasonable way to invest in your ROTH without research and still getting very good returns.

[zinemama]

Keep it and continue to fund it. You need money in your own name. Everything dh and I have is in both our names - except my Roth. I started it before we were married, and I'm continuing to fund it. As, Tired said, I don't make a dime, but I've earned every cent of the contributions I make to it.

[velochic]

So, you were contributing to a Roth IRA when you were working. I'm sure that isn't a rollover from a 401(k) because you can't roll a 401(k) into a Roth. YOu have to roll it into a traditional IRA, the you have to convert the traditional IRA to a Roth and that's usually not a fiscally advantageous move.

To answer the question, the major advantage of investing in the working spouse's 401(k) is that the company typically will match a certain percentage of your investment. That is, if you invest $1000 in the 401(k), the company will invest $1000 for you also. That is an INSTANT 100% return on your money. You can't get those kinds of returns from traditional or Roth IRAs. The other major advantage is that this money is invested pre-tax. So, instead of Uncle Sam earning interest off of your taxes, you get to earn the compounding interest instead. The final advantage is that you are allowed to invest up to $15,000 in a 401(k) annually. The only real disadvantage of a 401(k) is that you are limited in investment options - you can invest only in options your employer has chosen.

A traditional or Roth IRA is separate from a 401(k) and you are allowed to invest up to $4000 annually for these ($5000 starting in 2008) no matter what you do with the 401(k). Advantages: for traditional IRA, your contributions might be tax deductable (depending on your income), for Roth, your withdrawals are tax-free. You cannot contribute to a Roth if your combined annual income is over $150K/ year.

So, you should contribute to the 401(k) up to the amount the employer matches. Beyond that, if the employer has good investment options, you should still invest in the 401(k) because of the tax advantages. If you're worried about what happens to the money in the case of a divorce, you get half of what was earned and invested during the marriage. You can file a (QDRO) Qualified Domestic Relations Order to get half rolled into a qualified traditional IRA for you.

If the employer doesn't have good investment options, I'd contribute to the Roth after employer matching dollars, or if you make too much money, a traditional IRA.

[Emmeline II]

My Roth IRA was always a ROTH IRA, I said 401K by mistake , and (unfortuately) my dh's employer doesn't offer matching fund 401K: ; so we'll just keep things as they are .