maxing Roth IRA at once?

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EliteZags
Posts: 31
Joined: Wed Jan 08, 2014 6:44 pm

maxing Roth IRA at once?

Post by EliteZags »

anyone getting their 2014 Roth out of the way now? I've never set up automatic contributions for Roth since its such a small amount and just randomly deposited a grand every now and then til I hit max

still have end of year bonus burning a hole in my checking account and tempted to just get all 5500 out of the way now the way things are going (VFIFX)

and yes I realize I'm somewhat basing future performance on past returns..
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mhc
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Re: maxing Roth IRA at once?

Post by mhc »

Welcome to the forum.

If you have the money available, go ahead and do it all at once. One less thing to worry about.
52% TSM, 23% TISM, 24.5% TBM, 0.5% cash
Alan S.
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Re: maxing Roth IRA at once?

Post by Alan S. »

Generally, as long as you can afford to make the full contribution in January, you will be better off in the long run. Should an unexpected need for cash come up, you can always request a return of all or part of the contribution with allocated earnings and only the earnings would be taxed (and penalized). If you do it that way, you can still replace the contribution anytime before 4/15 of the following year.

The long range trend of the market is up, but there will sometimes be a losing year when the market will be lower at year end. If that happened you could always request a return of your original contribution (net of earnings) and then make a new full contribution. Your Roth balance then would not reflect the losses of that year. Those losses would be felt in your outside funds.

With respect to dollar cost averaging, contributing a lump sum early in the year at roughly the same time still meets that definition, just uses a long term time frame.
MichaelM24
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Re: maxing Roth IRA at once?

Post by MichaelM24 »

anyone getting their 2014 Roth out of the way now?
Yes. Last week.
grog
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Joined: Sat Jul 20, 2013 1:09 pm

Re: maxing Roth IRA at once?

Post by grog »

I say if you have the cash just sitting around with nothing better to do, go for it. Might as well get the money in earlier, since on average you will come out slightly ahead that way. Personally, I just barely got around to making my 2013 contribution, so I'm going to hold off to let my cash balances recover a little. I just helped my sister set up a Roth. She had a ton of money in the bank but no investments, and I just told her to make an 11K contribution right now all at once (5.5 for 2013 before the April deadline, 5.5 for 2014).
John3754
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Re: maxing Roth IRA at once?

Post by John3754 »

Why would you NOT make the full contribution now? What good is the money doing sitting in your checking account? I make the full contribution to my Traditional IRA every year on Jan 1st and then backdoor it to my Roth as soon as the funds clear.
grog
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Joined: Sat Jul 20, 2013 1:09 pm

Re: maxing Roth IRA at once?

Post by grog »

MichaelM24 wrote:
anyone getting their 2014 Roth out of the way now?
Yes. Last week.
Eager beaver award.
Topic Author
EliteZags
Posts: 31
Joined: Wed Jan 08, 2014 6:44 pm

Re: maxing Roth IRA at once?

Post by EliteZags »

Why would you NOT make the full contribution now? What good is the money doing sitting in your checking account?
as opposed to 'dollar cost averaging' as with 401k
I'm peppering it into some stocks and index funds also just making sure this is the correct responsible thing to do first
Longtimelurker
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Re: maxing Roth IRA at once?

Post by Longtimelurker »

According to my poll 59 bogleheads maxed their IRA's on Jan 1, while 30 had not yet made their maximum contribution: http://www.bogleheads.org/forum/viewtop ... 1&t=129533
Stay the course. If you can't resist greed, and fear is proven to be 2x as strong, you are doomed as an investor.
Angst
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Re: maxing Roth IRA at once?

Post by Angst »

EliteZags wrote:anyone getting their 2014 Roth out of the way now? I've never set up automatic contributions for Roth since its such a small amount and just randomly deposited a grand every now and then til I hit max

still have end of year bonus burning a hole in my checking account and tempted to just get all 5500 out of the way now the way things are going (VFIFX)

and yes I realize I'm somewhat basing future performance on past returns..
Welcome to the forum!
You'll discover over time that there are a wide range of people here, some of whom find $5,000 to be a lot of money to come up with over the course of a year. Then there are others who can't be bothered with I-bonds and their paltry $10,000 - $20,000 annual limitations. It works well to keep this full range of perspectives in mind when posting. ☺

ps - Yes! I invested the max in my Roth January 2nd.
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siamond
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Re: maxing Roth IRA at once?

Post by siamond »

Maxed out as well (well, still somewhat in process, due to backdoor IRA conversion delays).
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DiscoBunny1979
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Re: maxing Roth IRA at once?

Post by DiscoBunny1979 »

Alan S. wrote:
The long range trend of the market is up, but there will sometimes be a losing year when the market will be lower at year end
----------------------------

In my opinion, this might be misleading to a new investor. The long range trend is based upon the past. Borrowing a Motley Fool expression that goes something like . . . Past performance is not indicative of future results . . . it reminds me that while the past decades show an uptrend, that does not mean it will continue forever that way. I'd also like to suggest that there can be back to back years of bad years, or just a whole decade of breakeven performance - depending upon when money was put into the market to work. It is all based upon a person's starting point and when they contribute. So while the OP might be best served to just put the money to work now, that does not mean that the OP should do so believing that since the 'long range trend' is up, that there's nothing to worry about because of it. The future is not known and therefore anything about it is just guessing.
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