Roth IRA Question

[AgTag23]

Quick IRA question for the green screeners. Wife and I both have Roth IRA. We have an extra $500/mo to invest.

Is it better to put the full 500 into one, or split 250 in each? Both IRAs are a mix of mutual funds with about the same performance.

Thanks.

[trophy8]

Lot of variables there. Fees etc. whichever makes the most money. I’m fairly young so I roll high risk on most of mine. Bigger gains with the understanding it gets hit harder at times. There’s several TBH guys that do them. One of them has one of my accounts.

[HogHunter34]

I’m assuming y’all both already contribute to each. If so, you’ll exceed max limit at $500 more a month going into to just 1. Max limit is $6k per year or $500/mo for 2019

[texasair]

While we are on the subject or Roths. Do they still have the maximum annual income ceiling for contributions?

[thegrouse]

While we are on the subject or Roths. Do they still have the maximum annual income ceiling for contributions?

Yes, but it is easily bypassed with a backdoor Roth

[meltingfeather]

You might think about balancing between traditional and Roth... especially as your income rises.

[Arrowthreat]

If the investments are long term, I believe the Roth is the way to go. Not being taxed on the earnings is a safe bet. Especially due to the unpredictability of what that tax may be in years to come.

[antonlsu]

If the investments are long term, I believe the Roth is the way to go. Not being taxed on the earnings is a safe bet. Especially due to the unpredictability of what that tax may be in years to come.

X2

[be12hunt]

Shouldn’t make much of a difference. If they are balanced similarly then the returns should be similar. The only other thing I would consider is I believe mutual funds often offer discounted fees for larger buys. If so then doing it in one might be better.

[WItoTX]

Either way, doesn't really matter. The key is getting as much money into retirement as possible. So don't wait to start dumping that money somewhere because you don't know which is better.

I know some financial wizard will say I am wrong, but I really don't think it matters a whole lot.

[Shane]

As always, the answer is "it depends"...

How much are you and she currently contributing to your Roth IRAs? Are you maxing either/both out yet?

Whether you're maxing out or not, is it important to you/her to have money in each spouse's name, or are you both comfortable with having more money in just one spouse's account?

Do you have different risk tolerance and/or investment objectives in your respective accounts?

What is the age difference between the two of you? Do either/both of you have early retirement as a goal?

Is there anything else that makes your Roth IRA accounts or goals different from each other?


As far as investment returns go, if you are investing in the same things, then you'll end up with the same amount of money down the road whether you put it all into one account or split it between the two. But there are other considerations besides just that.

[meltingfeather]

Not being taxed on the earnings is a safe bet.

You're taxed on the way in, and what the bottom line looks like in retirement for Roth compared to traditional depends on specific factors-- Roth is not a silver bullet for all retirement investing.
If you're paying taxes at a high rate on the way in and have an ability to manage your tax liability in retirement because of a mix of options, 100% Roth might not be the wisest choice.
The tax you pay before the money ever gets to your Roth account is compounded by the lost potential earnings over all the years that money could have been working for you.

[HogHunter34]

You're taxed on the way in, and what the bottom line looks like in retirement for Roth compared to traditional depends on specific factors-- Roth is not a silver bullet for all retirement investing.
If you're paying taxes at a high rate on the way in and have an ability to manage your tax liability in retirement because of a mix of options, 100% Roth might not be the wisest choice.
The tax you pay before the money ever gets to your Roth account is compounded by the lost potential earnings over all the years that money could have been working for you.

This is why I do both in my 401k. I like to get some tax relief on the tax deferred option but also I want some tax free savings during retirement with a Roth account. That way when you need a lump amount for a major expense whether paying cash for a vehicle, new HVAC, etc... you can take that $ amount out and not get hit on income tax. The tax deferred portion can serve well as supplemental income to SS

[glen]

Max out both your Roth IRAs before any other investments if your looking at retirement goals.

[brokeno]

Doesn't matter. She is going to get half either way