OK heres the deal I make bout 35k as a fireman city matches our 5% contribution 2 to 1.. So in other words i give say 70 bucks a pay check that will pay 140 towards my retirement though texas munincipal retirement. Thing is I make bout 25k a year working a side job with no retirement. Im 24 and I have the option of retiring as early as 2027. I have been placing 2k in a roth ira since i was 18. the roth is now direct deposited from my primary job check. Im figuring on contributing bout 100 a month some where any ideas?
You should just take that extra 100 dollars a month and put it into your ROTH or the Texas municipal retirement.
The max you can contribute for a Roth IRA is 5,000 dollars a year. You said in your original thread that you are only contributing 2,000 a year to the Roth.
I could be wrong, but I believe the max you can put in a Roth or Traditional IRA is $4,000 per year. I think I remember reading an article on Bankrate saying that if you do not owe any taxes after your credits, you can contribute to what's called a "Roth 401(k). Basically what happens is you are able to put money into the Roth tax free. Usually you pay up front when it comes to a Roth, but some loophole in this allows you to bypass that. So bottom line, the money goes in and comes out of the account tax free. That may be worth looking into if you fall into the small category of having your taxes zeroed out after the credits. I would definitely contribute to your employers 401(k), that is just free money, and if possible, continue to contribute to the IRA. I just did my friends taxes, and putting away $4,000 got him an additional $1,000 on his refund. It's pretty nice to get that just for putting some money away and letting it earn interest for you. IMO, unless you have high interest debt you're paying off, you can't go wrong putting money into an IRA. Pugs
Starting in 2008, the limit has been raised to $5,000. If you are 50 or older (or turn 50 this year), the limit is a $1000 higher, $6000. If you are making IRA deposit between now and April 15th for the tax year 2007, the old $4000 limit applies.
If you meet certain AGI guidelines*, you can deduct you IRA contribution. This mean your taxable income is reduced and the taxes you owe (based on taxable income) is also reduced. If you do not owe any taxes, this usually means that taxes got zeroed by some tax credits (child care tax credits, education tax credits, child tax credit, etc. which are targeted at lower income tax payers) If you do not owe any taxes, you do not need the IRA deduction (as much). Using a Roth IRA would make solid sense then. Roth 401K is a completely different beast. * its way more complicated than I am implying. Being able to deduct a IRA contribution involves AGI, whether your employer provides you with a retirement plan, whether you are a nonworking spouse, etc.
