Your recommendations please.....

[globetraveler]

Thanks Jim!

I will take a day or so and look further into your suggestion and go over it with him.

Globetraveler

[jIM_Ohio]

One edit to above= in sleeping on this, I could see merit to using a Roth conversion strategy with a traditional IRA. This would increased taxes paid in retirement some, and add restrictions and requirements to withdraws.

Restrictions- money accessed before age 59.5 might be subject to 10% penalty in addition to taxes.
Requirements- money must be withdrawn at age 70.5, regardless of whether money is needed, and these withdraws might put person in a higher tax bracket,

My post above (second to last post) suggested a technique which provides the investor 100% flexibility on when money is spent with slightly higher taxes paid in next 15 years for lower taxes paid in retirement.

If a traditional IRA is used,a person could defer the taxes paid while working, then attempt to transfer assets from traditional to Roth when AGI is lower in retirement.

This still assumes the basic "tax rate in retirement is less than it is now" issue.

[globetraveler]

So the family member in question has went and spoke with a finance person at his bank (Bank of America) about opening up a IRA.

He was fully intending on opening the account and partially fund it while he was at the bank.

The issue he has ran into is that the finance person he was speaking with told him that he would have to make his payments/deposits to his IRA in person.

The original reason he went to his bank first to look into a IRA was so it would be intergrated into his online banking so he could make deposits bi-monthly or monthly.

So my question now is, do you guys know of a group (like possibly TROWE price) that offers IRA's that you can electronically deposit the funds into monthly?

He works out of the US for several months at a time and wants to make it as simple as possible for himself.


globetravler

[disneysteve]

So the family member in question has went and spoke with a finance person at his bank (Bank of America) about opening up a IRA.

So my question now is, do you guys know of a group (like possibly TROWE price) that offers IRA's that you can electronically deposit the funds into monthly?

First, NEVER, NEVER, NEVER open an IRA at a bank with the sole possible exception of if you want to fund your IRA with a CD. BoA has an investment department that I'm quite certain sells nothing but high cost, load mutual funds. Stay away!

Yes, mutual fund companies allow you to fund your account electronically. Actually, I find it hard to believe that BoA doesn't offer that option as well. I deal with Vanguard. I opened the account online. I fund it online. Very simple.

[jIM_Ohio]

So the family member in question has went and spoke with a finance person at his bank (Bank of America) about opening up a IRA.

He was fully intending on opening the account and partially fund it while he was at the bank.

The issue he has ran into is that the finance person he was speaking with told him that he would have to make his payments/deposits to his IRA in person.

The original reason he went to his bank first to look into a IRA was so it would be intergrated into his online banking so he could make deposits bi-monthly or monthly.

So my question now is, do you guys know of a group (like possibly TROWE price) that offers IRA's that you can electronically deposit the funds into monthly?

He works out of the US for several months at a time and wants to make it as simple as possible for himself.


globetravler

It is relatively simple to open an account at TRP. Look at their web site and see what it takes (there is an "open a new account" link).

He has 2-3 choices to fund the account

1) Monthly deposits initiated by T Rowe Price. Must commit $50 per month per account. This technique also waives fund minimums.

2) Mail a check into TRP. First check must accompany a new account form, and subsequent desposits will have minimums (probably $100)..

3) Mail check to TRP and set up autmatic fund transfers from bank. Fill out same form as #2 and mail in, then also attach cancelled check to set up electronic deposits. He can then make deposits if he has access to internet and the money is already in his primary bank account.

[globetraveler]

Thanks!

[noppenbd]

Take a look at Vanguard too. Although Jim's advice is no doubt top-notch, I might suggest a simpler strategy since your and his experience levels are low.

Open 2 Vanguard accounts (TRP or Fidelity ok also): a traditional IRA and a taxable mutual fund account.
-Send $500 a month to a traditional IRA ($6000 a year). Put it in a Target Retirement 2025 account. If $500 a month doesn't meet the minimum then just do an initial $6000 deposit and be done with it for the year.

-Send the remaining funds to the taxable mutual fund account, invested in one or more of Vanguard's Tax Managed funds. These funds use a variety of strategies to minimize tax bills and are intended for taxable accounts. Tax Managed Balanced has returned 7.7% since inception (50/50 stocks and bonds), and Tax Managed Growth and Income has returned 9.3% since inception (100% stocks). TM Balanced has a miniscule expense ratio of 0.12%. TM G&I is slightly higher but still tiny at 0.15%. Expense ratio is the single greatest predictor of future returns.

Vanguard allows you to link your checking account with your investment accounts for lump sum deposits or regular automatic deposits. It is very easy to do. Also, their reputation is outstanding.