John G

Well, you could just call Vanguard and ask them ! I believe you are looking at the commission schedule for stock purchases rather than mutual fund purchases. Let's clear up some things. With IRAs/Roths, FEES generally refer to annual custodial maintenance fees. These vary from ZERO to nominal amounts like $10-20. Fees can be waived if you just ask, and asking is pretty painless. They may be waived if you sign up for electronic statements and confirmations. They are often waived when your assets grow beyond a certain threshold. A few years ago, 20-25K was often the cited threshold, but competition is driving that much lower. I think a few brokerages/fund families have reduced that to $5,000. Sometimes non-IRA/Roth assets at the firm may count towards that threshold. You'll have to ask. NO LOAD Funds means no front end or exit commisions. So the no load fund is not dinging you for transaction fees. Transaction fees: almost all brokerages offer a bevy of mutual fund choices. Some of these are loaded (have imbedded commisions on in or out) - - boo, hiss. But, no load fund families have marketing relationships with brokerages so that you can acquire mutual funds without transaction fees. When there is no relationship, then the brokerage may charge some kind of transaction fees. When you contact a brokerage, ask about how many no-load funds have zero transaction fees. Bear in mind that you probably are not going to have very many mutual fund "trades". Generally you hold funds for many years. You won't find every fund available at every brokerage, but with over 8,000 mutual funds I suspect you will have ample choices that will get the job done. PS: If you think fees are the biggest issue, wait until you find out about how a lack of investing knowledge can cost you! Congrats on getting some books and boning up on investing.

Good Idea. This topic has come up before - you can find info by keyword searchs using "child" and "children". Yes, you daughter can have a Roth. There are no IRS age limitations for IRA/Roths. Custodians sometimes have limitations, but that is a custodial issue not an IRS issue. Schwab says yes. Etrade says no. You will have to make some phone calls to ask about children's Roth accounts. If your daughter will also have "earned income" in 2007, you can increase the initial contribution by pre-funding 2007 even though you daugher has not yet received the earned income. Another option is to elect the automatic contribution approach - say $100 per month from your checking account. The minimums are often waived for auto plans. Consider using this project as an education opportunity for your daughter. Very few teenagers or 20/30 somethings know anything about stocks, bonds, or mutual funds. Kids seem to get more interested when they can see their assets grow. PS: I started Roths for my two daughters when they were around 16. They both just started working after college. When I add the 4K this month, their accounts will be over $30k, and they both know that when they retire the existing assets (with no additions) are likely to over $1.4 million. My wife and I view this a premptive estate planning coupled with economic education.

A couple of points: 1. You probably should not be making a lot of "trades" in any year as the diversification of a mutual fund means there is a low probability of a specific event that will cause you to switch your assets. If you held individuals stocks, you would expect a higher trade frequency. If you but a fund and plan to keep it for years, a small transaction fee won't matter much. 2. If you have a small asset base in this account, then you can reduce you costs by dealing directly with a mutual fund family like Vanguard. Yes, the primary limiting factor here is you can only select from the funds they offer, but on a practical basis many fund families offer 30, 50, even 100 choices. 3. I don't have direct experience with Scottrade, but most discount brokers offer you literally thousands of mutual funds with no transaction fees. You might want to look at Etrade, Schwab, Fidelity, Brown, etc. Not all mutual funds will be listed, but you probably only need to find 1 or 2 to meet your needs. Some fund families, like Vanguard, just are not interested in developing marketing alliances with brokerages. That's why you either don't see them, or get charged a transaction fee. You framed the problem rather well. Don't forget you can make a decision now, but later move your funds to another custodian.

Your choice. You may lean towards brokerages if you have other accounts with them, or because you can invest in funds from two different families. But, most mutual fund families have enough funds (some have 40+ choices) that you could stay with Fidelity, Vanguard, T Rowe, etc. and have 2 different kinds of no load funds. You might favor one approach because they have a local office. There might be minor difference in annual fees you will pay depending upon your total assets and single shot vs monthly election. Frankly, annual fees are often waived (if you just ask, if you elect for email statements, or if your assets grow beyond X,XXX, or if you have other business with the firm). I would not worry about a $10-15 charge but it's always nice to have zero. Basically, most of these companies look a lot alike because "we" the marketplace are driving them to compete for our business. When one company comes up with something slick, others copy it. And, the general trend due to increasing internet/electronic ways of handling finances is for costs/fees/expenses to decline.

I think you are getting a combination of extremely bad advice, coupled with you lack of understanding about what you hear. 1. Funds - this is just a mechanism. Investing in fund is like belonging to a group or club that agrees to undertake many investments. Funds can focus on bonds, money market instruments, REITs (real estate trust versions of stocks), stocks, ETFs (exchange traded funds), or any combination of these. You seem to think buying stocks vs buying funds is mutually (bad pun) exclusive. 2. Energy stocks or energy funds - who knows. Energy companies made a lot of money in the past two years but completely stunk the four years before that. If you chase after last years winners, you are not going to get good results. Often the best performing area flips to a poor performing one in the following year. For many years health related stocks (drugs, HMOs, hospitals, nursing homes) did extremely well, but in 2006 the health sector was a terrible place to invest. 3. Energy - this is a sector, just a part of the overall economy. Beginners should not to start with sector funds. Ditto on a country or region specific fund. 4. Individual stocks vs funds: point was already made by other responders. You can't own a dozen companies when you have just $4,000 in assets. But, if you buy an S&P500 index fund you end up holding part of 500 different companies across many industries. Index funds have often been glorified because of their low costs. They beat the majority of mutual funds for many years.... but not in 2006. Still, the prior advice on a general purpose (S&P500 or total market) index fund is a sound way to get started. 5. Funds tend to be considered "safer" only because of their diversification. A fund can still be a buyer of Enron... but that hurts less when its only one stock in a basket of 250 positions. When you have 100k in assets, and time to research companies, you might consider owning individual stocks. Thats probably over a decade into the future. A lot of stocks have prices in the $20 to 40 range. With 100k in assets, you could then own 14 different stocks with 200-300 shares each. 6. Buying stocks: unlike no load mutual funds, there will be commissions to both buy and sell. Expect to spend time monitoring your positions. And, consider this... you should never be buying any stock if you can't talk for 5 minutes about the company (competitors, new products, earnings, senior mgmt, growth rates, debt, etc.). You need to also spend time reading about each mutual fund you buy... although general purpose equity (aka stock) funds and index funds are easier to study. 7. I wonder if you read that stocks were good early on, but that BONDS were better as you get older. There is some logic to this statement, but note it has nothing to do with FUNDS. Stocks tend to outperform bonds over the long haul, but in any given year either might provide better returns. This concerns allocation of funds between asset classes. 8. There are two things you should focus on right now. [1] Get started with a basic mutual fund. [2] Understand that you need to learn more about investing and that you need to dedicate some time to reading investment primers and the general financial press. If your blood boils for spending hours thinking about investing and finding "big winners", then consider joining an investment club. There are thousands of these around the country. They often meet once a month and individuals research and present there investment ideas. If you convince half the room, they may buy shares in something you found. Time is an investors friend... don't expect a lot of "action" 'cause investing is like watching paint dry. Make you choice, then let growth, profits and American capitalism slowly increase your nest egg... about 10% a year.

Archimedes - whooaa Lets get the advice to match to author - in this case it sure sounds like a novice. Beginning investors should not be thinking about calls or covered calls. These are "options" which are not suitable for a beginner, heck, not suitable for a lot of experience investors. Some of the reasons: it is hard to make money with options (80% lose money), commissions are a larger percent of the position (much larger than with buying stocks), the bid/ask spread is huge compared to stocks (another reason why it is harder to "win"), they expire and so often you trade them before expiration date which means more time spent monitoring positions, and they are complex investment tools that require a lot of knowledge to use. Also note, that many IRA custodians do not allow their IRA customers to even use options. [custodian not IRS rule] Most beginning investors should focus on mutual funds because you get diversity, invest in dollar amounts (rather than shares), and can avoid commissions with NO LOAD funds. ETFs are very much like mutual funds and are potentially another (relatively new) category of investments that beginners could select. Jinvest - the IRS takes no position with regard to investment selection. Their job is financial/admin governance and tax collection. You can find info in Kiplinger Financial, the Wall Street Journal, Money, Worth and many books you will find in your local library. Learning how to invest is a lifetime job. The days of great pension plans and Social Security have faded. The new rules are: "you are in charge". At a minimum you will need to spend 1 hour a month reading about investing, IRA/Roths, mutual funds, etc. That's probably less time than you spend shopping for electronics or a car in a year.

You are very likely to be using mutual funds - and with no loads (and all of the brokerages you cite have many no load options they support) you don't have to worry about commissions. I would not make a decision based upon stock commission rates - it just won't apply to you. All of the funds you will need? When you get started, and for many years, you only need one or two mutual funds. Every one of the firms you listed will have hundreds of reasonable choices. Don't expect to make perfect decisions. Folks who have been investing for decades don't make perfect decisions. Rocket scientists don't make perfect decisions. You will learn many lessons over the coming decades about investing - and sometimes pay "tuition" for learning from mistakes. The single most important thing to remember is get started. If you don't like your choices or custodian or mutual fund, you can always do a transfer or exchange down the road. Schwab, Fidelity, Brown and Company... there are many other brokerages that offer mutual fund connections. Most of these have good websites with information for beginners (you can visit before you have an account), have relatively low error rates, and provide good monthly statements. You may prefer a firm that has an office in a nearby city. Annual fees for IRA/Roths range from ZERO (a very good number) to minimal $10-15. Anything beyond that should be avoided.

"the best company for a Roth" ?? There are over 8,000 mutual funds, more than 10,000 stocks, thousands of bonds and hundreds of ETFs (exchange traded funds) to choose from. You really don't want to be thinking of "the best", first because you can't determine in advance any "best" investing strategy. No one can, not me or any so called "experts". Second, because your search will consume too much time. And, finally, because you just need one or two good choices. You don't want to swing for the bleachers on every pitch, getting doubles and singles each year will probably get you very good results. To narrow your search, consider limiting yourself to NO LOAD mutual funds. These have no initial or subsequent commission. Further narrow your search to a broad based stock fund, no sector, country or other narrow base fund. Throw out anything with above average annual expenses. Throw out anything with above average annual fees. That will still leave you with hundreds of choices. You might want to use the search options to look for key words like "beginner", "started", "no load", "index" (a low cost computer driven type of mutual fund), or "novice".

There are many many good funds and brokerages that will work for you. Focus on the rules that will apply to your situation. Aim towards eliminating or reducing fees. Keep annual expenses down. Avoid commissions. You don't need the perfect solution, just a fund choice that will perform for you needs. Forget the grand slam, look for singles and doubles. You win a lot of games if you get on base.

I concur with Janet, but.... You can probably do both. Set aside a fixed amount each month for your IRA (hopefully you are thinking a ROTH IRA) and set another amount aside for your credit card. This way to begin a dollar cost averaging program for the IRA. I agree, you want to wipe out the CC balance before it gets a real percent attached. You can open a Roth/IRA with a small initial balance if you committ to monthly auto payments. Yes, you are generally correct that having the IRA/Roth open longer means more time for the assets to grow, but a few months are noise and you might buy in at a near term peak. No one can tell you that buying the full Roth/IRA in January is a better strategy. Markets are just not predicatable on such a short term basis.

Nope. The "I" stands for individual, its yours. However, you can make your wife the beneficiary upon your death. Also, you can make other family members secondary beneficiaries. This way, upon your demise, you wife may take all, some or none of the assets and any remaining assets will be distributed to those next in line per your declared percent allocations.

Wow. You seem to have been talked into some funds - and you don't understand much about them and what kind of fees you may get charged when exiting them. Boy, I hope you are learning some lessons about asking questions up front and spending some time reading the materials (like a prospectus) before you make a decision. There are TWO kinds of fees you might be charged. First, a custodian will often charge a fee when you terminate a Roth or IRA, something like $50 to $100 per account (perhaps 4 fees for you if you have two IRAs and two Roths). Some firms will credit these fees back to you when you transfer your account. For example, Fidelity and Schwab do this if you ask. The funds/brokerages treat the public poorly with these dumb fees... they already ticked you off with apparently bad service, then they ding you to leave. Does you barber, grocer or book store get away with an exit fee? The second kind of fee can come when you exit a specific investment product which has exit fees. Back end loaded mutual funds fall into this catagory, as well as recently purchased mutual funds. Annuities have surrender charges. I have no idea what kind of mutual fund shares you might have at AG Edwards, but they should be able to explain it to you over the phone. Some of these exit fees are phased out if you hold the investment for many years... like 6%, 5%, 4%, 3% ,2%, 1% and finally none over a six year phase out. I highly recommend that you dedicate some time to learning more about investing. Especially NO LOAD mutual funds where you will not get trapped by these archaic fee structures. NO LOAD means no commission, not front end or upon termination. You may want to search on this message board for "Target" to see what I previously posted about Target funds. They may work out just fine for you, but they are basically a gimic investment. The mutual fund industry realized some folks were confused on how to pick funds. The marketing dept. created the Target fund - just buy these and you don't need to think for the next three decades. DANGER DANGER Never ever fall for the "don't need to think". Some of these Target products have layers of expenses upon expenses because they are essentially a umbrella mutual fund that then owns cluster of other mutual funds. One of the supposed benefits of Target type funds is that they automatically move your assets from stocks to bonds and cds as you get older. Anyone can do the same thing once a year with a 5 minute phone call. But when you buy a Target fund, you live by their fixed schedule, which does not take into consideration your assets, health, expected life, etc. You get the "group" rule not your personalized solution. You brought up the issue of diversification if you have four Target funds. OK, here's a homework assignment. Go to Vanguard websiteand read about the composition of the Target funds. You will find that their assets are spread across a number of mutual funds. Now move to reading about the portfolio of each component fund. These funds have dozens to hundreds of positions, typically covering many industries, and sometimes many countries. That's a lot of divesification. Some folks think if they own four separate mutual funds they are much more diversified. Maybe. One reason they may not is because many of these funds own positions in GE, Microsoft, Marriott, Dell, Intel, Home Depot, and AT&T. To the extend that different funds hold some of the same stocks, you are not getting more diversification. How many funds do you need to own? For some folks, just one general purpose equityfund (not a niche or specialty fund, but one very broad based fund) will do just fine. For example if you own an S&P500 index fund or a "total market" index fund, you own 100s of stocks representing all of the domestic industries and in a global economy, some of those firms have a worldwide reach (Coke in China, Halliburton in the Middle East, Dell in Europe). If you jump into Target funds because you think they are a solution, then perhaps you are making the same mistake you made when you bought the AG Edwards program. I think you need to read more about your choices and understand how they work. YOU are the single most important person in the process of making investment choices. Make it your New Year Resolution to spend perhaps 1 hour a month learning more about investing. Ask lots of questons.

1. There are many mutual fund "families" - companies with multiple mutual funds. You can find lists of them in the Wall Street Journal, Money, Kiplinger Financial, etc. You can also track down funds using the internet. T Rowe Price, Vanguard, Fidelity, Strong, Scudder... just some of the many names. You can also buy mutual funds through discount stock brokers like Ameritrade, Etrade, Scottrade, Schwab, Fidelity, etc. 2. I would focus on NO LOAD funds. These have no initial commission charge and no commission when you sell them. There are literally thousands of these. 3. You say stocks are a bit risky... yet stocks are included in the portfolio of many mutual funds. Three big differences between you buying stocks and buying mutual funds: [1] funds are diversified - holding dozens to hundreds of different positions which is not practical for individuals, [2] you can easily buy mutual funds via modest dollar amounts (rather than share amounts) so you can get started with a smaller amount of money, and [3] you do not need to spend as much time in learning about companies. 4. Banks: some offer nothing but low yielding CDs. Others offer LOADED (commissioned) mutual funds or annuities (not recommended by me). I am not keen on using banks for investments, but it works for some folks, especially if they want assistance and a local "branch". Frankly, the banking industry seems about 10 years behind everyone else in product development, internet access, commission fees, etc. 5. More on risk: risk comes in many forms, and ALL investments have imbedded risks. For example, that CD may not keep you ahead of the rate of inflation. Roth investments are typically held for decades and over the long haul, capitalism is the driving factor... stocks tend to go up because our economy is expanding. 6. Nothing wrong with being a newbie. I highly recommend that you start putting at least 1 hour each month toward reading Kiplinger Financial, WSJ, Worth, Money, or library books. YOU are the most important person in your future investment success. Don't spend 5 or 10 times the number of hours looking at cars or electronics compared to minutes that some spend on investment assets.

Lots of folks are borderline AMT but may not know it because they don't do the calculations. My accountant has been giving me a large tax return each year with AMT calculations even when they don't apply. I crossed the line 1 year, but have been flirting with the boundary for a decade. AMT, Roths, and inheritance tax regulations will be under Congressional review. I think there is some sentiment for changing the AMT since it was originally conceived to "catch" the ultra rich who sometimes paid no taxes. Well, that plan didn't work. There are still folks who don't pay taxes and the AMT is now getting triggered my too may middle class families. Because the deficits/war/entitlements all interact and we have a new Congress - it is not possible to know which rules will get changed and what compromises will be made. Even the minimum wage fits into the picture. Watch for changes. Do not expect "magic" windows like 2010 to go unchanged.

My mistake, I missed the 15K was coming from an IRA. Its goof to hear that you already did the conversion, so the year end rush will not be a factor. I too suspect that future tax rates may drift higher. Our story is a little unusual, but we have lots of friends in nearly the same situation. As a professional planner I am the first to admit how difficult it is to project even 5 years into the future. My wife and I are non-traditional professionals with virtually zero pensions, annuities or insurance. As my wife is a PhD candidate and I am semi-retired, we have minimal payroll income. That means we now rely completely on our taxable investment assets. At some point (my wife will be a professor for perhaps a decade) our retirement expenses will be met by a combination of taxable brokerage assets, IRAs and Roths. In 2000, I did a six screen Excel spreadsheet of our financial future to project how an escalating stream of annual expenses might be met by a combination of social security, small pension, stock investments, IRAs and Roths. After three years, I had to completely overhaul the 2000 plan because of positive changes in annual returns, my wife going back for her PhD (never expected by me), and new involvement in real estate partnerships. I probably need to completely overhaul it again next year. By setting up the spreadsheet with various toggles and assumptions, I was able to test scenarios. Some observations from our scenarios: social security will never be more than 10% of our annual income, we never run out of money before age 95 unless annual returns average under 5% and coupled with an expense inflation rate of over 5%, our retirement income is likely to look a lot like our best years, although tax free Roth distribututions could be a substantial part of income each year our taxable income will be substantially into six figures, under all normal scenarios we have the capacity to help other family members or make community bequests, and depending upon the scenario and tax policy we may have estate planning issues. In '94, I "retired" from the normal work world to focus on investing and private ventures. My wife and I converted about 2/3rds of our IRAs in 1998 in part because we expected to be top bracket in future years. In our scenarios, the deductions and exemptions diminish and the taxable income stays far above 100k, so we don't expect a drop in tax rates. Although those assets have gone through some choppy times, we have had put our best investments in the Roths and have averaged around 17% annual returns. We are both 55 and don't expect to draw down on the Roth funds for another 15 years, and possibly much later. We are comfortable with a hybrid 25/75% IRA/Roth. PS: I think that you have a 50/50 chance of the 2010 rules getting changed. There are just too many revenue/budget/deficit issues that need to be addressed by Congress and some of the recently passed tax legislation left odd gaps. Another area that is likely to change is the inheritance tax rules that jump back and forth in different years.

I guess I have a question about the process. You apparently have funded a 401k (regular, not Roth) for 15,000 and now want to convert that to a Roth. Have you checked that you company 401k allows you to flip the assets out of the plan? If that is not allowed by the plan, I don't think what you propose will work. If that is not a problem, understand that you will have to act very, very fast because the 401k needs to be transferred to a custodian and the custodian must then do the conversion before the end of this month if you want it to apply for 2006. Custodians and plan holders get very busy in the last two weeks of the year, so you need to monitor the progress of anything you request. If the transfer has not yet started, you chances of getting this done in 9 business days is at best 50/50. If your company is not offering a match for the current 401k, you could directly fund a Roth with 4,000 of you after-tax income. And, yes, you could do both.

Jen, good question, and one that many small business people face. I think we need more information before we can comment. Please answer a couple of questions: 1. What is the maximum you expect to set aside each year in a retirement program? Would you like to do this on a monthly plan, or a lump amount once each year? 2. What is your current age? When do you think you might retire? 3. In today's dollars (called current dollars), how much do you think you would need to support yourself in retirement? For example, if you make 50k now, you might be very comfortable with 40K (about 80% of current income). Just make a reasonable guess. 4. Do you have employees at your business at this time that would be participating in any plan? 5. Is you business incorporated, or are you basically self employed? 6. Do you have an accountant? You have many choices for retirement plans, depending upon your answers. You might elect a combination of approaches. Often your accountant can give you some ideas based upon the various options used by similar clients. Roth basics: a Roth is a specific type of IRA, it will cover just you, annual max is $4000 but will bump up when you are 50 and in future years, you use after-tax dollars, your withdrawals are tax free, generally you are in charge of investment decisions (that may sound scary but most folks can pick up the basics). You can set up a Roth for 2006 by the tax filing deadline in April 2007, but for some other retirement programs you would have only the next two weeks to get the mechanism in place and write the check. You spouse can also have a Roth based on either their or your income. Tax deferred means that you assets can increase in value over many years and you only have a tax consequence when you dip into the funds. 401K and standard IRAs are tax defferred. Tax deductible means that you get an immediate write off for contributions to the retirement program. Some folks have tax deductible IRAs. Roths have no tax deduction (you fund them with after-tax dollars) but you don't owe taxes on the withdrawals, which can be very important if your assets mushroom in size.

DH, you talk as if annuities have no risk. That is misleading. There is NO investment with zero risk, none. The biggest risk with annuities is that they just doesn't keep you ahead of inflation, especially if the annuity is expected to pay out over a long time. Yeah, there are annuities that increase payments over time, and that's often because they have a partial stock market component to them... so they have risks that are just like stock market risk. A third type of risk is related to the insurance companies themselves. As one of my lawyer friends found out with liability settlements, not all insurance companies thrive over the long haul. When he uses annuities (typically for a handicapped person who can not take charge of their investments), he breaks up large settlements into at least 5 pieces and spreads the funds across five unrelated insurance companies. I'm no big fan of theoretical arguments about X,Y or Z. Every investment option has both positive and negative attributes. When someone beats the table for one option as superior... well we call him a salesperson. I reiterate that it is possible to develop a well balanced portfolio of dividend paying stocks, bonds, and laddered CDs to address virtually any circumstance or drawdown scenario such as short term fixed, delayed variable, and long term escalating. A blend approach where you never give up your core value sure seems to have significant advantages to a plan where you turn over your assets on day 1. One part of a portfolio approach is that you can arrange assets to "manage" risk or to choose an acceptable level of risk.

1. Absolutely the child must have earned income as the basis for funding the IRA/Roth. You can fund the account (grandparents can too), but your daughter must have the earned income. Dividends, interest, lottery winnings, etc. do not count as earned income. Payment for newspaper routes, babysitting, modeling fees, yard work at the neighbors and any payment related to normal employment count as EI. We have not seen any posts about how much the IRS bothers to check on the $500 to $1000 type claims of earned income. Maybe the accountants can comment on if a tax return is always required. But I would assume that it is harder to document earnings from a 9 year old then a teenager. 2. Family owned businesses employement: Yep, that works. Especially if you issue a W2. My kids helped with filing, shredding, mailing, etc. and I paid them each $2000 a year from our family business, which allowed me to fund their Roths at the max since they also had newspaper routes and summer jobs. I think they were 15 when we started, and no one has ever asked a question about what we did. Today, they each have over 28K in 3 - 5 no load mutual funds. If those accounts grow at 10% a year, they will have about 1.8 million in their mid-60s. They vary in their interest in monitoring their account or making fund choices, but sure like the potential goal! 3. Custodians: Etrade says NO to kids accounts. Schwab says YES. Some custodians are willing to set it up as a custodial account. Others don't want the business. You might need to hunt around. 4. Child's access to money: Yes, this can be a problem. Normally you have no control over money in a child's name once they reach the age of majority (right term?), 18 in most states. Some approaches to that problem: (1) teach your kids to be responsible, get them involved in community service (so they don't just think of themselves), and talk about the responsibility/morality of money, (2) don't tell the child about the account (not sure how legal, but it is a practical solution), and (3) let the kid know about the account and get them to understand it is for the future, use it as a teaching tool about investing. I used #1 and #3 and added they would be cut out of any inheritance if they couldn't handle this token amount... which so far is working with my kids. I am not a big fan of "secrets" like #2. Use anything you start as a teaching tool... learn to fish, rather than hand the child a fish, and you get them off on a good start in life. But understand that the black sheep of the family could go and by a hot car with the cash when they turn 18. 5. If your child does not have earned income... put your plan on hold for a few years. In the mean time, consider open an educational IRA, standard mutual fund or other investment account and begin your child's education about the world of money. A modest mutual fund in your child's name will probably not earn enough in the first few years to trigger any taxation. Alternatively, you could just fund your own accounts (Roth or otherwise) and then use those assets to pay for your daughters college tuition. 6. Don't forget yourself!: You are relying on the 401K? You did not provide a lot of details, but you perhaps you should also maxing out your own Roth. 7. Another option to consider is a 529 college saving plan. Some are good. Some terrible. They vary by state and company. Way too many issues to fully cover this option. 8. There are literally thousands of companies that can handle IRA, Roths, mutual funds, brokerages and other investments. Contact three or more. Ask lots of questions about fees and investment options. You can find them online, in Money or Kiplinger magazines, or your local paper business section.

Good question. Sure you can do a CD... at a bank. You can also invest in bonds directly or mutual funds that are dedicated to bonds. Some bonds are backed by the federal government or the local taxing authorities. Other are "revenue" or corporate bonds and have more risk. But, are you dying in 12 years or just retiring in 12 years? Lots of folks live 2+ decades after they retire, so you may need to consider the erosion of your annual draw. Twelve plus 20 years is a long time. Second question, do you have other income like a pension to go with social security? And if yes, what fraction of your future income is likely to be coming from the IRA assets. If you have a good base, then you won't be drawing down as heavily on your IRA assets and could invest them (in many ways) for a higher yield. Risk free equates to lowest annual return. There are many ways to reduce or manage risk and get a better long term result.

I detect a whiff of "the lost years" in your comment about "closing in on me". I recommend you get a copy of The Number by Einsenberg. (the "lost years" is one of his themes about late starts) The book is dry reading and you have to suffer the NYC colored visions of the world, but its a good book for looking at the uncertainties and anxiety over planning for the next phase of your life. It really is less about number crunching (although the author eventually covers some of that) and more about the array of decisions you need to consider. The author covers: life style changes, cost of living, medical uncertainties and how much is enough. If you max our your 401K for the match and set aside $4K in a Roth, you are off to a reasonable start at building a nest egg. Are you married? Your spouse can also put up to $4K into a Roth based upon your earned income. Each year check to see the new limit - the 4K will move higher even if Congress takes no immediate action on retirement planning issues. If you still have extra funds that can be invested, try opening a discount brokerage account and putting your cash at work via no load mutual funds. Post again if you have additional questions.

Here we go again.... (to paraphrase a former President) I copied from a prior response on real estate and it applies rollover or otherwise... This is another one of those periodic real estate posts that pop up every three months. Real Estate investing is typically beyond the IRA/Roth resources of most folks who visit this message board. In addition, there are major legal impediments. Just for fun, let's throw in the loss of tax write-offs associated with real estate. Oh, and anything that unusual or related to "self directed" means significantly higher custodial fees. In an IRA, that long term capital gain reverts back to ordinary income at higher taxation. You must have enough assets in your IRA to cover all of you expenses (taxes, repairs, etc.) And... that darn housing bubble. Still interested.... well, try a search on "real estate" and read the 100+ posts from prior years. You have had about 10 accountants and tax professionals more or less say forget about it. This is what Money Magazine said in a March 2005 article: "rules are complex... stakes for running afoul of them are high. A misstep can disqualify your IRA's tax deferred status (triggering taxes and penalties).... an individual can't personally guarantee a IRA loan... few banks will lend money to an IRA, if you pay cash you give up leverage." They quote a self directed IRA custodian (Pensco Trust) that less than 1% of their nearly 3 trillion in IRA assets involve real estate. (I would guess some of those $$ were in REITS) They provided two examples of folks who bought buildings for cash using Entrust Administration as custodian. One was a home remodeler. If still want to proceed, you are going to need sophisticated professional help to define the boundaries to real estate investing. You will need a custodian, accountant and lawyer with knowledge in this field. You should expect to pay fees for transactions and advice in the thousands of dollars each year. - - - Disclosure: I have nothing against real estate investing. I currently participate in six different real estate Limited Partnerships involving offices, retail, and apartments both in the USA and Europe. These have performed well. But none were suitable for an IRA or Roth.

DH003 - I don't think generalized or theoretical posts are very useful. I have asked you before to narrow the focus of your posts and to not attempt to explain points where you have no experience or professional training. With regard to the question of annuities, there was an earlier post that folks may want to read: http://benefitslink.com/boards/index.php?showtopic=33594 Annuities are a hybrid product of the insurance industry. There is minimal competition across the industry - most insurance agents only represent their own affiliated products. The two main pitches are the death benefit and the income stream. Annuities tend to be expensive (both due to commissions and imbedded annual fees) and offer relatively low performance. The promised income stream can be duplicated in many ways using laddered CDs, bonds, income focused mutual funds and dividend paying stocks.

If you were allowed to have multiple accounts each at 4000, you would defeat the limitation Congress wanted on IRA/Roths. While you can have multiple IRA/Roths, there are practical limitations from how much paperwork you want to track and possible additional fees for multiple small balance accounts. But... if you wanted 2000 at Vanguard and a second 2000 at T Rowe Price... you might want to have two direct mutual fund accounts, especially if one or more of your chosen funds are not commonly listed at brokerages.

Most folks invest their Roths and IRAs in mutual funds, stocks, bonds, CDs and money market accounts. There are limitations or prohibitions on many other kinds of investments like real estate, collectables, coin/bullion, etc. Besides the IRS imposed limitations, you have custodian imposed limitations. Custodians can limit investment options for many reasons such as: problems with valuing the asset at year end, mismatch to skills/experience of account holder, and simplicity (they just aren't interested in high cost, messy "deals").