John G

There are no regulatory limits on the number of IRAs , it is really a simple question of practicality. Yes, new contributions can be made to a new account. You can later decide if you want to roll over other IRA funds into the new location or keep both. Practical questions include what investment options are available, annual fees, and minimum opening balance. The more accounts you have, the greater the administrative burden to track your investments. Performance for most stock funds was negative for about 2.5 years, so you have a lot of company being disappointed about results. However in the past 10 months or so stocks have been up sharply, especially technology companies. Time is an investors friend - and Roth IRAs are long term investment vehicles that should be evaluated from a long term perspective.

You need to think creatively about this timing problem. Perhaps there is someone in your family that will provide funds for a short period - someone who is getting 0 to 1.5% right now (mom, dad, uncles, etc.). This person would provide the mortgage company with a "gift letter", something that is done hundreds of times each month. You could use the money in your IRA initially, but take a short term loan AFTER you buy the house to repay the IRA within the 60 limit. I am puzzled by the closing cost amount - you can often get a range of deals which mix points and interest rates so perhaps there is something option based upon the type of mortgage you chose and you might be able to find a lower closing cost option. Can you get a home equity loan on your first house if it is not yet sold? You might even be able to talk your new employer into helping your out - as a loan (which does not trigger 2003 taxes). It sounds like you are moving because of a new job - did you ask for moving expenses... sometimes employers will provide a flat dollar amount that could be applied to replenishing your IRA. There are tons of "free" credit card applications in my mailbox every week. Some even allow you to take an advance interest free for a brief period. The mortgage company is concerned about your closing, they have nothing to say about what your do the following days. Can you shift the closing date further back in the year? If closing is a while off, can your spouse work to pull some extra money? Your problem is of manageable size and I think you will find a way to solve it. All of the above are aimed at your original question. Before I end this note, I want to say something about my concern about the minimal reserves that you have accumulated. You did not say if both of you work, your income, other assets, or debts... but $4,000 is a very small amount of money to have in reserve and it sounds like it will be gone after this transaction. Perhaps you are using your Roth's as a reserve - but look at the problems not having a reasonable amount of cash reserves is causing on the home purchase. There are a lot of unpredictable events that would eat through 4k in a day. You probably need to get more aggressive on building up your cash reserves. This is even more true if you are carrying any balances on credit cards. After you buy a house, there are usually a lot of extra expenses to get up and running. You look stretched awfully thin - perhaps saying no to some purchases, vacations, etc. can get you to a better financial position.

My very first concern with your post is that you have no savings? You did not mention anything about debt. Perhaps you are just refering to your personal accounts rather than your husbands side. You may want to clarify that situation. My advice below focuses on the retirement issue but I am concerned about your cash reserves and the possiblity that credit card debt may be another issue. - - - - - - - - - I think that your concerns about investing are completely valid issues, however you fear of the stock market is probably more related to your lack of knowledge about investments. You are going down the wrong track with your thinking what is "safe". Let me give you some reasons why you should consider a wider range of investments than just savings or CDs. You said you are in your early 40s. You probably have a life expectancy of perhaps 40 or more years and I would imagine from what you said that you are perhaps 20 years away from retiring. While you may need some money in about 20 years, a large part of your savings will not be touched for 3+ decades. You have said you want a risk free choice that only goes up - did you know that this will absolutely guarentee you the lowest possible return over this long time period? "Safe" investments will barely grow more than the rate of inflation. Right now, many "safe" investments (like passbook and money market accounts) are not even keeping up with the rate of inflation. If you choose "safe", then after considering inflation you assets will grow a minimal amount. I don't think this is wise. A broader array of investments over this time period are very likely to give you a better result. The key is for you to understand your investment options and not be be fearful of short term results. You did not say the amount of your husbands 401k resources are how they are invested, but it sounds like your Roth would be the smaller part. I make this recommendation assuming that you plan to put at least $1000 into the Roth this year. (if that is not true, post again) I would recommend that you use your Roth contributions for just two NO LOAD mutual funds. In the first year, you would pick one, choosing the other in the second year, alternating back and forth. The goal is to build your confidence for a systematic program. I am also going to suggest that you set this up as a fixed amount coming out of your checking account each month. Perhaps you can choose $100 for each month. The first type of fund I am going to suggest is a stock dividend and income NO LOAD mutual fund. These types of funds invest in stable businesses that pay consistent dividends such as electric utilities, energy companies, or older blue chip firms. The second choice for a NO LOAD mutual fund would be a broadly based S&P500 or total market index fund. This type of fund owns hundreds of stocks and mirrors the overall stock market. With each of these funds, you are going to just make the contributions, check them periodically to be sure the contributions are getting recorded, AND ignor the total value. Like the infomercial "set em and forget em".... yes, that sounds stupid but I am trying to get you past your fear of the stock market. To keep things simple, I am going to suggest that your consider Vanguard mutual funds... but there are many other choices that you will find listed in Money and Kiplinger magazines. I would expect that using the above two funds that your Roth over many decades would increase on average about 8% per year - that is a long term average, not a fixed amount each year. I am also going to recommend that you go to your local library and read the March issues of Consumer Reports - there are good articles on investing basics. You will also find good articles in Kiplinger Magazine. How does a CD work? I don't think you want you money in CDs for the reasons I have given above, but here is how they work. A CD is basically a glorified IOU that a bank writes. They promise to pay back your money with interest over a specific period of time. It is essentially a contract and you will get documents from the bank. Every bank I know sends you a letter perhaps 30 days before the renewal date reminding you and telling you about some of your choices. You can often renew by phone. If you do nothing, the CD usually has some default provision - like renewing for a like term. "There has to be something that is safer than the stock market but earns more than a savings account." No one I know expects the stock market to be a poor performer when judged over a 20-30 year period. "Safety" come from the pasage of time, which is an investors best friend. Post again if you want more information. You may want to provide some details about the 401K plan since that is part of your retirement picture. Both you and your husband should get a social security statement to show that part of your retirement plan.

"Bonds are a much less volatile investment, and you are much less likely to lose money over the short-term." You can lose money in bonds over the short term when interest rates climb. Or perhaps a better way to say this is that the value of the bonds you hold will decline when interest rates climb. Bond values move in the opposite direction of interest rates. When I say "bond values", I am referring to the value determined by open market transactions rather than the face value when the bonds mature. Think of that recently refinanced mortgage you may hold with a 5% rate for 30 years. If interest rates move up 2% in the coming year, do you think the bank will be able to sell you mortgage at full value to another bank? Sure they can sell it, but only at a significant discount because the 5% rate will not be attractive. The same holds true for bonds. If you buy a bond when issued and hold to maturity, you eventually get the face value of the bond plus the interest, as long as the entity does not default. This is the simplest way to think of bonds. Bonds can be bought on the open market in "mid-life". The price you pay is a function of many variables including the remaining life of the bond, the coupon or interest rate, perceived risks of default and competing market rates. Conversely, you can sell bonds in mid-life, but the price you will receive will be determined by market forces. Note, if you hold to maturity, you get the face value of the bond which may be higher or lower then the price you paid. General obligation bonds of governments are assumed to be safest catagory since the taxaction authority of the government can be used to pay off the debt. Revenue bonds (often for bridges, tunnels, airports, etc.) are a little more risky since they depend entirely on the revenues raised by the facility. For example, after September 11 there were some issues regarding how the bonds for the WTC would be treated because the complex was destroyed. Corporate bonds are slightly more risky as they are based upon the revenue and profitability of the corporation. Defaults are not very common but can occur in all catagories. The nuclear power plant bonds in the Pacific Northwest (WOOPS Bonds) were the last major quasi governmental default I can remember in the USA. For a time in the 1990s, the airport bonds based upon the new Denver airport were threatened when the baggage handling equipment did not work. {At one point you could buy these airport bonds for about 70 cents on a dollar... when the technology finally worked, the bond values climbed back.} Bond type income can also be obtained through a mutual fund. Yes, there are small annual expense fees. However, there are some offsetting positives: a bond fund gives you greater diversification, can be purchased at a variable dollar amount, has flexibility of entry/exit, can be purchased at lower dollar amounts then the increments in most bonds, can be margined and is administratively simple. Roths and Time Horizons The time horizon with Roth investing is often more than just the years until retirement. When SSN was created, folks retired and were expected to live just a few years. When someone retires today at 55 or 65, they may be living 20, 30 or even 40 more years. Someone who is just 5 years away from retirement may want their income stream to run for a few decades. It may be very reasonable for a significant portion of your portfolio when you retire is in stocks.

I agree with Appleby completely, but lots of things can go wrong with this plan,. The chief problem would be failure to get the funds properly credited back into the IRA in 60 days. I would also ask, why in this era of cheap money where everyone is eager to lend and interest rates are so low would anyone be compelled to go this route? You have internal family loans (helping mom with a better interest rate than she gets on her CDs), home equity loans, loans against 401ks, margin loans on non-IRA investments, borrowing from the real estate seller, real estate agency bridge loans, bank bridge loans, loans from employers, and a bunch of zero interest rate credit cards that sometimes run for months. When you are talking 30-60 days, there are lots of options with less disruption and risk of a administrative foul-up. You mentioned refinancing - why not imbed the needed funds into the deal? I know you are relaying the problem - but I sure wonder why someone feels compelled to use a relatively tricky proceedure when there are easier ways to get the job done. Remember, the biggest single problem with this idea is that your don't get the money back into the account in 60 days and that potentially triggers penalties and taxes.

Mbozek , well said. I agree completely.

Mark, I wished you had posted earlier as there are better ways to solve the temporary need for cash to buy house #2. You could have looked to get a home equity loan based upon house #1. You could use margin borrowing power if your non-IRA assets were substantial. You could look to someone within your family to borrow the money for the short term - you would clearly offer a better interest rate than most folks are getting in money market funds or CDs. You could ask the home seller to take back a short term note, payable when you sell your first house. And, finally you could approach most banks and arrange for a "bridge loan" - a short term loan to cover a cash gap. A good real estate representative should have suggested some of these options. Taking money out of a Roth should have been a last resort because it is difficult to put it back in. I know the advice is too late for you, but others who read this thread may benefit from your transactions. Thanks for posting again.

Email - sure. You are pretty anonymous on this site, but feel free to email me using Blackstone.summit@att.net and reference "benefits link" in headline so I don't delete it without reading. Keep your response fairly generic. I don't need the fine details just approximate age, approx retirement age, rough other resources, etc. Some of my questions such as debt concern related choices. After I respond you may want to cut and paste or add info here if you are comfortable at that point. Bruce Steiner's example is along the lines of what I talked about, but sometimes there are details that shade it one way or the other. When conversions were first proposed, lots of folks thought they were a slam dunk great idea for everyone. That is not true. We will see what I can say in your case.

You did not provide much information about yourself or your circumstances. What is your age? When do you expect to retire? What is your investment experience and knowledge? What type of mutual fund did you have? Do you get easily upset with market flucuations? Let's talk a little about investing. The reason you invest is because you want to grow your assets to meet your retirement goals and to ensure that your purchasing value is not eroded by inflation. Investing is the gas pedal. The brakes are your attitude towards risk, which is mistakenly assumed to be just the risk of your investment declining in value. Some investments have very low risk loss of principal risk. Government bonds held to maturity have typically low risk. CDs at a bank are insured against loss of principal and are very low risk. You chose money market funds. The risk is that they just won't get the job done. Money markets right now are barely able to even give a positive yield and therefore you are "losing money", that is your purchasing power right now is shrinking due to inflation. The problem with low risk investments is that you may fail to reach your retirement goals. This is where stocks and mutual funds can be important. Stocks over long periods of time have generally given bigger returns than safe investments. Mutual funds come in many flavors, but often hold a mix of different kinds of stocks or a stock/bond mix. In any given year, stock investments can go up or down. But, for every down year, there are between 4 and 6 up years. AND, the best up years are much better than the worse down years. It takes a lot of data and a good chart to understand this point... I get my high school Junior Achievement students to crunch the numbers and tally all the years since 1925. When you have a long time before you need your investments to provide an income, the general theory is that you should be biased towards stock investing. If you need the money to pay bills starting next year, then you bias your assets towards options like CDs and bonds with more predictable results. Another factor to consider is your tolerance for risk. If you can't sleep nights because you don't understand your investments then you need to learn more about investing. If you understand your investments and still are edgy and nervous then perhaps you are taking to high a risk. Someone who is knowledgeable about investments and has a long planning horizon tries very hard to be unemotional about negative years and stays the course. Why? Because no one is very good at figuring out when "up" starts and when "down" begins. The last 10 months have seen astonishing increases in stock values - and back in October of 2002 I don't remember anyone telling the public that this was the time to start buying. {see this message: <a href='http://www.benefitslink.com/boards/index.php?act=ST&f=18&t=20751}'>http://www.benefitslink.com/boards/index.p...T&f=18&t=20751}</a> Well, thats another story..... Your question was are you wrong to have your assets in a money market fund. I can not answer that question without knowing more about you. Your choice could very well be a bad idea, but you did not provide enough information to give you a good answer. Post again and I will reply.

I think I can help you work through the math. But like Holmes, Kojak and Columbo, I have some questions for you first. 1. What is your approximate current income and your occupation? I ask because I am puzzled by your expectation of a 15% tax bracket in the future. Note, the tax bracket would likely change if you marry and have two incomes. 2. You have 29k in the SEP and expect to retire at age 61? Do you have other retirement resources you are planning upon? What percent of your current income do you expect to retire upon? 3. Tell me a little about your cash reserves. Do you have the non-SEP cash to pay the conversion taxes and still have a reasonable amount of cash reserves for any negative event like losing your job, an accident or replacing a car? 4. Are you currently contributing to any retirement account? What type? Do you contribute the annual maximum to a Roth.? 5. What percent of your annual income do you save or invest each year? 6. Tell me about your debt. Credit card, mortgage, or other loans. The balances and current percent rate. 7. What is your investment experience and knowledge? Sorry for the multiple questions... but the answers will give me a good chance to respond to your question and put the conversion option in the context of other financial moves you might make. I see a few "red flags" in what you have already stated. Long term retirement investing (especially given your time horizon), should be more actively placed where the annual return will be far above 4%. The $1000 in dividends and interest is pretty low which has me wondering about your cash reserves and savings habits. As your experience and assets grow, many people move into higher tax brackets and I wonder why you are not sure that will happen to you. Generally, a Roth conversion looks more attractive when your current tax bracket is low or lower than your expected future tax bracket. The mathematics are a little involved because you are looking at changes in two catagories of assets: tax sheltered vs taxable. However, there are other reasons to argue for conversion such as an expectation that you will not be able to qualify in future years or you want to eliminate mandatory distributions associated with IRAs. I think you got an odd conclusion because you did not set up the problem correctly. With equal tax rates now and in retirement, the convert or not convert should be close to a wash. But, lets see your answers to the above and perhaps your facts will tip towards converting either all or part of the SEP this year.

Allowed investments are controlled by IRS regulations and the rules imposed by your custodian. You might start by calling your custodian/broker to find out what they will allow as it is likely to be more restrictive than the IRS. I am curious as to the advice you broker will give you. You did not say anything about your investment experience, age, academic training/field, investment goals, or if you were talking about just part of your assets. From the tenure of your question, I would guess you are relatively new to investing. Assuming this, I will offer this reply: Since what you can add to a Roth is limited by qualifications in any year and has a numeric maximum, you generally can not own an investment were you are exposed to unlimited liability. Why? Because there is no way for you to cover a bad investment. For example, a naked call is not likely to be allowed. However, with a covered call your downside risk is having your shares taken away. Currency trading is not for a casual investor, even companies like Dell and Kodak have had poor track records in this area and they have a lot of well trained staff. Currency trading takes many forms, so it is hard to generalize what would be allowed or disallowed. There are not too many forms of investing that are as exotic or as volatile. I would not recommend it for a retirement account. The topic of allowed investments has come up a number of times, and I don't recall anyone having a definitive list of what the IRS excludes. I believe that collectibles are not allowed but can't find the reference in Publication 590. Real estate and shares of non-publicly traded companies have lots of limitations. Perhaps our tax accountants have a definitive list of prohibited investments. I wonder why you want to get into complex and exotic investments? Do you know anything about these areas or have a successful track record over many years? If not, then I would recommend against your using IRA resources for any of these kinds of investments. One of the most true statements about investing is that if you don't understand in what you are investing, the odds of making money are vastly against you. There are over 8,000 domestic stocks, 8,000 mutual funds, 200+ stock indexes and thousands of bond choices. Surely you can find something more conventional in which to invest. Sometimes folks get into the mode of chasing performance - wanting to buy what ever was hot the prior year. This is not a great long run stategy. The strongest areas of investing shift with changes in the economy, world news, government regulations and other events. In 2001, security companies and some defense related investments soared. Financial stocks have had a great run for two years when interest rates kept coming down. In investing, history is not a good predictor of future events. Investment cycles change in unpredictable ways. You have said you are investing in a REIT. Which one? What do you know about this REIT? Why do you want to sell it? My only REIT for the last two years is CARS (the NAZDAQ symbol) and I sure wished I owned a lot more of it since it both paid great dividends and increased over 200%. I can tell you their business plan, their competitors, estimated earnings, hdq location, management team, how they finance growth, many of the properties they own, analysts recommendations, and recent comments from the last teleconference call. I bought this stock because I liked their niche and thought their business plan was sensible. Why did you buy your REIT? Reaching the above level of detail is completely appropriate for individual investments. Some folks play hunches, and that is more akin to gambling then investing. When someone tells me they are not happy with their investments, I ask them name their top three investments and explain what the company does and why they bought it. Not many people can handle those kinds of questions, but that is the heart of investing. It is not about random decisions and guessing. Those folks are much more suitable to mutual fund investing. The requirements for exotic individual investments are even greater, since more volatile investments (like currency trading) require constant monitoring. I have written this post partially for A_boyer, but more for readers who may be thinking they want to try other investments. We all know that expression "the grass is greener on the other side of the fence". Doctors investing in oil&gas. Petroleum execs investing in bio-med. When you invest in things you harldy know... the results are usually ugly. Some of those folks have posted on this web site... and they were not just dot.com investors. It is hard not to be interested in some new area that promises a great return. But, chasing a high return exposes an IRA owner to higher risks. If you are systematically contributing every year to an IRA and started at a reasonable age, you don't need to chase those returns. It is boring but true to say "just grind it out, year after year". A 10% annual return means that your money doubles about every 7 years. For folks around the age of 50, this means that just your current assets should be 4x greater by the time SSN starts in the mid 60s. For folks in their 20s, a 10% annual return over many decades of IRA contributions will very likely give you over a million dollars in retirement assets.

Mark, you may have been taking a distribution for a non-eligible transaction... it is not clear. If this was an IRA, depending upon your age, you may owe taxes and a 10% penalty. However, if this was a Roth you are allowed to take contributions out without penalty at any time, but different rules applies to income/gains depending upon your age. You did not provide enough facts to completely answer your question. It sounds like you would like to deposit $3,000 back into your account. If you have not made any contribution in 2003, you may be eligible to do so now. Since so much will depend upon your facts, dates and applicability issues I would highly recommend that you see a local accountant or tax professional to get this resolved.

Appleby - note it says "second home". Do they even qualify? I thought it was a primary residence option only, but I can't find a reference with clear language.

Eric, you are missing some knowledge about how Roth IRAs work. You do not pay any tax on normal distributions under the current rules. None. It may be a question of semantics, but you buy investments within an Roth, you can't buy an investment and then add it to a Roth. You would not want to hold any tax shelter investment within a tax shelter because the returns would be lower than you could obtain with a normal investment.... you can't benefit from tax avoidance because you have no tax to begin with, but you give away annual return (which is always lower on a tax preference investment). You would not want to buy tax free muni bonds within a Roth for example. You did not indicate your age, investment knowledge/experience, time to retirement and your financial goals, so giving you advice involves some guessing. If you post again with a little more background I will try to give you some pointers. All that said, I would not recommend Ibonds for an IRA. They are a very conservative investment and are unlikely to give a high enough yield to meet your goals. If you are not inclined to own stocks, or even hold a balanced portfolio of stocks and bonds, then you should be looking at just standard bonds with a mix of holding periods.

DH, I think the posts above are well done. I highly recommend the Warren Buffet interview and Ben Graham hot links you provided. The Buffet one in particular provides some great insight into the difference between wealth and happiness - Buffet style. I am a little amazed that just two weeks ago you were posting about "irrationalities of Wall Street", promoting value funds, claiming the DJIA outperforms the S&P500 and suggesting that folks could pick the top 20% of funds. I think readers will appreciate the more carefully expressed recent posts. As we eventually discovered with the Beardstown ladies, above average performance is often created by selective memory, creative accounting and marketing hype. I would adde to your comment about hard work, intelligence and luck - - lots of time spent in research and analysis. Thank you for the good posts.

GBurns, Yes there are charletains among the book authors. I can't vouch for the authors mentioned above except for one, Peter Lynch. As head of the Magellan Fund for many years, Lynch made a ton of money for both himself and thousands of others... during his tenure it was one of the top 10% performing funds which is amazing because the fund was huge and it is stellar performance is hard when you are large. Lynch was first a stock picker. He only became an author later. He is currently a senior member of Fidelity Mgmt and does not manage individual funds. I remember going to an investor conference were a young firm managed to talk him into speaking for about $50,000... which he graciously assigned to one of his charities, his usual practice. I think Lynch would not be a good example of your point. Dollar cost averaging is a fairly basic investing concept. It is no miracle solution to investing, just a practical method that many investors employ. The concept is that you invest a fixed amount in each period, such as per payroll period, quarter, or month. You can do this with individual stocks but often it is used with mutual funds. It gets folks past the point of "is now a good time to invest" and other market timing nonsense. It is also a method of making a systematic committment to invest part of your income, as opposed to remembering to occasionally send a check. When you DCA, you are also following the maxum of "pay yourself first", encouraging continous savings/investing. From one perspective, DCA gives an investor a slight bias towards buying low and selling high because you buy more "units" or shares when the price is low and fewer when the price is high. The theory is that this will boost performance. But, in my opinion, this is not a dominant factor or even the primary reason people use DCA. Real life examples? Most employee payroll investment plans (401k, 403b, thrift, etc.) often operate as a DCA. I think the driving factor is convenience. As a teacher, my wife has participated in a 403B program for many years that puts a fixed amount of money each month in a fund, a process which is DCA by default. Note, I am not saying DCA is a miracle solution to investing, just a practical system that gets the job done and in theory gives you a slight bias toward better performance. I think it is promoted by folks primarily to the hesitant investor. (Like the guy who recently posted about procrastinating for three years about opening a Roth) However, in the case of IRAs and Roths, you may be better off putting the max contribution in at the first part of the year. DCA folks sometimes get a break on annual fees or minimum initial deposits with mutual funds because they provide a predictable stream on money.

OK, I rise to the challenge. Dean, Congress has created a wonderful tax shelter in the Roth IRA and if you have "earned income" (a paycheck!) you are likely to qualify. Roths have been a round for a few years, the rules could change in the future or (better yet) your income could rise spectacularly so that you no longer qualify. So light your rocket and get moving. The sooner you start the more likely you will meet your investment goals. You can get a Roth up and running with a couple of hours work scattered over a week. I am going to make this extremely simple and cut a lot of corners so that you will be confident that you can get the job done in the least amount of time. Step 1: Selection of custodian (2 minutes) There are many choices, I am going to boil all those down to just one. You are going to contact Vanguard, a mutual fund family either by calling their 800 number or visiting <a href='http://flagship.vanguard.com/VGApp/hnw/PersonalHome'>http://flagship.vanguard.com/VGApp/hnw/PersonalHome</a> See on this page "invest now in a fund or IRA" Step 2: Selection of investment option (2 minutes) Someone getting started will do just fine with any no load, broadly based mutual fund. Vanguard has over 100. Too many choices. You get to pick any one of the following two: 500 Index Fund or Total Stock Market Index. Flip a coin if you want, either will do. You can go through the Vanguard screens to learn more about different IRA options. They have some good material on risk, investment objective, time horizons and costs. But, you can skip that stuff and just get started. A couple of years from now, maybe you will want to investigate other options. Step 3: Application (1-2 hours depending on how fast your write or type) Fill out and application either on line or the hardcopy they will send you. Step 4: Contribution choice (2 minutes) Select either "here is my big check" or "take a little each month from my checking account" as the method for how you will make your contribution. Either will work. Don't spend a lot of time thinking about this, you can change your mind later.N Step 5: Transmitt the package (2 minutes to walk to mail box, 10 seconds to press a key) I guess that counts as a step. Step 6: Monitor (10 minutes) Read the stuff Vanguard sends you to make sure they have your SSN, name, contribution and address correct. Read the occasional statements they will send and marvel how easy it was to get started. Dean, it takes longer to get two new pairs of shoes than to open an IRA account. I takes longer to find a Christmas gift for your mother than to open an IRA account. Get going! If you want to read more material on this message board about the basics, look to the "Extremely basic question from a beginner" which includes some other references. Maybe I should say something about WHY bother opening a Roth. It is a great tax shelter for long term investing, quite flexible, and you can build a nest egg of a million dollars if you start early and stick with the plan. (waiting three years to get going is not part of starting early) and you will be a lot less concerned about SSN. You just spent 5 minutes reading this response. You need to spend about 100 more minutes to complete the job. Get going! PS: It probably takes something closer to 4 hours, but I did not want to discourage you from getting the job done.

For the past 10 months, the media has run multiple stories about investment risk and being in "safe" investments. "Do you know where your money is?" The pundits (with the possible exception or Rukeyser) have made a lot of "tut tut" type remarks emphasizing being in cash, investing in "solid" companies, "conservative" investments, and there was all that stuff about dividends and taxation. A scan of Money, Worth, Kiplinger and other financials mags would show an overall negative tone. What has actually happened? Lets look at the statistics for Oct 9 through the last Friday in July the approximate returns have been: S&P500 up 28% DOW up 29% Russel 2000 up 31% Nazdaq up 58%. Any my point is? Did anyone tell you that last October was a turning point in the market? Did they tell you the best single performing segment would be the top 100 Nazdaq stocks (like Intel, Microsoft, Cisco, Dell, etc)? I think it was quite the contrary, too much doom and gloom. Where were all those supposedly smart people telling the public that it was a good time to invest in equities? My point is that markets run in cycles. It is near impossible to time "the market", to know when to jump in and when to leave. Equity (aka stock) investing has a lot of short term risk and volatility, but over the long haul has historically provided excellant results. Some folks wait for "proof" and invest after the market climbs and panic when the market swoons - the results are ugly. In Dec 4 on this message board I said: "While the stock market has been down for 2+ years, investors in bonds have done very well. CDs have more or less kept pace with inflation. All of this is highly irrelevant to the long term performance of various asset classes in the future. You should not make investment decisions based upon the instant snapshot of market conditions. Neither you nor I can have any certainty where real estate or stock market values will be 1 year later, but we should have a good sense for 20 years down the road. The long term annual rate of return in the stock market is in the 9-12 % with the low end being a balanced portfolio with some bonds and the upper end being a mix biased towards growth. Some people beat that range, some don't." The experienced investor has a better chance of understanding these cycles and for the most part ignoring them. I hope by posting this message, which is a little off topic, it will help less experienced investors to understand the market dynamics and make better decisions.

Bruce - some good points. All of the responses above are based upon a minimal amount of info on facts and circumstances. We don't know if the wife is alive/divorced, the age of children (sounds like they are grown), if all potential beneficiaries are able to handle their own finances, nature of non-IRA assets, etc. Stepped up basis of non-IRA assets may be a factor in choosing an approach. We don't know the value of any primary resident. The "answer" may change based upon further info if Misty posts again. I was not suggesting going through a full blown estate plan on three parallel paths, that would indeed be expensive and confusing. Rather, I was recommending spending at least an hour with three different attorneys/estate specialists to choose wisely someone who listens, has experience in the needed areas and has the time available. In my experience, sometimes the first mistake is in choosing your consultant. Why not convert? Well, one reason could be tax liability. We don't know the marginal rate of any of the participants, nor what state they live in. If dad lives in a state with income taxes but the children do not, conversion could be more expensive. If dad's rate is at the high end and some potential beneficiaries are at the lower end, that might make a difference. It is likely dad qualifies for conversion, but we don't know that for sure. Misty, I hope you will post again and let us know how you are progressing.

Papogi, you type faster than me apparently. Good post. To clarify the withdrawal part - contributions to a Roth can be withdrawn without any tax consequence. There are also exceptions for home buying and education expenses. But a Roth is a great tax shelter and I would be extremely reluctant to withdraw for these purposes when home equity loans and other borrowings have such low rates.

Basic questions are just fine. IRAs and Roths tend to be self directed investments. You make the decision. Your first two decisions are "who will be my custodian" and "what kind of investments fit my circumstances". Custodian choices include banks, mutual funds and brokerages. You often get access to some mutual funds at all three locations. When you are just getting started, a NO LOAD (no front or exit commission) mutual fund is a reasonable choice because you buy in dollar increments (rarther than 100 share blocks) and get some immediate diversificiation (owning a wide range of investments). An Index fund gives you market performance at ultra low cost - even no load funds have imbedded annual expenses and for index funds this is often below 2/10ths of a percent. Index funds are a little easier to monitor. You can keep things fairly simple for a long time and get good results. Over the long haul, an investor generally does not need to "beat the market" to achieve their retirement goals. Here are some discussions that have occured at this site previously on this topic: http://www.benefitslink.com/boards/index.p...=6565&hl=novice http://www.benefitslink.com/boards/index.p...778&hl=beginner http://www.benefitslink.com/boards/index.p...876&hl=beginner http://www.benefitslink.com/boards/index.p...350&hl=beginner http://www.benefitslink.com/boards/index.p...523&hl=beginner Note to new readers - you can often find information on this message board by using the search options at the bottom of the page. It is OK to repeat a question, especially if your facts or circumstances are a little different. If the answer seems to be off the mark, or generates more questions.... post again!

Misty, As much the professionals on this board would like to make suggestions, I think you have a delicate problem that probably requires an immediate consultation with an attorney and tax accountant specializing in estate plans. You may have multiple options such as gifts to family members, how real estate is titled and retirement plan restructuring.... depending upon how long your father lives. Are there any grandchildren going to college? He may be able to directly pay the tuition and reduce his estate. If your father supports a number of religious or charitable organizations, pre-paying what he would donate in the next few years would reduce his taxable estate. But, first and foremost, my advice is, with your father's approval, consult with some estate planning specialists. Plural... I would talk with at least three different ones to see with whom you are comfortable and to get a feel for their knowledge. You may need someone who is very good at explaining options - your dad should know the consequences of doing nothing.

As one of the moderators of this message board, I have decided again to delete some posts on this thread from DH003i. This is not the proper forum to express political views, give web references that are off topic or to act as an expert with no apparent experience in the issues being raised. This is not the free wheeling Yahoo or MSN message boards... thankfully. Benefits Link is aimed at addressing problems and issues related to retirement accounts, tax planning, investment options, legal issues and accounting issues. All the accountants, lawyers and financial planners who post here do so as volunteers, they should not have to waste time correcting erroneous information from the same author. If this message board were to deteriorate in quality, we would lose both our experts and the general public. DH003i - please look to other forums to express your opinions and political views.

Mbozek - I talked with some Colorado labor dept staffers this morning. They said that in Colorado, there are no minimum ages or hours for children working in family businesses, however the rules for hazardous occupations did apply. You will find 8-12-104 on Exemptions in the following part of Co Revised Ttatutues, Title 8, article 12 will give the details. This may have come from the historic agricultural roots of this state... generally Colorado has relaxed rules on many business issues. www.coworkforce.com/LAB/ColoYouthOpportunityAct.pdf'>http://www.coworkforce.com/LAB/ColoYouthOp...ortunityAct.pdf Special Note to DH - You have made multiple long posts that have been often off topic, not in keeping with the tone of this message board, sometimes inaccurate, and frequently not based upon any expertise, I have stepped in as one of the moderators of this board and deleted these messages from this thread. This is a step that I have only had to take with one other author in the past three years. You have ignored my suggestions about your posts. Please restrict your posts to the posted topic and areas where you have knowledge or experience.

Mbozek, you are correct that there may laws limiting child employment. However, many states exempt or relax the rules for family owned businesses, which is what is likely to apply here. DH - a 5 year old working a paper shredder? I guess you would not take the warnings from shredder manufacturer to keeping curious children away from dangerous equipment. You said you are not a parent. I recommend that you do not offer advice in areas where you have no experience.