2 Roth IRA's ?

[Guest jewoods]

Hello,

I wanted to open a Roth IRA for myself and my wife. If we only have about 5,000 a year to contribute, should I max out 1 at 4,000 and other at 1,000 or split them down the middle?

Thanks,

John

[John G]

This is a question better asked of your spouse.

I can think of only two small administrative factors: (1) you may want to check the mininum opening amount for some mutual funds, and (2) two IRAs usually mean two annual fees, and it may take longer to qualify both for fee elimination when you reach a asset threshold like 5k or 10k. Since fees can be zero, $10 or $20 I think a conversation with your wife is a tad more important.

Don't forget to also discuss beneficiaries. There are some advantages for listing each other first and then with the second tier listing your kids. First to die could decline to accept the funds which would mean the secondary beneficiaries would get the assets. This is a rudimentary "toggle switch" that may help you with estate planning.

Do NOT make all the investment decisions for your wife. At a minimum, get her involved in making mutual fund choices and monitoring the account.

You may also want to consider using the monthly automatic checking account withdrawal to fund your IRAs using a "dollar cost average" approach. (Often custodians waive fees when you select this option)