Roth IRA Overview

[Guest LASRM]

My understanding of Roth IRA's is as follows:

1. A husband and wife can each contribute up to $4000 per year (for a total of $8000) to a Roth IRA.

2. The contributions (but not the earnings) can be withdrawn at any time for any reason without any penalty.

3. We have until April 15, 2008 to make contributions for 2007.

Is this accurate? Also:

4. Can a husband and wife have a joint account? If so can they combine the accounts that they started before they were married?

5. How complicated is it to withdraw the contributions? Is it possible to keep some of the contributions in a standard savings account at a bank to allow easy access? My husband and I would like to max out our contributions for 2007 but doing so will deplete all of our savings leaving us with nothing to fall back on in case of an emergency so we want to make sure we'd be able to get the money back out quickly and without paying a penatly if we needed it.

6. Can you contribute to both a 401(k) plan through your employer and a Roth IRA?

Thanks in advance for your help.

[John G]

1. Yes for 2007 if you have sufficient earned income and file a joint return.

2. Yes, for contributions. Earnings or gains are different.

3. Yes

4. No joint IRA/Roths. The "I" stands for individual. Each spouse would have their own separate account.

5. I don't know how long it takes to remove contributions, but I would imagine it takes a letter to the custodian an is probably not a 48 hour deal. Perhaps you should consider partially funding your accounts at say 2000 each, then moving a little more over later in the year as a 2008 contribution. While you have credit cards, signature lines of credit, home equity and other possible short term sources of money, I would not recommend that you every empty the piggy bank. You don't indicate your age, income or other family circumstances, so you have left an incomplete record for giving advice.

4. Yes, you can do both. Generally, you want to contribute enough to the 401k to collect any company sponsored match.

Post again if you have other questions.