08 ~ 09 Roth IRA Contribution Thread - Enter Flip

[Rmsanger 10+ year member]

As per my New Year's Resolution I've committed to maxing out my Corp 401K match and maxing out the 08 - 09 Roth IRA contributions (5k/year).

I've already maxed the match for 08 and am on pace for 09. Instead of investing above and beyond in the 401k, I like the Roth Tax hedge for the long-term. What I need your help on is choosing the correct funds to invest in.

Two restrictions:

1) For my 08 contribution I have to make by mid-Feb due to it have it in before processing of Taxes.

2) My 08 contrib has to be with American Funds since I have an existing account, per the restriction on 08 contribs in 09 you must have an existing account.

So for the 09 contrib I'm free to put it anywhere.

So far I've been looking @ the following:

AEPGX - EuroPacific Growth

CWGIX - Capital World Growth and Income Fund

NEWFX - New World Fund

SMCWX - SMALLCAP World Fund

I've got my other Roth & 401k in primarily domestic large cap funds so I like the FX/Foreign exposure these funds provide. Most provide Net expense rations

Just wondering your outlook on these and for 09 which funds do you think are worth looking at. I'm pretty optimistic most of these have 10-20% more on the downside at worst but have good upside in a 5-10 year window. Obviously my total investment horizon is between 35-40 years but can be more actively managed within this time frame.

Thx for the input!

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[Flipx99 5,000+ posts]

Why can't you contribute until April? It is still FY08 until April 09.

Keep in mind World/Global funds invest domestically; thus AEPGX is really your only choice for "diversification".

AEPGX doesn't look like a bad fund...however, it invests in mostly large/giant companies. I am certain the correlation is too close to achieve "real" diversification.

SMCWX may provide some real diversification even though 42% of the assets are domestic.

 

[bigbirney420 10+ year member]

SMCWX and AEPGX are both great funds with quite a bit of diversification. American funds are one of the better ones left as far as management and fees to run.

 

[Rmsanger 10+ year member]

I need to contribute before I complete my income tax filings for 2008. My family has a tax accountant that helps with all of our returns and I have agreed to send my details by Feb 9th. Would also prefer to not complete an amendmant.

I think this should give me enough time to wait out the likely dissapointing earnings/gdp data due this week.

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Roth IRA Contribution Limits - Roth & Traditional IRA Contribution Deadlines, Limits, Important Dates to Note, Types of Compensation, Roth IRA & Traditional IRA Income Phaseout Ranges For Contributions

The April 15th deadline for filing taxes to the IRS is also the deadline for investors to make their final Roth IRA & Traditional IRA contributions for that tax year. For instance, April 15th, 2009 will be the deadline for making contributions towards the 2008 tax year. After this date, any contributions made will be applied towards your 2009 tax year (for which the deadline will be April 15th, 2010). This differs from 401(k) plans that have December 31st, as the deadline for making 401(k) contributions. The IRS considers these deadlines to be 'do or die' cases where if investors miss the contribution deadlines, they forfeit their priviledge to make 401k or Roth IRA contributions for that tax year. If you have already filed your taxes before the April 15th deadline and have not made Roth IRA contributions, you can do so and file an amended tax return using Form 1040 (U.S. Individual Income Tax Return)

http://www.401klookup.com/roth-ira-contributions-phaseout-ranges.html

 

[Flipx99 5,000+ posts]

Interestings. I make contributions after I file. I don't see why it matters, the amount I contribute doesn't change the tax I owq.