It's like the difference between an apple and a paperclip. An IRA (or Roth IRA) is simply a tax advantaged way of holding money (can be held in a CD or cash or stocks or bonds or whatever). There are a myriad of rules related to funding and withdrawing from IRA's. Too much to summarize here. Google it and read it up on it.
It's like the difference between an apple and a paperclip. An IRA (or Roth IRA) is simply a tax advantaged way of holding money (can be held in a CD or cash or stocks or bonds or whatever). There are a myriad of rules related to funding and withdrawing from IRA's. Too much to summarize here. Google it and read it up on it.
i know the rules/fees/restrictions. but never learned and can't find what i want to know, if i left my money in a cd to keep rolling over until i am 56.5 i believe the age is for ira, would it be better to put in a ira and then cd. like whats better with tax purposes? i don't get when i will pay taxes on my cd?
i know the rules/fees/restrictions. but never learned and can't find what i want to know, if i left my money in a cd to keep rolling over until i am 56.5 i believe the age is for ira, would it be better to put in a ira and then cd. like whats better with tax purposes? i don't get when i will pay taxes on my cd?
I think you are mixing them up in a way that you dont need to.
There are two ways to hold an investment for taxation issues (for this case) either IN or OUT of an IRA.
In an IRA means you defer taxes until you WD the money, so you can keep the money growing tax deferred. You end up paying taxes on the monies at a later date, just when you WD.
OUT of an IRA means at a bank or wherever, and you pay taxes on the interest just like a savings account or any non-IRA type of investments.
I personally wouldnt own a CD in or out of a retirement account, you can beat a CD rate with most reasonable money market accounts, plus you dont have early redemption fees and hassles.
The tiny bit extra in yield you MIGHT make, you give up in the length of time you are forced to hold the CD and you cannot touch the money.
yanks,
I think you are mixing them up in a way that you dont need to.
There are two ways to hold an investment for taxation issues (for this case) either IN or OUT of an IRA.
In an IRA means you defer taxes until you WD the money, so you can keep the money growing tax deferred. You end up paying taxes on the monies at a later date, just when you WD.
OUT of an IRA means at a bank or wherever, and you pay taxes on the interest just like a savings account or any non-IRA type of investments.
I personally wouldnt own a CD in or out of a retirement account, you can beat a CD rate with most reasonable money market accounts, plus you dont have early redemption fees and hassles.
The tiny bit extra in yield you MIGHT make, you give up in the length of time you are forced to hold the CD and you cannot touch the money.
sorry man but CDs are trash, they are what I call 'safely losing your money'
reason: inflation, especially in the next 3-5 years b/c of these rates cuts, will be 3% + ... that is just about better than any CD rates out there annualize, mainly because CDs are taxable as well
do yourself a favor and don't do CDs, especially if you are young.
if you are young and inexperienced with investing just buy the best low cost mutual funds that you can and put them in an IRA (roth if you make less that 96k/year and traditional if you make more than that or will make more than that soon)
gl, any more ?'s, let me know
sorry man but CDs are trash, they are what I call 'safely losing your money'
reason: inflation, especially in the next 3-5 years b/c of these rates cuts, will be 3% + ... that is just about better than any CD rates out there annualize, mainly because CDs are taxable as well
do yourself a favor and don't do CDs, especially if you are young.
if you are young and inexperienced with investing just buy the best low cost mutual funds that you can and put them in an IRA (roth if you make less that 96k/year and traditional if you make more than that or will make more than that soon)
Not an accountant but you might need to do some more research and possible talk to a professional b/c you have a number of things mixed up.
For example you said you can get an IRA at 56.5. That isn't correct - there are a myriad of rules but essentially if you have a job you can put money into an IRA or IRA Roth (income dependent and with tax consequences) right now. Choosing an IRA or IRA Roth will depend on what you think your tax obligation will be in the future (you should as a professiona). IIRC, I think you need to start pulling money out of your IRA at 70.5 but I am not sure on that. If you are over 50, you have the ablity to add more to your IRA/IRA Roth in so called "catch-up" provisions.
For a CD, if you put money in a CD, the bank you deposited the money with should send you a 1099-INT which you should report when you do your taxes though I have no idea if you'll get one each year or the year the CD matures b/c as everyone states - CD's are pretty much crap right now and I have never funded a CD.
Not an accountant but you might need to do some more research and possible talk to a professional b/c you have a number of things mixed up.
For example you said you can get an IRA at 56.5. That isn't correct - there are a myriad of rules but essentially if you have a job you can put money into an IRA or IRA Roth (income dependent and with tax consequences) right now. Choosing an IRA or IRA Roth will depend on what you think your tax obligation will be in the future (you should as a professiona). IIRC, I think you need to start pulling money out of your IRA at 70.5 but I am not sure on that. If you are over 50, you have the ablity to add more to your IRA/IRA Roth in so called "catch-up" provisions.
For a CD, if you put money in a CD, the bank you deposited the money with should send you a 1099-INT which you should report when you do your taxes though I have no idea if you'll get one each year or the year the CD matures b/c as everyone states - CD's are pretty much crap right now and I have never funded a CD.
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