If you are saving for retirement, the question is ‘should I contribute to a Traditional IRA or a Roth? What about my company 401K?’ Usually this is not a cut and dry solution.If you have a 401K with a company match (say they match 50% of the first 5% of your salary you contribute), it is found money to take the match. You have just made 50% on your contribution, plus the tax deduction. After that if you feel tax rates will be higher in the future (I think this is also a no-brainer. We have the lowest rates in over 40 years now), you should contribute to the Roth IRA next. No tax deduction, but when you retire you can take all the money out tax-free. Maximum contribution is 100% of earned income up to $5,000, $6,000 if you are over fifty. If you still want to save more for retirement, go back to the 401K and have as much as you can put in that plan. No match, but you get a tax deduction. Feel free to spend what money you have left after that. (Or you could save some in an investment account. What an idea!)
Brian’s Tax Musings
Happy Valentine’s Day! Did you know you can still get one tax deduction for 2010. You have until April 18 to make a tax deductible contribution to a traditional IRA or an after tax contribution to a Roth IRA and until October 17 to make a contribution to your qualified plan if you file an extension on your personal taxes. If you have a corporation or partnership and you have the qualified plan through there it is only until September 15. That can be a sweatheart of a deal for your long term finances! Tomorrow I want to talk about Traditional vs Roth IRAs.
Brian’s Financial Musings
Say goodbye to no strings free checking at most of the large banks. You now have to have a minimum balance or a monthly direct deposit of a certain amount or a mortgage or a savings account or something to get free checking. Here is an article in the LA Times a few days ago discussing it:http://articles.latimes.com/2011/feb/04/business/la-fi-free-checking-20110204I talked to a banker at Union Bank and he told me as far as he knows they had no plans to discontinue free checking but I don’t know what requirements they have to get a free checking account and they aren’t in the article, so I guess go online or call them and see if their free checking has strings or not. The other possibilities are to go to a Credit Union or a regional or local bank. A little work might save you a $5 to $15 dollar a month checking account charge.