Thread: Should I do a Roth IRA in addition to a standard brokerage account?

I am looking to retire around age 50, and I don't want to mess with my Roth 401K until I'm 59.5
I have saw that some financial gurus say to open a bridge account to keep separate money in to withdraw at 50 "bridging the gap" until 59.5

I will be investing more than the 6,000$ into this account so just putting it all into the brokerage account seems to be the easiest way to go and since aftertax money is used is there a reason to even open Roth IRA and deal with all the BS when I start withdrawing @ age 50?

if you can, you should always do an ira.

Originally Posted by tripod29

Why wouldn't you? Srs question.

Sorry I'm late replying on this,

-The main reason I was questioning it was because I'm already maxing out my employers Roth 401K. Just by doing that and using a conservative return percentage I will have a few million for retirement (no brag) so I figured I should just start putting extra money into brokerage account so I can retire @ 50


-The resolution I have decided is to just go ahead and open a Roth IRA and max that out every year too, it just seems silly to not take advantage of tax free growth/withdraws even if I do have to wait until 59.5, but I think with this account I can start withdrawing at 55 years old. I will probably use an ordinary brokerage account with whatever money I have left over and see where I'm at when I turn 50. I'm not against moving into a lower impact job from 50-55 either if I have to/want to.

I read you can withdraw Roth CONTRIBUTIONS at any age with no one penalty. That could be the bridge.

That 55 rule has some stipulations FYI.

Why not open both? The goal is to make less on paper so the government doesn't take this from you (ie tax).

If I wasn't going into real estate investing route, I would open both to lower my taxable income and start compounding. You also want to allocate your funds into a correct S&P 500 etf. Since some people open the account and just let their retirement account pick their etf with high management fee at default.

Originally Posted by RyanJLuu

Why not open both? The goal is to make less on paper so the government doesn't take this from you (ie tax).

If I wasn't going into real estate investing route, I would open both to lower my taxable income and start compounding. You also want to allocate your funds into a correct S&P 500 etf. Since some people open the account and just let their retirement account pick their etf with high management fee at default.

The simple answer is because I wanted to retire before 55. Crunching the numbers lately has brought me to terms with opening both and seeing where I'm at when the time is right. I dont think its wise to allocate everything into S&P right now because there is still some good upside to have in small cap funds. I do keep 25% of my portfolio in a Blackrock S&P fund though.

Real Estate can be good as long as you're not overleveraged. I own one single family rental outright that I've had for a couple years but I would not be dipping my toes in until the government quits subsidizing the people not paying rent and see where everything shakes out when the dust settles. Very happy I do have the first home already as that is a big part of my retirement strategy.

IRAs are for people that cant save. The entire incentive of an IRA is pay taxes now (or later if traditional) but if you pull that money out you will pay a penalty. I would not just because you never know what life throws at you and if you need the money will pay a 10% penalty on top of income taxes.

Originally Posted by cavillac

The simple answer is because I wanted to retire before 55. Crunching the numbers lately has brought me to terms with opening both and seeing where I'm at when the time is right. I dont think its wise to allocate everything into S&P right now because there is still some good upside to have in small cap funds. I do keep 25% of my portfolio in a Blackrock S&P fund though.

Real Estate can be good as long as you're not overleveraged. I own one single family rental outright that I've had for a couple years but I would not be dipping my toes in until the government quits subsidizing the people not paying rent and see where everything shakes out when the dust settles. Very happy I do have the first home already as that is a big part of my retirement strategy.

This has sort of been beaten to death, but max the 401k, max HSA (if you have one, triple tax advantaged account), max Roth IRA.

If you don't know what to do with the money, definitely open the brokerage account. RE is another good avenue to go. Using a 1031 exchange you can transfer the wealth that accumulates to other properties. You pay no tax unless you sell for a profit and don't put the money in another property. Transferring wealth this way, means 0 tax implications. If you die, it's not taxed depending on the state as well. I'm still looking into the 1031 exchange and how it all works, but it's worth looking into. Avoiding taxes is pretty much the most important thing you can do next to saving/investing it in the first place.

The beauty of the brokerage account is writing off any losses that may result on your taxes and it can be carried over to future years if you hit the max.

Originally Posted by GainzMcgee

IRAs are for people that cant save. The entire incentive of an IRA is pay taxes now (or later if traditional) but if you pull that money out you will pay a penalty. I would not just because you never know what life throws at you and if you need the money will pay a 10% penalty on top of income taxes.

That's not 100% true. All contributions to a Roth IRA can be withdrawn tax free. The capital gains cannot, until retirement, or you're taxed. Contributions of 6k*30 years is 180k you can tap into earlier, if truly needed. Which is nice.