Traditional IRA Contribution Help...

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carquiaidave
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Joined: Mon Oct 30, 2017 8:59 pm

Traditional IRA Contribution Help...

Post by carquiaidave » Mon Oct 30, 2017 9:20 pm

Hi. I recently opened a traditional IRA through T. Rowe Price (mutual fund). I am not employed, but my husband is in the military, and I have contributed $5500 each year for the past two years. This particular mutual fund is fantastic, and I went online to make a large, seperate contribution and open a standard account, but learned they had closed the fund to new investors. Thus, I am now limited to the account type I began with - I can make contributions only to the traditional IRA account. My question is this: I love this fund and I want to invest $250,000 into it now. Since it's a traditional IRA and not through an employer, can I do that without penalties if I only claim the standard $5500 annually? I still pay taxes when I withdraw it, so why am I limited in contributions if I don't claim more than $5500? Any advice or explanations would be greatly appreciated. Thank you.

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Alexa9
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Re: Traditional IRA Contribution Help...

Post by Alexa9 » Mon Oct 30, 2017 10:18 pm

What fund is it? Never fall in love with a fund :) There are many other great choices out there and likely better ones. 5500 is max for an IRA but you can invest in taxable accounts or other types of retirement accounts if your husband is offered them like a 401k. T Rowe Price is pretty good but there are better options out there. To be honest, Vanguard is the favorite on here and Schwab/Fidelity are close seconds. Passive total market index funds are preferred.
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carquiaidave
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Joined: Mon Oct 30, 2017 8:59 pm

Re: Traditional IRA Contribution Help...

Post by carquiaidave » Mon Oct 30, 2017 10:30 pm

It's the Global Tech Fund. Fantastic performance overall. I am researching others now, but still don't really understand why the contribution is limited given you pay taxes on the back end (assuming, of course, you don't claim a tax exemption for the overinvestment). Vanguard does look appealing. I'm not sure I want to dump it all in an ETF as the prices are on the higher end and we're in a bit of a bubble at the moment. The T. Rowe Price Global Tech has been outperforming most, but I guess I don't have any options there. I've just started looking into others; curious how people feel about iShares USA Momentum ETF (MTUM) vs. Conestoga Small Cap.

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Earl Lemongrab
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Re: Traditional IRA Contribution Help...

Post by Earl Lemongrab » Tue Oct 31, 2017 10:49 am

carquiaidave wrote:
Mon Oct 30, 2017 10:30 pm
It's the Global Tech Fund. Fantastic performance overall. I am researching others now, but still don't really understand why the contribution is limited given you pay taxes on the back end (assuming, of course, you don't claim a tax exemption for the overinvestment).
Because it's the law. In this particular case, if you could put an unlimited amount into a TIRA on an after-tax basis, then you could convert that to a Roth and NEVER pay any tax on the growth.
This week's fortune cookie: "You will do well to expand your horizons." Ow. Passive-aggressive and vaguely ominous.

carquiaidave
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Joined: Mon Oct 30, 2017 8:59 pm

Re: Traditional IRA Contribution Help...

Post by carquiaidave » Tue Oct 31, 2017 1:14 pm

I didn't realize you could convert a traditional IRA into a Roth. See, that helps. Thanks!

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