ROTH versus Traditional IRA

[BOSSHOG]

I have a good deal of money in both types of IRA's; although I haven't added to the traditional IRA in years. I'm 52. When I become eligible to withdraw money from the IRA's, which one should I withdraw from first, ROTH or traditional? I'm thinking ROTH first, banking on having a lesser tax liability when I get around to tapping the traditional. Any input would be greatly appreciated.

[A HERETIC I AM]

1. Your tax bracket when you begin to withdraw should be the decider....

sorry for the use of a shrubbery term!

If you begin withdrawals soon after you turn 59 1/2, it does depend on what other income you have and what your MARGINAL rate will be as, if i am not mistaken, that is where the IRA monies are taxed. Obviously, the longer you let your Roth grow, the more tax-free income you'll have when you start to take it out. Also, don't forget that you MUST begin withdrawals on your traditional IRA by 70 1/2 but there is no such requirement on the Roth. If you don't start taking withdrawals by then, the IRS will penalize you 50% of the amount they say you have to take (A percentage of the account balance every year). If you have earnings, even a part time job in which withholding is taken from your pay,(Like a doddering old greeter at Wal-Mart, for instance) you can continue to contribute to the Roth for as long as you wish.

Short end....withdraw from the traditional first. Take the Tax Free income later on.

PM me if you like. I am in the business and i might be able to help you more in a private message than i can on a public message board.

[BOSSHOG]

2. Thanks very much

A lot of food for thought. One item I didn't mention, the traditional is a commercial bank CD from waaay back (currently 4.8%,) the Roths are mutual funds (Janus and Chase.) I was contemplating converting the Roths to CDs when I turn 60 and letting them sit for awhile as I wouldn't have to worry about the funds crashing.

[A HERETIC I AM]

3. Look into Blended funds available from the fund families you are in......

A blended fund will have a considerable Bond position in it's portfolio. That reduces volatility and increases income via interest payments. The overall return is usually lower than with a 100% equity fund but if you are worried about a downturn in the market (2007 looks pretty good, actually. As good as '06, anyway) then blended funds will be less affected. Check out Janus Balanced (ticker JABAX) 5 star 10 yr ranking by Morningstar, 40% US stocks, 18% non-US Stocks/35% bonds 10yr tot. ret. of 9.7%

www.janus.com

JP Morgan (Chase) has similar funds

www.jpmorganfunds.com

Don't give up on the American Equity markets. Too many people on this board are thinking there is going to be a depression next week! It isn't going to happen.

And now for the disclaimer. The above is not a solicitation to buy or a recommendation to purchase any particular securities. Investing in the stock market has risks that include the possibility of a loss of principal. Upon redemption of shares you may receive less than your original investment. Past performance is no guarantee of future results. Seek the advice of a qualified investment professional in your area and carefully weigh recommendations before making any investment.

[BOSSHOG]

4. Your assistance is greatly appreciated

and no need for the disclaimer.

My Janus Roth IRA is in Contrarian Fund which has done quite well the past few years; surpassing my expectations for a "conservative" fund.

When I was a young lad I threw caution to the wind and shoved as much money in Mutual Funds as possible. Janus Mercury (now research) and Growth and Income made my head spin in the late 90's. I took a big withdraw in January 2000 to put down on a home. Great timing but all luck. As I approach that twilight and my opportunities to regain losses dwindle I value my monies more. I don't foresee or predict a depression and I've made more from Janus then I will ever lose (I'll make sure of that). Your spending plan for my sit back and drink beer years is right on the money, so to speak. Thanks again.