Mutual Fund?
August 16th, 2010
I currently am a government employee and have an employee retirement plan (not 401k). Should I also consider investing in a mutual fund? Would I be able to have a Roth IRA? I don’t plan on working for the government for much longer so I would like to start a separate retirement fund.
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Tags: employee retirement, government employee, mutual fund, retirement fund, retirement plan, roth ira
Absolutely! First, make sure you have all of your high interest credit cards paid off and have a contingency fund in an interest bearing account for emergencies. Then, by all means, contribute to a Roth IRA (http://www.irs.gov/publications/p590/ch02.html#d0e9412). If you max out your contributions you could also consider a tax deferred annuity from a low cost provider, such as Vanguard (http://www.vanguard.com). You can also contribute unlimited amounts to regular mutual fund accounts. I suggest no load, ow annual fee funds such as those offered by Vanguard and Fidelity (http://www.fidelity.com) to name but two. Do some research at any of these sights and set some long term goal and contribute regularly. Good luck.
It is definitely a good idea to have investments outside of a retirement account. After all at some point in your life you may need some extra money that you have access to. There are income limits associated with a Roth IRA account. I do not recall the particulars, somewhere around $114,000 AGI if you are single, more if married.
The published IRS documents on a Roth IRA do not say that you can not contribute if you have an employee retirement plan.
Yes. yes. yes…be warned that if you leave the government job ( and that pension)…and on your next job you pay into Social Secutity instead….when the time comes to retire, your Soc Sec payments will be reduced…if you have a " government connected" pension plan ( some railroads, too)
…and it’s not a little reduction, either…it’s like 50%.
So be sure to get a ROTH IRA working for you and ALWAYS try to contribute the yearly max…that way you ‘ll have one good government plan working against one very bad one.
( Absolutely cannot fathom WHY they would penalize someone for paying into two pension plans…. I think it’s got something to do with politicians ( who qualify for full pensions after maybe two terms in an office.)…GREAT they work eight years and I worked 38…my Soc Sec is reduced because they’re on a gravy train !!)