(1) My wife, who is a resident (british) (non-US citizen) and I (a US citizen) am planning to open a joint-Roth IRA account for me and her? Is there any IRA caveats for resident aliens??

(2) Is there any advantages or disadvantages in having a joint or individual IRA account??? I noticed that some answers on the board indicated "No" but it appears to me that having the option to "violate" one account is better than not having any choice at all???? or am I not making any sense???
(3) Are there any hidden charges to promotions claiming no-fee IRA's??

(4) Can I trade my funds in an IRA account as if it is a brokerage account?? Trade in stocks??

(5) Should I be concerned with whom I open my IRA account with?? Seem like anyone with a well-known name would do??? or is there more homework to do than I realize??

(6) Given that retirement accounts are so important in one's life...it boggles my mind that the government has made this area into one of the most difficult to understand and to navigate especially with so many traps!!! Am I the only one who feels this way??

Thanks for any replies

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andrew

Not sure about your wifes eligibility. But, all IRA accounts (reg or Roth) are INDIVIDUAL accounts.

There are thousands of places offering IRAs so you just have to compare about fees, service and investment options. Often the no fee is with very conservative options (low interest CDs at a bank) or if your total IRA assets exceed $10,000. My experience is that the annual fees range from 0 to $35. Shop around.

Brokerage account IRA will allow you to trade stocks, but it sounds like you are just getting started. It is hard to efficiently or wisely invest less than $10,000 in stocks. Try mutual funds until you build up your assets. With less than 10K you get eaten up with commissions and have a hard time building a portfolio. You may want to consider an index type fund which has very low overhead costs.

Just anyone? well, no. The level of service, convenience, annual charges, range of choices vary a lot. Following my prior suggestion: try Vanguard, T Rowe Price, Janus or one of the other NO LOAD family of mutual funds. Each offers lots of choices for investing.

Responding to your final comment. Anytime the government sets up something new there is ussually a prolonged period of fixing admin and technical glitches. They just don't consider all of the potential variables (market drops, people dying prematurely, divorce, etc.) Everytime I say something about tax simplification, my accountant falls off his chair laughing. Don't expect it to get any easier... people want to talk about flat taxes more than tax simplification. They are not the same.

Your wife is eligible if you file Jointly and your joint AGI is less than 160K (contribution allowability is phased out for MFJ taxpayers with AGIs between 150K and 160K). She need not even have earned income, so long as you earn at least as much as the two of you will contribute to your RESPECTIVE Roth IRA accounts. Contributions to each account are limited to 2K/yr.

There are NO JOINT IRAs. "I" stands for INDIVIDUAL.

John L. Olsen, CLU, ChFC
Olsen Financial Group
St. Louis, MO

Dear Andrew:

It appears from your questions that you are just beginning to take advantage of IRAs, in general. If I am mistaken, please forgive my incorrect presumption.

However, making mistakes when you are just beginning would be the best lesson in investing -- especially in uncertain markets like now. It would be disastrous if you learn them later in life. [Always remember the hedge fund manager who had the "world as his oyster" during the heydays of the 90's but had to sell most of his possessions last year just to cover part of his debt from miscalculation in "hedging". Do not forget also all those rich and powerful people around the world who had to fall with Lloyds of London -- because they never paid attention to their own money but for the profit coming in. One such power broker almost lost a cabinet appointment (during the Senate hearing) in the US because of the dubious links with some Lloyds investments.]

Your wife is a foreigner as far as the Immigration Office is concerned but she is treated differently in terms of taxation (and investing) if she works here in the US. I am speaking from my own situation -- but do not report me to IRS if I have been mistaken. Just to play safe, consult with an accountant or a tax attorney -- it is worth the expense and will save you from anxiety attacks if that is always at the back of your mind. Also, since you are married, why don't you work for her to become a citizen or at least a permanent resident, if she does not want to lose her citizenship?

As the other replies stated, you should look very carefully before placing your money with any investment firm -- the quality of their customer service varies widely and becomes very important especially when problems arise. For example, I am not as comfortable yet in investing through the purely internet companies even if they are the cheapest but I do not mind using the online service of a well-established company like Charles Schwab or Fidelity. My previous and recent experiences with some "annuity and insurance" investment companies (that I am forced to deal with in my 403b accounts since sometimes they are the "less unattractive" choice) made me more resolute that investors should consider very carefully the customer service you get -- even if you pay more for certain services. Schwab for example charges $29.95 while Fidelity charges $15.95 -- 19.95 for online stock trading -- it is only $8.95 in some internet trading companies. In fairness to the internet trading companies, I have not tested their service yet but I am a more cautious investor and like to talk to a real person sometimes to clarify certain issues. Among the more traditional companies, Vanguard has one of the lowest management fees for mutual funds -- but in many mutual fund companies, you may not get a real person 24 hours a day like you would with some companies, like Charles Schwab. Accessibility is important for me because late in the evening may be the only time I have to deal with my investments.

I started with investing through a mutual fund family initially (20th Century -- now American Century) when I was given a chance to participate in 403b retirement investing but moved to a "one-stop investing mall" offered by Charles Schwab since they were the one who popularized this concept -- if not the first to offer investments in various mutual funds (with no transaction fees, etc.) from various mutual fund families -- now totalling several thousand mutual funds), as well as stocks, bonds, etc. The main advantage of "one-stop investing" is that you do not have to be limited in your choice of mutual funds to that offered by a mutual fund company or you can choose other vehicles to invest your money in. Also, "one-stop investing" has the advantage of your financial statement being consolidated.

Now, Fidelity, T. Rowe Price, Vanguard, American Century and others also offer the "one-stop" investment concept. No annual management fees are charged once you have assets of more than $30-50K to avail of the one-stop investment service. However, if you do not have that much in your IRA and regular accounts combined, many of the companies (except Schwab, I think) would waive the management fees if you invest $5K in a single mutual fund.

While you do not have to pay transaction fees in many mutual funds offered by one-stop investment firms like Schwab, you have to pay transaction fees in some mutual funds that are also very popular and very successful (like those offered by well-known and established companies like Fidelity, T. Rowe Price, Vanguard, etc.) -- if you bought them through Schwab. [In contrast, you do not usually pay fees in some funds if you bought them directly through the mutual fund company.]

However, while, a transaction fee should be a consideration, I pay more attention to the performance of a mutual fund and would not hesitate to buy a "transaction fee" mutual fund through Schwab, if I like it. One other disadvantage of one-stop investing is that the initial investment in companies such as Schwab is now too high -- $2.5K for regular accounts and $1K for IRA -- beyond the reach of beginning investors with modest salaries. Many mutual fund companies still allow you to invest as low as $250. [In 1988 when I started investing, I used to have automatic investment of $5 per week with 20th Century; now even that company has a minimum initial investment of $1K and $100 automatic investment minimum.] So, there are trade offs.

Beware of fees because there are many fees (some of them cleverly "hidden" in very find prints or text subterfuge) -- they could eat up your money if you do not pay attention. Some companies charge you up to 5.75% just to get in -- usually a commission for the broker -- and yet their performance are not necessarily better than other mutual funds that do not charge fees; many "transaction fee" funds, in fact, are underperformers. All mutual funds though charge management fees -- and their management fees could vary from "almost nothing or at cost" for some index funds (e.g. Vanguard 500 Index) to as high as 2.5% for many beginning or aggressive mutual funds -- to cover their expenses. Then there are 12b-1 fees, redemption fees, fees when you do not stay in the fund long enough (I call them "speculation fees" for those who trade in and out that could destabilize a fund and its true investors), etc.

While I like Schwab, I have accounts also with Fidelity Investments for a long time because they have many mutual funds I like and Fidelity is one of the few choices I like best among those offered through my 403b accounts (you should avail of these too, if all you want is to maximize your retirement contributions). I would have paid transaction fees if I bought them through Charles Schwab.

I may open accounts with Vanguard and T. Rowe Price this year. This "expansion" may seem contrary to the consolidation I did just a few years ago (to minimize paper work) but I have always liked some of the funds offered by (I used to have one fund or two with)these companies -- I would have to pay transaction fees if I bought them through Schwab. Also, since I am interested to evaluate the customer service of these companies again (for a webpage I am preparing for beginning investors or those who do not have much time, such as those in science research like me) -- the best way to achieve this is to have funds with these companies.

I use "Morning Star" to evaluate the mutual funds I invest in and spread my money in several mutual funds to hedge my choices further. If you are just beginning, try several mutual funds of various style and risks -- you will be able to test your "risk tolerance" balanced by the amount of "return" you want from your investment.

Knowing your risk tolerance is very important from the beginning -- there will come a time (sooner than you think) when you must be able to lose ("in paper") $100,000 or more in your investments without losing sleep on it because the stock market has become very volatile more recently, especially with speculative tradin

Andrew,

You've got lots to think about here.
(1) I'm guessing your wife is already a permanent resident. Should be no problem having a Roth IRA. To correct something said above: if she opts to become a US citizen, she does not automatically forfeit her British citizenship, though she would be expected to travel on a US passport (she will have to surrender her alien registration card when she is sworn in as a citizen, and a US passport is the only document that will get her back into the country). The US recently changed the law regarding dual citizenship, thereby encouraging many aliens to become naturalized. Many had resisted this move through fear of losing their original nationality. I know, by the way, because I am a recently naturalized US citizen of French/South African origin. I've jumped through all the hoops!

(2) An IRA is by definition an individual account. You can set up a spousal account for your wife (2,000 for each of you per year if you meet income requirements).

(3) and (5) Don't set up an IRA through a bank if you can avoid it, or any brokerage house that charges you a commission. The bank and broker are middlemen, salespeople, nothing more. And banks have huge overhead costs to meet, whereas many mutual fund families don't. Go for 100% no-loads, with low expense ratios. Most reputable fund families will have websites and 800 numbers, and offer a wide variety of funds without commissions. Many will answer technical questions on retirement planning, and procedures for setting up accounts. Forms can be downloaded from the Internet. I highly recommend the Vanguard Group, which tries very hard to keep costs down for investors (www.vanguard.com).
If you seek advice from an independent financial planner, it's best not to deal with one who sells investment products, because there's an inherent conflict of interest. This person will steer you towards the products he or she gets a commission on.

(4) CGC has given you lots to think about. Sounds like you are a novice investor. I highly recommend that you read "MUTUAL FUNDS FOR DUMMIES" before making any investment choices. You never choose stocks or a mutual fund before figuring out what your investment horizon is, what your risk tolerance is, what tax bracket you expect to be in, and so on. Once you know what your goals are, you work out your asset allocation (mix of stocks, bonds and cash in certain percentages) and choose your mutual funds accordingly. This allocation should take account of ALL your investments (your 401(k) or other employer plan), not just your IRAs. Don't trade in individual stocks until you know what you are doing. Find a balanced mutual fund (asset allocation is determined for you) or a judicious mix of about four mutual funds that achieve the balance you are looking for.
If you need to set up a Roth account right away to meet the April 14 deadline, park the funds in a money market account (eg Vanguard's Prime Money Market Fund) while you figure out what your asset allocation should be. Then you can start to shift it into the mutual funds of your choice. You can trade these at any time, but be aware that some mutual funds have a minimum initial investment threshold.

(6) Yes, this business is complicated, and I'm one of many still figuring things out, with questions of my own. Do your homework. Read Mutual Funds for Dummies, check out the www.rothira.com website, read a variety of posts that come up on this message board, and for basic investment issues, why not subscribe to Morningstar's BBS at http://www.morningstar.net/nd/ndNSAPI.nd/B...umId=F100000002 -- it's free. There is another forum on Morningstar dealing specifically with Vanguard funds. It's a popular forum with lots of experienced people contributing to it. Find it by clicking on "other forums".

Good luck

Lyric