When buying & selling stocks is it better to have an ira account even when i take some out to pay bills?
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The only benefit for having an IRA that you expect to use prior to retirement is if you take out $10,000 for a first time home purchase, or you use it for qualified higher education (tuition, fees, books, expenses). In that case, the IRA withdrawal, although it will be taxed as income, it will not incur the 10% penalty. Why is this better than a taxable account? Because all the while you are deducting the contribution from your income AND the earnings are growing tax deferred. Plus, if it turns out you do NOT need the money, it can stay safely in the IRA until retirement. I certainly wouldn't put in money that I was planning on using for a car or vacation...but if you want an emergency fund that is hard to touch (prevents temptation) and could be kept for retirement, and IRA is hard to beat.
A Roth IRA is another good choice. You can always pull out money you put into the Roth without any taxes or penalties as long as you don't touch the earnings.
But, if you want an account to pay bills, neither account is better than a simple checking or savings account. If the amount of money you keep in there is substantial, look around for a good interest rate. Otherwise, look for low fees.
If you are going to take money out, it is better to get a money market account or something. Taking money out of and IRA is taxable income and 10% penalty. Try mutual funds or money markets.
Better to have both IRA and non IRA accounts. The money earned withing the account can acculuate tax free until such time as you withdraw it. Try not to touch it early due to the penalty. Have a non IRA account for purposes of using the money otherwise.
The idea of an Individual Retirement Account (IRA) is to segregate retirement investment money from normal money (see link 1). You can't touch this stuff except in an emergency, major emergency, and even then you have penalties (see link 3). If you put money into an IRA, kiss it good by until you are ready to take it out during your retirement (see link 2).
Think of it like making really risky speculations or gambling--set aside only that which you can afford to lose. The beauty of an IRA is that, unless you invest in stuff like Enron and WorldCom, you don't lose this money, it is there when you are ready to retire.
If you are older than 59 1/2 and you are not holding the stocks for more than a year, it is a great idea because the only tax liability is on what you withdraw. This means that you can reinvest your capital gains tax deferred - they will be taxed as ordinary income when you withdraw. I do this pretty frequently.
Early withdrawals from an IRA are usually a bad idea due to the 10% tax penalty. See this link for exceptions. http://www.irs.gov/publications/p17/inde...
If you are younger than 59 1/2 it is a bad idea
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