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New Member
posted Jan 13, 2022 3:09:21 PM

What is the best IRA for me? I'm a 1099 and did not make much at all in 2021.

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3 Replies
Level 8
Jan 13, 2022 3:11:05 PM

Talk to a financial planner.  Most banks and credit unions will have one available for their customers.

Level 15
Jan 14, 2022 8:30:05 AM

The simple answer is the Roth IRA is best.  The money grows tax free (instead of only tax deferred) and you can take out your original contributions, tax and penalty free, at any time.

 

But, taxes and finance aren't simple. So, the simple answer is not best for everybody.  That's why there are so many choices out there.  The self employed, in particular, have more options. For more detailed discussion, just "google" Roth vs Traditional for the self employed.  There's lots of info on the internet.  Example: https://www.nerdwallet.com/article/investing/retirement-plans-self-employed

Level 10
Jan 14, 2022 3:07:03 PM

I the Roth IRA advice from @Hal_Al if you don't have much income in the contribution year. Why? Because getting a deduction for a Traditional IRA won't reduce your current taxes much (you're not in a high bracket) and the power of tax-free withdrawals down the road is very powerful. 

 

I also like the idea of an investment advisor, but that may be hard to find or afford if you don't have much income or assets. I highly recommend that you select someone with the Certified Financial Planner (CFP) designation.  See https://www.letsmakeaplan.org/

 

It is also worth considering using a "fee only" planner rather than one who doesn't charge you a fee but rather gets a commission from what you invest in. I think it is very hard for % planners to be objective. They will naturally steer you to investments that pay them.

 

Do note that you can't take out the earnings anytime. Sometimes there is a penalty and tax if taken out "early". You should plan leaving the earnings in the account for 5 years after opening the account and when you are older than 59.5. There are a few exceptions (education, first time homebuying, health insurance if unemployed).  See https://www.investopedia.com/ask/answers/05/waitingperiodroth.asp