Comments on: Reader Mail: What’s a Smart Thing to do with My Tax Refund?

By: Amanda@twitter

Amanda@twitter — Sun, 29 Apr 2012 20:35:34 +0000

@VolcanoMouse Totally thought the same thing about it being magical, but I saw that it’s FDIC insured which made me feel way better.

By: Johanna

Johanna — Fri, 20 Apr 2012 14:42:23 +0000

Johanna from Betterment.com here. First up – great article Mike. Hope you don’t mind me chiming in but I came across this post and saw some common themes throughout the article and comments: Investing should be easy, you should be able to invest without a lot of money etc. I thought it might interest the readers of this blog to learn about http://www.betterment.com. It’s smart investing without the hassles: Link it to your checking and set up auto-deposit and you’re immediately invested in a fully diversified portfolio. We take care of all the management for you. We now have Roth and Traditional IRAs too. Happy to answer any questions people have. Thanks, Johanna

By: NeenerNeener

NeenerNeener — Thu, 19 Apr 2012 03:41:25 +0000

@frenz.lo
The 1099R for a Roth won’t provide you with the breakdown. But you should be able to figure out what portion of the $10k was from contributions (or the bank should have this info), and any amount above that that was withdrawn is earnings. I don’t think it matters, since you used it to buy a house (distribution needed to be within 120 days of the purchase), so you meet an exception to penalty or tax on the earnings. I don’t use Turbotax, but there should be somewhere to 1.) enter your basis (amount you contributed) in the distribution so that that part is not included in taxable income and 2.) check a box or something about a home being purchased so that no penalty is calculated. If you can’t find it, I’d probably call/im with someone at turbotax rather than switch to another program, as it’s probably just going to give you the same difficulty.

By: jane lane

jane lane — Thu, 19 Apr 2012 02:58:03 +0000

@sony_b Yeah, it’s GMAC rebranded with a lower interest rate. My family got all kinds of fucked by all the GM…everything, so I’m not a real big fan even though I still have an Ally account.

By: frenz.lo

frenz.lo — Thu, 19 Apr 2012 01:55:49 +0000

OK, timely Roth question: I cashed out a Roth IRA that was about 4.5 years old, in an amount of slightly less than $10,000 to buy my first home last year, but the form I got from my old bank just listed the gross distribution, not a break down of what I’d put in over time and what was interest. When I plugged it into Turbotax, Turbotax listed it as income, so suddenly I owed a lot more than I did with just wages. I filed an extension, because this doesn’t seem right, and I like to put things off. But should I just re-do my taxes in another program, or suck it up and get an accountant, or what? Do I have to call my old bank and demand they break down interest vs. gross distribution, or does this matter?

By: Sarah Rain@facebook

Sarah Rain@facebook — Wed, 18 Apr 2012 23:58:48 +0000

Given how pathetic interest rates are right now I’m not seeing much point in investing. The price of food has been going up faster than my 403(b) from my last job. Maybe I should buy a few year’s worth of peanut butter instead?

By: Mike Dang

Mike Dang — Wed, 18 Apr 2012 20:38:01 +0000

@sony_b Yes, Vanguard is my choice too, and their STAR fund is a highly recommended starter fund.

By: sony_b

sony_b — Wed, 18 Apr 2012 20:32:55 +0000

IMHO Vanguard is the best place to start if you’re new to investing. Buying and holding index funds is historically the best way to do it, and Vanguard built a solid reputation on creating no-load funds (which means more of your money is actually invested instead of going to some money manager’s pocket), and they also have their targeted retirement date funds which allow you to pick when you expect to retire (in five year increments, IIRC), and then they will be automatically managed and reallocated to lower risk as you get older. It’s lazy but generally pretty safe and they have a solid reputation.

By: sony_b

sony_b — Wed, 18 Apr 2012 20:27:44 +0000

@VolcanoMouse Ally is a legit bank – it’s actually GMAC rebranded – which actually makes it kind of evil if you’re feeling grouchy about bank shenanigans and the mortgage mess. I’m not saying don’t use it, just beware. :)

By: Megan Patterson@facebook

Megan Patterson@facebook — Wed, 18 Apr 2012 20:12:19 +0000

Best. Image Choice. Ever.