A: Can I take money out of a Roth account to pay bills and still get a tax deduction for contributions to a traditional IRA? — B.A., via email
Q: The fact that you have a Roth account and want to take money out, which you can do, assuming that you are at the appropriate age and meet investment time constraints, doesn’t have anything to do with the tax deduction for contributions to the traditional IRA. They are totally separate. But you must meet all requirements that the Roth account imposes, such as time opened, etc., in order to take money out of it, otherwise there will be some penalties.
Q: I do not agree with your representation of a 6 percent to 8 percent return. I retired in 1992 and was given an option to receive a pension monthly or a lump-sum payment. It was suggested that a return of 7 percent would be enough to equal the pension amount. I could not for the life of me determine how I could attain these results. I am not a trained investor, nor could I hire someone to achieve these results. — Reader, via email
A: I can understand your concern. You say it was suggested that earning a return of 7 percent would be enough to equal the pension amount, but you couldn’t determine how to attain these results. Even though, as you say, you are not a trained investor, 6 percent to 8 percent is not an unreasonable return if you are taking a modest amount of risk in the marketplace.
Will you make that every year? Most likely not. On the other hand, last year my broker returned almost 13 percent. It was a very good year.
One thing to consider is that if you pass away, the money left in a pension fund is in all likelihood gone. If you take the money and invest it yourself, when you pass, the principal could be left to an heir. This may not be important to everyone, but I think it’s certainly worth some consideration.
