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I'm getting a large sum from an annuity and i want ideas on what to do with it. I'm 18.?
19,500. 10,000 is going to a car, 2,000 to insurance, 1,000 to 401k, 1,000 to RothIRA. Like do i invest it? do i save it? or do i just add more to both 401K and RothIRA
Idk how to reply to people on here but i dont have to pay taxes, the company i get it from are paying it for me it says so in my contract.
- Rick BLv 72 months agoFavorite Answer
I would fund an emergency savings account with 3 to 6 month's worth of expenses and put the rest in retirement, but I do not know your situation.
- RitaLv 62 months ago
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- A HunchLv 72 months ago
First off, if the inheritance is taxable the company is not paying taxes for you. They are withholding money for taxes for you and sending the money to the IRS. They might withhold too much or too little. There is no way to know until you file your own taxes - next year.
= how much needs to be withheld is based on your specific situation, not mine or the people who responded here.
401K and Roth IRAs have money tied up until age 59.5. Do you want this money tied up that long = 40 years! There are special situations that you can withdraw the money for, like with an IRA a first time home or with the Roth IRA you can pull out your contribution after 5 years but the growth is locked for 40 years.
We have no idea what your situation is. Are you in college? going to a trade school? What are you doing in terms of planning for life??
Spending over 1/2 of it on a car and insurance seems like a gigantic waste or a gift.
- AmyLv 72 months ago
There's no reason not to put the maximum ($12,000 or less depending on your income) in your Roth IRA. You can always withdraw that money later.
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- KiethLv 72 months ago
Your 401k and Roth money would see better growth if you bought gold coins. I wish I did when I was your age. Gold was less than $100 per ounce then. My mutual funds are worth less now than they were then because of the pandemic bulls#it.
- Lisa ALv 72 months ago
$5000 for taxes
$6000 to IRA for 2020. If you deposit it before April 15, you can classify it as a contribution for 2020.
$6000 to IRA for 2021.
$0 to 401(k). Only your salary can be deposited in 1 401(k)
$2,500 to an emergency fund.