When people talk retirement, the Roth IRA often comes up.

Rightfully so.

It’s an excellent tool to help you save more money for your retirement. I’ve used it in the past, in addition to my company’s 401K, to help me save for my own retirement needs.

Here are some characteristics of people who have a Roth IRA:

• They may be just getting started with retirement investing and looking for a place to put their savings.
• They may use a company 401K, but they are looking for an additional place to save.
• They want to save a lot of money on taxes when they withdraw their retirement savings.
• They want to have more control over their investment options and the investing fees they pay.
• They want more control over their retirement savings withdrawals (i.e. use the money for a first home, major medical emergency, etc.).

Sound good? if you’re wondering what a Roth IRA is and how it works, I’m going to try to answer that for you in plain English below.

First came the Traditional IRA

To understand the Roth IRA, it’s important to understand it’s predecessor, the Traditional IRA. The Traditional IRA and the Roth IRA are both tax-advantaged places to hold your retirement investments.

Meaning, there is some type of tax savings involved. The U.S. Government created them so that you’d be encouraged to save more for your own retirement.

With a Traditional IRA, you place pre-tax dollars into the account and you don’t have to pay taxes on the contributions or earning until you start withdrawing the money at 59 and 1/2. In short, with a Traditional IRA, you get a tax break now, but you have to pay taxes on the earnings from the account when you retire and start cashing out.

This is almost identical to the way a 401K works. The major difference is control. With a 401K you are at the mercy of your employer’s choice of funds and expenses. With a Traditional IRA (as well as the Roth), you get to decide where to open the account, what to put in it, and if you want investments with low costs.

Richard Geller, CEO and managing director of FinancialSuccessInstitute.org, announced today, “The Institute is concerned the loss of customer funds by MF Global is very possible with any financial institution other than FDIC insured banks. the Gold IRAor 401K likely eliminates this risk when it’s correctly structured. Yesterday, the FinancialSuccessInstitute.org expert panel released their preliminary finding about why a Gold IRA or 401K eliminates risks inherent with financial institutions that gamble with customers’ investment funds.”

The FinancialSuccessInstitute.org’s mission is identifying highly secured investments for investors. the institute’s Gold IRA article outlines how the MF Global bankruptcy can happen to any financial firm at any time. A Dec. 14 Reuters article states the MF Global bankruptcy was caused by a $6.3 million investment made in European sovereign debt using customer funds without first disclosing the investment. the Reuters article cites a bankruptcy trustee inh the case as saying as much as $1.2 billion is unlikely to be recovered.”

Geller stated, “At the heart of the Institute’s study is finding the most secure investment possible while delivering a good return. We believe it’s one where the investor physically controls the asset in the way a Gold IRA or 401K might be structured. A Gold IRA or 401K could feasibly be assigned ownership of the gold. the Gold IRA might then register a bank safety deposit box in the name of the Gold IRA to physically hold gold without a third party custodian having any access to the gold. the owner-investor of the Gold IRA would possibly have exclusive access.”

Geller continues, “A Gold IRA appears to make sense because gold has increased in value on average 18% annually since 2000. No other commonly held asset class is able to make this claim other than the Gold IRA or 401K.”

Geller points out, “A Gold IRA or 401K will likely have liquid cash on occasion. Properly structuring a Gold IRA would notionally involve opening a savings account or certificate of deposit at an FDIC insured bank in the name of the Gold IRA for the purpose of holding cash. This could provide the Gold IRA the highest level of security available.”

Geller emphasizes, “Those not fully understanding the importance of physically holding gold in a Gold IRA need to read the Gold IRA article explaining why all investor funds held by non-FDIC financial institutes are at risk in the same manner MF Global customers were surprised to find themselves. Another reason the Gold IRA appears to make sense is the risk that stock markets will again bottom-out over a negative news headline – the same headline is likely to drive up the value of a Gold IRA. along with reduced risk, another benefit often associated with a Gold IRA is it has always been a hedge against inflation. Overall, the expert panel sees great promise in the Gold IRA as an ultra-low risk investment vehicle.”

Geller summarizes the FinancialSuccessInstitute.org’s announcement of the expert panel study of the Gold IRA this way, “The panel is aware of other highly secure investment vehicles rather than the Gold IRA. For example, the institute educates investors about using a self directed 401K to own real estate. these are highly secure but not as secure as the Gold IRA. Investors spooked by the MF Global bankruptcy should educate themselves about the Gold IRA and other highly secure investment vehicles by visiting FinancialSuccessInstitute.org today.”

I have participated in the company sponsored 401K since I started to work for my company.  back then, I did not know anything about investment so I just kept putting money to the 401K.  especially, I put lots of money from my salary for few months until I learned about how 401K really works in great detail (Please see my investment section for the detail).  since then, I just put only 1% of my salary in 401K.

As a rule of 401K, I can’t withdraw my money in 401K until 59.5 years old (If I could, I would withdraw everything) but I do know that I can borrow against it.  So I borrowed 50% of my contribution amount and invested in buying silver.  many people probably think that it is pretty crazy idea.  But, putting money and leaving the money in 401K account is pretty illogical in my opinion.  My quick idea that investing in silver by borrowed money is based on the following rationale:

1. I borrowed money from 401K at 3.25% fixed rate loan.  Considering current inflationary environment, rate of inflation is definitely much higher than 3.25%.  Let’s say current inflation rate is 6%, more than everything what I borrow will be effectively destroyed by inflation.

2. again, due to inflation, price of silver will expected to go up even higher.  last year’s percentage increase in price of silver was over 50%.  if you borrowed money at annual rate of 3.25% and invested in silver last year, your return would be 46.75% (If you only putting the money in 401K, return would probably be 7 – 8% if there is any…)

3. I fear that stock market will go down severely.  I expect that there are several future events that would possibly cause stock market to decline.

4. Current government monetary and fiscal policy makes me expect more dollar devaluation.

Personal finance experts Farnoosh Torabi, Jean Chatzky and Stacey Tisdale advise viewers on how best to handle student loan debt.

TODAY Money financial expert Farnoosh Torabi joined us for a live Web chat Wednesday to answer your questions.

Here’s one of her answers to questions from the live chat. (See below for the full Q&a and video of Farnoosh’s TV appearance this morning.)

Here’s one of her answers to questions from the live chat. (See below for the full Q&a and video of Farnoosh’s TV appearance this morning.)

Steve asked:

“I am considering NOT investing in 401k (no match) or Roth and instead ramp up paying down my current mortgage on rental home. My justification would be once paid off I’d continue to rent (2k/mo) and be source for long-term income. I’m 42 single, no kids. Stable job, renting out a condo. Mortgage is 15 yr 4% fixed..thanks!”

Farnoosh replied:

“I would hate to see you neglect your 401k or ROTH. it may take many many years before you pay off your mortgage and in the meantime you’ve missed out on major opportunities to save for retirement. And as we know with any kind of investing, the earlier you start, the more you can build. if there’s any way to even just pay up to the annual max on a ROTH ($5k) I’d do that.”

Here’s the full chat archive:

If you have a question for our TODAY Money experts, submit it here. 

To sign up for an e-mail reminder for our next chat, click here.

One of the bigger crimes special agent Michael Martinez said he sees is something called “non-delivery of merchandise.”

“That occurs when somebody gets online and says ‘I want to buy this’, and they chat back and forth with the person selling the item, finally giving them some kind of payment, but then they never get the item they ordered,” Martinez said.

El Paso native Charles Frazier learned about identity theft the hard way.

“I accidentally wrote down my social security number on my 401K and then found out my benefits were going to someone else,” Frazier said. “I was also getting bills for things I never knew I had.”

He now limits the number of people who get his social security number to his doctor, banker, and the police department.

Ernie Vasquez doesn’t know how his credit card information was stolen, but he didn’t find out until he went to apply for a credit check.

“I was totally surprised and upset,” said Vasquez of west El Paso. “It took me about five years to get everything corrected and back to where I was before it happened. now I’m a lot more cautious about how and where I use my card.”

If you are a victim of identity theft there is a website the FBI uses to help building a criminal report: ic3.gov

On the website, the FBI suggests a few ideas for further protecting yourself from identity theft like shredding mail with pertinent credit information, checking your bank account daily, and never giving information to any unsolicited online offer.

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I co-owned a home during my marriage, but am now getting divorced (so am I a first time home-buyer?). I am not yet retirement age. I will get IRA(s), and have an old 401K, but want/need to put the money into a home downpayment. Is there a way to do this without paying taxes and penalty? can I use a self-directed IRA?

Not with out paying taxes and, most likely, a penalty.

401k: No exceptions to the taxes. There are a few exceptions to the 10% penalty but this is not one of them.

IRA: No exceptions to the taxes. There is an exception to the 10% penalty if you have not owned a home within the past two years prior to the purchase of the new one. your joint ownership of the old home would disqualify you if it was within the past two years.

A self-directed IRA can not be used for home that you live in. It can be only used for investment/rental property.