Call me a hopeless optimist.... but I say you'll be called !
In January, "global warming" will repeat with terrible cold and snow. Natural Gas, will be at the lowest inventory level of a decade, I can't even guess what the spot will be, but I'm sure above $6. And ERF will be cashing in big time as production at the Marcellus hits all time high records.
And to sweeten the pot even more.... read about Phillips and two Enbridge terminals for shipping liquid gas (propane, butane, or whatever form needed to circumvent Obama's export limitations on NG), should be in the news by then, signing contracts with producers like ERF to sell to China at amazingly high prices. Do you know that right now they are widening the Panama canal (I'm serious) to make room for "supertankers" to carry (our) gas from Houston to ShenZhen ? In two years we could easily be in the $40's. After 5 years, Marcellus production will decline. Don't be stuck in ERF then...
I'm eagerly anticipating ERF's next earnings report. It's possible that the increase in the stock price is that the "whisper" numbers are very good. Does anyone know when earnings are going to be reported?
"Master, the corpse is stirring!". I hope this uptrend can continue for a while, I might even get my money back this year! This was a $12 stock a year ago, it looks like it may finally be pulling out of the long-term rut it's been in.
As I posted in this thread, each individual/family must analyze their own situation and determine what's best for themselves. You have done that and decided on a Roth, good for you. There are so many working people who go all their lives without thinking about investing for retirement/education/estates or about the utilization of 401k's/Roths/Traditionals. You've got to take advantage of all the tools at your disposal.
Blew thru $21 faster than we blew thru $20 ~ I'd anticipate that we'll see $23 sometime before mid May ~ So much for the Street and Jimmy Boy's SELL rating on this stock back in March ~ L_M_A_O and too bad for the poor saps that followed that buffoons advice ~ I'm actually starting to think we could see $30 by years end ~ GLTA!
What I mean by the tax benefit now (a traditional IRA) or in the future (a Roth) is when you take distributions as you lay out in your example. I would still opt for the Roth though for other reasons.
First and foremost, no one knows what the income tax ates will be down the road. So, you example more likely than not won't hold up. I would rather have a tax-free income stream down the road from a Roth.
Secondly,A Roth IRA is inherited by a designated beneficiary for the account rather than an heir named in a last will and testament. The beneficiary is specified with the financial institution holding the account. By naming a beneficiary, you instruct a direct distribution of your Roth IRA to that individual upon your death. You avoid having the account inherited by settlement of your estate.
Read more: http://www.ehow.com/how_7325172_leave-roth-ira-minor.html#ixzz2zVxD0ZWC
Then you have the abilit to use the money for things like education or a down payment on a house without penalty like using the funds from a traditional IRA.
I also like the idea that there is no required age where you need to start taking the distributions.
Either type of IRA is a great idea though. If you don't have one, get one. I started mine with money from an old 401K that I was no longer contributing to. That money has now morphed into 4 IRA accounts with considerable holding.
Single Taxpayer example (you can crunch out the numbers yourself for a married couple):
Let’s assume that we have Joe, a single retired taxpayer. He only has two annual sources of income, $15k from Social Security and an annual withdrawal of $10k from his Traditional IRA account. When he prepares his Federal Tax return you’ll see that he’ll owe no taxes at all, to include no taxes on his Traditional IRA withdrawal of $10k. Rule number one is, if a Social Security recipient’s income is $25k or below ($32k for marrieds), then none of his Social Security is taxable. That leaves Joe with an adjusted gross income of $10k, but he gets a minimum standard deduction of $6.1k ($12.2k for marrieds) and a personal exemption of $3.9k ($7.8k for marrieds), this leaves him with no taxable income at all. Joe withdrew $10k from his Traditional IRA and paid no taxes on it and he can repeat the process year after year until his account is exhausted. That’s the same tax advantage that the Roth holders receive. But Joe also was able to deduct thousands each year, during his working life, as he could use his Traditional IRA investment as a write off against his taxes. A Roth investor couldn’t do that.
In so many cases, the Traditional gets a much better tax break than the Roth investor.
The reason I wrote this is to help ERF investors figure out how to REALLY MAXIMIZE their investment returns. But investors need to keep fully aware of the tax advantages offered by Roths, Traditionals, and they need to keep tabs on their own retirement situation.
Good luck to all ERF investors!
Continuation of previous post.
As I previously posted, there are many retirees who invested in self directed Traditional IRA accounts who, just like Roth IRA investors, will pay no taxes on their Traditional IRA withdrawals. Furthermore, during their working years, they can contribute up to $13 toward their Traditional IRA and save up to $3k a year in federal taxes. If this is the case, then the Traditional IRA owner gets everything the Roth owner gets, plus much more. That $3k tax annual tax savings adds up over a career, and the Roth owner doesn’t get that adjustment to gross income.
So, the question at hand is, “How can a Traditional IRA investor prudently make annual withdrawals from their account, without having to pay taxes on it?” In fact it’s done legally, through the current IRS laws, and it’s a very common practice. It can occur for either single or married taxpayers who withdraw money from their Traditional IRA. The situation is best illustrated with a short example of a single retired taxpayer (but it applies to married taxpayers also).
Continued again on next post:
Rthomas, first of all, let me congratulate you on your foresight of putting your ERF shares into a self directed Roth IRA. As I previously posted, you’ll save yourself 15% on the Canadian tax, 15% on the US dividend tax, and 15% on any capital appreciation that you’ll gain over the years. No taxes for you sir, congratulations.
However, you do make a very wrong assumption about self directed Traditional IRA’s when you post, “The difference between a Roth and Traditional IRA is whether you want the tax benefit now or in the future." A lot of people think that is the case, but it’s not always.
Approximately 50% of retirees, who prudently withdraw a portion of their Traditional IRA savings, will also never pay any taxes to Canada or to the US for dividends/capital gains. But besides paying no taxes on their Traditional IRA, they receive a great tax advantage that Roth IRA holders don’t. Traditional IRA investors can write off up to $13,000 annually, as an adjustment to their Federal income tax return.
This could mean an annual tax savings of up to $3k for each year of their working/contributing life, $3k each year for your working career can add up to a lot of money. Again I emphasize, 50% of these investors will never be taxed a penny on their Traditional IRA, either before the investment or after prudent withdrawals from their Traditional IRA. A lot of investors don’t realize this. But I know this because I’m a trained/tested/volunteer tax preparer who prepares approximately 50-100 returns each year for the elderly.
So, the question is, “How can you invest in a Traditional IRA and still pay no taxes on your withdrawals. Because of the length of the answer to this question, I’ll continue in a response to this post.
First of all, you are right about having the shares in a self-directed IRA. That's where I have mine and the dividend is dripped. It's great.
The difference between a Roth and Traditional IRA are whether you want the tax benefit now or in the future.
Both have limits that you can contribute in any given year. You can't contribute to a Roth if you make more than x amount of dollars in a given calendar year.
The traditional IRA allows you to take a tax deduction now based on what you contribute and how much income you report.
The Roth is funded with after tax money. When you start to use the money when you retire, it'll be tax-free. For anyone out there looking to open an IRA, open the Roth. It has other benefits as well.
With a Roth, you do not have to start taking distributions at any age. A traditional will require you to in the calendar year after you turn 70.
With a Roth, you can leave it to your kids if you don't use the money.
With a Roth, you can take money out without penalty in special circumstances (i.e. to pay for education, as a down payment to buy a home, etc.)
I had my son open a Roth with Schwab and now I fund it (he hasn't done anything about his retirement).
I'm sure I'm leaving something out about IRAs but a Roth is the way to go for anyone wanting to open one. For those of you with a traditional that you want to convert to a Roth, you probably won't be able to stand the tax hit you'll take,
There are other great tax advantages to opening up either a Roth or Traditional IRA with ERF shares included in your account.
Both Roth and traditional IRAs qualify for an annual federal 'Savers Tax Credit'. The government pays you for saving for retirement.
There are limits as to how much you can contribute annually to a Roth or Traditional IRA:
1. $5500 if you're single and under 50 years of age, $6500 if you're over 50 years of age.
2. $11,000 if you file Married/Jointly and you're under 50, $13,000 if you're both over 50.
Finally, don't limit yourself to thinking of only about a Roth. The self-directed Traditional IRA has some advantages that a Roth doesn't. The big advantage is that anything you contribute to your Traditional IRA can be subtracted, as an adjustment, from your Federal 'Adjusted Gross Income', for tax purposes. As an example, say that your total income for a given year was $50,000 and you contributed $10,000 to a self directed Traditional IRA, you could subtract that $10k from your income. And your Adjusted Gross Income would be $40k instead of $50k. You'd save approximately $2,000 in taxes in this example.
Whether you're young or old, you need to take advantage of all the tax benefits that self directed Roth/Traditional IRAs offer.
Don't pay any Canadian or US taxes on your dividends. To obtain max performance of ERF returns, is to cash them in now. Take your profit or loss. Use the proceeds from your ERF sale and reinvest the proceeds in ERF stock in a self-directed Roth IRA account. Drip all your ERF dividends. You'll avoid both Canadian 15% taxes and US 15% taxes for the rest of your life on both your capital gains and dividend. Such a simple and obvious solution.
In the self directed Roth account, you'll still be able to buy or sell your shares and invest in other stocks if you desire. The only drawback to the Roth is that you have to wait until you're 59 1/2 before you can withdraw your money. But that may represent years and years of tax free capital gains and dividend income.
Think about it, especially if you're a young investor. Tax free capital gains and dividends can compound investment income dramatically over time.
The solution, for max performance of ERF returns, is to cash them in now. Take your profit or loss. Use the proceeds from your ERF sale and start up a self-directed Roth account with ERF shares. Drip all your ERF dividends. You'll avoid both Canadian 15% taxes and US 15% taxes for the rest of your life. Such a simple and obvious solution.
For full info from ERF home page, on the 15% Canadian tax, google 'Enerplus tax info for U.S. Investors'.
Let me clarify. If you hold ERF in a taxable account, your dividends are subject to a 15% Canadian withholding tax plus they will be taxed again by the US at a 15% rate. You may be able to reclaim your 15% Canadian tax withholding as a credit on your US tax return. However, if you have your ERF shares in a qualified US retirement account, Canada will not withhold their 15%. See Enerplus home page for 'Tax Info for U.S. Investors and you will see that this has been the case since 2011. See excerpt below:
For 2011, if Enerplus shares are held in a taxable U.S. account, the dividend is subject to a minimum 15% Canadian withholding tax that is withheld prior to any monies being paid to shareholders. U.S. investors may be able to receive a foreign tax credit with respect to this withholding tax. Where shares are held in an IRA, withholding tax should no longer apply.
"you will get withholding of 15% regardless what type account you have ~"
That's not true, you need to investigate and save 15%. Canada does not withhold the 15% tax, on dividend payouts, if your stock is held in a U.S. retirement account.