Why would you choose a ROTH instead of a regular IRA? I agree with the American Funds. I have money with them.
It might be nice for some of the Financial Planners to give a little bit of information on what is available. And why one would choose one strategy over another
The question about why a ROTH IRA vs a Regular IRA is a good one.
An IRA has more restrictive rules governing what can be contributed and how money can be removed. This is a qualified account meaning the money that goes in is PRE TAX. You don’t pay any taxes on what you put into the account, but when you remove money from the account, 100% of it is taxed at the income rate you are at. Any funds taken out before age 59 ½ (I think) you pay a 10% penalty (no exceptions)
A ROTH uses post tax money. meaning the money you put into the ROTH, you have already paid the taxes on. Upon drawing from the account, you are only taxed on the capital gain (at the income tax rate at the time). However, there are some reasons (someone else might be able to give them) where you can withdraw from a ROTH without paying the IRS penalty.
Both are excellent and should be used by anyone who does not have a retirement plan at their work. Those with work related retirement plans still can benefit from a ROTH. There are restrictions on the IRA for people who have work related qualified plans.
Maybe PastorD and DT and any others could share some basic information along these lines.
__________________ If I do something stupid blame the Lortab!
It might be nice for some of the Financial Planners to give a little bit of information on what is available. And why one would choose one strategy over another
The question about why a ROTH IRA vs a Regular IRA is a good one.
An IRA has more restrictive rules governing what can be contributed and how money can be removed. This is a qualified account meaning the money that goes in is PRE TAX. You don’t pay any taxes on what you put into the account, but when you remove money from the account, 100% of it is taxed at the income rate you are at. Any funds taken out before age 59 ½ (I think) you pay a 10% penalty (no exceptions)
A ROTH uses post tax money. meaning the money you put into the ROTH, you have already paid the taxes on. Upon drawing from the account, you are only taxed on the capital gain (at the income tax rate at the time). However, there are some reasons (someone else might be able to give them) where you can withdraw from a ROTH without paying the IRS penalty.
Both are excellent and should be used by anyone who does not have a retirement plan at their work. Those with work related retirement plans still can benefit from a ROTH. There are restrictions on the IRA for people who have work related qualified plans.
Maybe PastorD and DT and any others could share some basic information along these lines.
i would be glad to help anybody but in private, pms are welcome, no charge, dt
__________________
A product of a pentecostal raisin, I am a hard man, just ask my children
It might be nice for some of the Financial Planners to give a little bit of information on what is available. And why one would choose one strategy over another
The question about why a ROTH IRA vs a Regular IRA is a good one.
An IRA has more restrictive rules governing what can be contributed and how money can be removed. This is a qualified account meaning the money that goes in is PRE TAX. You don’t pay any taxes on what you put into the account, but when you remove money from the account, 100% of it is taxed at the income rate you are at. Any funds taken out before age 59 ½ (I think) you pay a 10% penalty (no exceptions)
A ROTH uses post tax money. meaning the money you put into the ROTH, you have already paid the taxes on. Upon drawing from the account, you are only taxed on the capital gain (at the income tax rate at the time). However, there are some reasons (someone else might be able to give them) where you can withdraw from a ROTH without paying the IRS penalty.
Both are excellent and should be used by anyone who does not have a retirement plan at their work. Those with work related retirement plans still can benefit from a ROTH. There are restrictions on the IRA for people who have work related qualified plans.
Maybe PastorD and DT and any others could share some basic information along these lines.
I wouldn't want a Roth IRA simply because I think my tax rate is higher now than it will be when I retire and need to take the money out. I worked for a CFP for eight years so I have seen situations where a Roth would be the better choice.
I wouldn't want a Roth IRA simply because I think my tax rate is higher now than it will be when I retire and need to take the money out. I worked for a CFP for eight years so I have seen situations where a Roth would be the better choice.
Without some sort of IRA, if you are investing in anything that earns interest then you have to worry about capital gains if you are in a high tax bracket
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