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Someone explain to me what a Roth IRA is
Posted on 1/24/17 at 8:36 am
Posted on 1/24/17 at 8:36 am
Can someone explain to me what a Roth IRA is and why i should get one?
newly married and in my mid-20's
heard someone talking about it and they said we should each get one
i'll admit i dont know much about money/401k/stocks
-- **shite i just saw this may be covered in one of the threads linked; thanks **
newly married and in my mid-20's
heard someone talking about it and they said we should each get one
i'll admit i dont know much about money/401k/stocks
-- **shite i just saw this may be covered in one of the threads linked; thanks **
This post was edited on 1/24/17 at 8:51 am
7
Posted on 1/24/17 at 8:40 am to LSUfootball222
quote:
Can someone explain to me what a Roth IRA is and why i should get one?
It is a retirement account that allows you to pay less money in taxes to the government.
Posted on 1/24/17 at 9:59 am to LSUfootball222
With an IRA, you get preferred tax treatment. Either the money is taxed before you put it in (Roth) and not subsequently taxed. Or the money you put in now is not taxed at the time it is deposited, but taxed when you take it out.
This is a really dumbed down explanation, but I think gets the point across that both give you preferred tax treatment, because a regular brokerage account would require that your deposit has already been taxed (like just income that has taxes withheld) and would be regularly taxed (like dividends and capital gains).
I would recommend both Roth and traditional IRAs but that's just me.
This is a really dumbed down explanation, but I think gets the point across that both give you preferred tax treatment, because a regular brokerage account would require that your deposit has already been taxed (like just income that has taxes withheld) and would be regularly taxed (like dividends and capital gains).
I would recommend both Roth and traditional IRAs but that's just me.
Posted on 1/24/17 at 10:03 am to LSUfootball222
Roth IRA's are retirement accounts that you fund with after-tax dollars that then have no taxes upon liquidation in your retirement. Up to $5,500/year can be contributed at your age.
They are powerful estate planning vehicles as there are no required minimum distributions and the Roth IRA, along with its tax benefits, can be passed on to your heirs.
Nobody can predict with certainty what their tax rates will be in retirement, so it's a good bet to mix up your pre and post tax contributions between the various options (Roth IRA, 401K, HSA, etc.). The HSA is the best pre tax investment vehicle as you don't get hit with FICA taxes on those contributions.
They are powerful estate planning vehicles as there are no required minimum distributions and the Roth IRA, along with its tax benefits, can be passed on to your heirs.
Nobody can predict with certainty what their tax rates will be in retirement, so it's a good bet to mix up your pre and post tax contributions between the various options (Roth IRA, 401K, HSA, etc.). The HSA is the best pre tax investment vehicle as you don't get hit with FICA taxes on those contributions.
This post was edited on 1/24/17 at 10:14 am
Posted on 1/24/17 at 12:08 pm to yellowhammer2098
quote:
It is a retirement account that allows you to possibly pay less money in taxes to the government.
Fixed it for you.
Posted on 1/24/17 at 7:31 pm to LSUfootball222
You pay the taxes upfront assuming that you will be making more money later on in life (income tax bracket should go up as you get older and make more income) so that when you withdraw, you are not hit with higher taxes. You also are not required to take RMDs like a traditional IRA (RMD=IRS making sure they get their taxes on your non-taxed contributions to a traditional IRA. RMD is a required min distribution) So in a Roth your contributions grow tax-free. Traditional is tax deferred. A bit of a ramble but I hope that helps.
Posted on 1/25/17 at 12:01 am to LSUfootball222
Posted on 1/25/17 at 7:56 am to OceanMan
anyone that qualifies (and can comfortably contribute) for a Roth that doesn't take advantage is a fool.
given the choice between a standard and a Roth, I much prefer the Roth. As a 35 year old, the idea of years and years of untaxed gains is really exciting.
given the choice between a standard and a Roth, I much prefer the Roth. As a 35 year old, the idea of years and years of untaxed gains is really exciting.
Posted on 1/25/17 at 11:54 am to 632627
quote:
anyone that qualifies (and can comfortably contribute) for a Roth that doesn't take advantage is a fool.
given the choice between a standard and a Roth, I much prefer the Roth. As a 35 year old, the idea of years and years of untaxed gains is really exciting.
Only a fool would assume that something would be absolutely true for all. It will depend for different folks.
If your income during retirement is going to be below what you currently make and you will be in a lower tax bracket then, the Roth doesn't make any sense.
Posted on 1/25/17 at 12:43 pm to LSUfootball222
traditional ira - tax free deposits >> tax free growth >> taxed withdrawals.
roth ira - taxed deposits >> tax free growth >> tax free withdrawals.
Health Savings Account - tax free deposits >> tax free growth >> tax free withdrawals for medical.
roth ira - taxed deposits >> tax free growth >> tax free withdrawals.
Health Savings Account - tax free deposits >> tax free growth >> tax free withdrawals for medical.
Posted on 1/25/17 at 12:45 pm to LSUfootball222
read sticky above!!
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