Traditional IRA or Roth IRA

#26
#26
Ernest T. Vol said:
Some good points...but cant take a Roth out early without penalty or exception.
Click to expand...

Yes. You can withdraw your Roth contributions at any time, for any reason, without taxes or penalties.

There are stipulations for withdrawing your earnings, however.
 
#27
#27
Thrasher865 said:
Yes. You can withdraw your Roth contributions at any time, for any reason, without taxes or penalties.

There are stipulations for withdrawing your earnings, however.
Click to expand...

Yes that is right...sorry if I misunderstood your post. A nonqualified dist from a Roth is subject to penalty and that is the earnings.

Edit: That's a perty kitty avi you got there.
 
Last edited:
#28
#28
qwerty said:
What is your favorite resource for investing tips?
Click to expand...

That depends what you are looking for. The Motley Fool is a very good place to start. Investopedia, Wikipedia, Yahoo Finance, and Warren Buffet's annual letters to Berkshire Hathaway shareholders are all very good for teaching investment principles. The Wall Street Journal, Barron's, Fortune, Forbes, Business Week. Investors Business Daily is a lot of technical analysis.

Peter Lynch's One Up On Wall Street explains his philosophy 25-30 years ago, but it still makes a lot of sense.

The landscape is constantly changing. Unless one is going to devote a considerable amount if time constantly reading, it's best to stick with major index ETFs with some international exposure added. Or the best investments to buy could be those based on the Targeted Year of Retirement. Look and compare the fees and expenses though. There can be a wide variety.

,
 
Last edited:
#30
#30
Just thought about this, but also should add that if you plan on taking out your balance in a lump sum at retirement, Roth is the only way to go. You'll be taxed like crazy doing this on a traditional IRA.

But if you do this:
Thrasher865 said:
It could also be a good idea to diversify with both accounts if you're not sure of your situation at retirement.

For example, say you make around $50-$60k, and your actual taxable income is $40k, just for the numbers. Well you have a cutoff at ~$37.5k from 25% to 15%. So if you have a lot of savings for the year, you might consider putting $2.5k in a traditional, so that none of your income is getting taxed at 25%, and then putting whatever is left over in the Roth, since deducting it this year is only going to save you 15%.
Click to expand...

You can take your Roth out in a lump sum and then take out just enough to get by from your traditional IRA, without having to get into higher tax brackets.

In the end, I think it would be of some benefit to draw your income in retirement from a combination of pre and post-tax dollars, whether that be a Roth and traditional IRA, or a Roth IRA and a 401k/pension/457b/etc.
 
Last edited:
#33
#33
If I Qualify to contribute the full amount ($5500) - can I contribute $5500 to Roth and another $5500 to Traditional in the same year?
 
#35
#35
GBO1988 said:
just curious what the credentials are of the folks giving the advice on this thread?
Click to expand...

I have no credentials except I have worked for the past 32 years, want to retire, and have some familiarity with IRA's and 401k's.

If only experts were allowed to post on topics on VN, it would be very limited. I think everyone understands that any advice given should be carefully weighed and researched.
 
  • Like
Reactions: 2 people
#37
#37
OldandStillaVol said:
I have no credentials except I have worked for the past 32 years, want to retire, and have some familiarity with IRA's and 401k's.

If only experts were allowed to post on topics on VN, it would be very limited. I think everyone understands that any advice given should be carefully weighed and researched.
Click to expand...

And I appreciate your insights! :hi:
 
#38
#38
I'm a financial planner by professional... the max is $5500 to a Roth or traditional or any combination of the two not to exceed the limit $5500. only exception is if you are over age 50 then the limit is $6500
 
  • Like
Reactions: 1 person
#39
#39
By the way would be glad to help any fellow vols figure out how much they need to be saving in order to retire that way your contributions have a purpose.
 
#42
#42
GBO1988 said:
No worries there. Insurance products are not needed when it comes to saving for retirement.
Click to expand...

I actually want to be a financial planner someday. If you're not making 191,000 a year. Always go with Roth to avoid double taxation.

If you have kids, there's a separate Ira to start a college fund.
 
#43
#43
Burger said:
I actually want to be a financial planner someday. If you're not making 191,000 a year. Always go with Roth to avoid double taxation.

If you have kids, there's a separate Ira to start a college fund.
Click to expand...

It's really when the account is taxed rather than double taxation. With a Roth IRA the money that is deposited has already been taxed (and isn't deductable from current earnings) and the deposits plus all of the earnings should be tax free upon withdrawal. So in effect the earnings on a Roth don't get taxed at all. With the regular, non-Roth IRA the deposits are deducted from current year taxable income and then the deposits and earnings are taxed upon withdrawal. Taxes on regular IRA earnings are deferred. There are no taxes on Roth IRA earnings.

Double taxation is a term most often used with corporate dividends. Corporation earnings are taxed, dividends that corporations pay are not deductable, then the shareholder is taxed again on dividends received so that money is therefore double taxed. Governments sometimes double tax foreign earnings too.
 
  • Like
Reactions: 1 person
#44
#44
Thunder Good-Oil said:
It's really when the account is taxed rather than double taxation. With a Roth IRA the money that is deposited has already been taxed (and isn't deductable from current earnings) and the deposits plus all of the earnings should be tax free upon withdrawal. So in effect the earnings on a Roth don't get taxed at all. With the regular, non-Roth IRA the deposits are deducted from current year taxable income and then the deposits and earnings are taxed upon withdrawal. Taxes on regular IRA earnings are deferred. There are no taxes on Roth IRA earnings.

Double taxation is a term most often used with corporate dividends. Corporation earnings are taxed, dividends that corporations pay are not deductable, then the shareholder is taxed again on dividends received so that money is therefore double taxed. Governments sometimes double tax foreign earnings too.
Click to expand...

Well done explaining the IRAs good sir. I'm 26 and am putting as much as I can into roth options...
 
#45
#45
Roth IRA's are currently have tax free withdrawals at maturity, but you need to know that could change. Our wonderful federal gov't is always looking for ways to raise revenue and taxing Roth's has been considered. They are still a great option for many, but at age 30 many things could change and it is best to be diverse.
 
#46
#46
Ace said:
Roth IRA's are currently have tax free withdrawals at maturity, but you need to know that could change. Our wonderful federal gov't is always looking for ways to raise revenue and taxing Roth's has been considered. They are still a great option for many, but at age 30 many things could change and it is best to be diverse.
Click to expand...

Exactly
 
New posts
You must log in or register to reply here.

VN Store



Back
Top