| Author |
Message
|
| trixiezzz |
 Posted: Fri Feb 11, 2005 12:16 pm Post subject: Should I invest in Roth IRA or keep my traditional one? |
 |
|
Investing Manager
|
| I've got money in regular IRAs but am interested in the tax-free growth. I don't want to convert my current ones, but should I open a Roth for future contributions? |
|
| Back to top |
|
 |
| jasonr114 |
| Posted: Sun Mar 13, 2005 8:03 am Post subject: |
|
|
Investing Associate
|
| Yes. I think rIRA, for those who quailify, are GREAT solutions for retirement. In fact, I would recommend that you look into rolling over your tIRA into a rIRA. |
|
| Back to top |
|
|
| tylr |
| Posted: Sun Mar 13, 2005 2:44 pm Post subject: |
|
|
Investing Associate
|
Roth IRA is always a good idea. Depending on your tax bracket, a regular IRA' contributions are good for tax deductions. So do your homework in terms of comparing the savings of a regular IRA deductions vs. tax-free Roth IRA earnings in the future.
My preference in terms of saving would be 1. contribute to 401K/403b if you have one up to its matching limit 2. contribute to your IRA/Roth IRA depending on your tax circumstances and 3. contribute to your taxable saving account.
Regarding rolling over regular IRA to Roth IRAs, again, it depends on current tax bracket and therefore tax and income planning. For example, if you anticipate a lower income after retirement then this would be a good time to convert regular IRA to Roth IRA instead of doing so in your best earning years. |
|
| Back to top |
|
|
| jasonr114 |
| Posted: Sun Mar 13, 2005 2:55 pm Post subject: |
|
|
Investing Associate
|
| tylr wrote: | | example, if you anticipate a lower income after retirement then this would be a good time to convert regular IRA to Roth IRA instead of doing so in your best earning years. |
I have heard this arguement before and I don't quite get it. If you put money into a rIRA you NEVER pay taxes on the profits ONLY on the contribution.
If you put money into a tIRA you eventually pay taxes on the profits AND the contribution.
Regardless of your current/future income brackets it seems apparent that the rIRA is better.
Let's say you invest $3k a year for 20 years into a rIRA making a modest 8% return along the way. The advantages of NOT paying taxes on the proceeds when you retire has to be MUCH larger than the intial tax savings. |
|
| Back to top |
|
|
|
|
stock market game on the web. At eInvesting you compete for monthly cash prizes while you interact, make virtual dollars, purchase items, and trade in the realistic stock market simulator. We make investing FUN!
