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Roth IRA vs. Traditional IRA?

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  1. Sokpuppet7 Sokpuppet7 is offline

    Fort Worth, TX
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    Dec 12th, 2009 (12/12/2009 2:01pm)

    I'm leaning towards Roth. I have a pretty good feel for the pros and cons but I'm curious what you guy's opinions are... Maybe you can even help me realize a pro or con about either one that I haven't realized yet.
  2. MNGambler MNGambler is offline

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    Dec 12th, 2009 (12/12/2009 2:06pm) in reply to Sokpuppet7

    Roth is top top, I've been contributing to mine for about 6 years now, tax free money is going to look real good when I retire. Just don't plan on using the money you put in your Roth unless there is an extreme emergency because you will be taxed and also incur a 10 or 15% penalty (cant remember which).....gl
  3. Sokpuppet7 Sokpuppet7 is offline

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    Dec 12th, 2009 (12/12/2009 2:09pm) in reply to MNGambler

    Yeah, I kinda prefer paying taxes now over paying them later on on all my principle and gains... And one thing I do like is that you can pull money out of a Roth IRA up to the amount you've contributed without being penalized at all. (obv only for extreme emergencies, and if you pull out more than that then you'll get penalized)
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  4. rocket5 rocket5 is offline

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    Dec 12th, 2009 (12/12/2009 2:13pm) in reply to MNGambler

     
    Originally Posted by MNGambler View Post

    Roth is top top, I've been contributing to mine for about 6 years now, tax free money is going to look real good when I retire. Just don't plan on using the money you put in your Roth unless there is an extreme emergency because you will be taxed and also incur a 10 or 15% penalty (cant remember which).....gl

    only the gains are taxed. this is why roth is so good. the money you put in is after tax money so your original principal you can have back whenever you want. no tax.

    there are income levels for roth i think its 110k plus or so and you can't do one.
  5. Cubs567 Cubs567 is offline

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    Dec 12th, 2009 (12/12/2009 2:18pm) in reply to Sokpuppet7

    I would choose ROTH IRA. In a traditional IRA, the money that is contributed is still taxed, but you receive a tax deduction in the amount you contributed, but it taxed upon redemption. On the other hand, the ROTH IRA does not allow for a tax deduction upon contribution, but is NOT taxed when the money is pulled out at the end of the term.

    Please note that both of these IRAs are taxed at 10% automatically when you withdraw them, and depending on your type of IRA, may also constitute as taxable income. There are certain exemptions to this rule, for example in 2009, you can withdraw from your IRA and not get taxed on it if you are going to use the money to put a down payment on a house.

    If anyone has any further tax questions, feel free to PM me.
  6. CCLLAAYY CCLLAAYY is offline

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    Dec 12th, 2009 (12/12/2009 2:19pm) in reply to rocket5

    I have a roth ira and I dont have tons in it but but its not chump change either (couple of g's), I made 4 cents last month... and 2 cents the month before... supposed to be making something like 4.5 percent but havent seen that since I first opened it 3 years ago.

    things are looking up!
  7. RichardHurtz RichardHurtz is offline

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    Dec 12th, 2009 (12/12/2009 2:20pm) in reply to MNGambler

     
    Originally Posted by MNGambler View Post

    Roth is top top, I've been contributing to mine for about 6 years now, tax free money is going to look real good when I retire.

    That is if when you retire they have not decided to tax it.
  8. Moosebabies Moosebabies is offline it's all about timing

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    Dec 12th, 2009 (12/12/2009 2:21pm) in reply to Sokpuppet7

    sick brag about thinking you'll live to 59 1/2
  9. Sokpuppet7 Sokpuppet7 is offline

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    Dec 12th, 2009 (12/12/2009 2:40pm) in reply to Moosebabies

    Any suggestions on who I should open the IRA through?
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  10. Moosebabies Moosebabies is offline it's all about timing

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    Dec 12th, 2009 (12/12/2009 2:42pm) in reply to Sokpuppet7

     
    Originally Posted by Sokpuppet7 View Post

    Any suggestions on who I should open the IRA through?

    Why not someplace local
  11. bflowers bflowers is offline

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    Dec 12th, 2009 (12/12/2009 2:47pm) in reply to Moosebabies

    pick a fund thru Vanguard and do it yourself. No fees....
  12. bflowers bflowers is offline

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    Dec 12th, 2009 (12/12/2009 2:48pm) in reply to bflowers

    And a ROTH for the obvious reasons you've already researched.
  13. Sokpuppet7 Sokpuppet7 is offline

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    Dec 12th, 2009 (12/12/2009 3:23pm) in reply to bflowers

    I've heard good things about Vanguard. I'll probably look into them. Thanks for the tips everyone.
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  14. Sokpuppet7 Sokpuppet7 is offline

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    Dec 12th, 2009 (12/12/2009 3:28pm) in reply to Sokpuppet7

    By the way, if anyone knows much about rolling a 401K over to a Roth IRA, please PM me your AIM screen name. I have a few questions I'd love to ask if you dont mind. Thanks in advance
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  15. LDM LDM is offline

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    Dec 12th, 2009 (12/12/2009 3:34pm) in reply to rocket5

     
    Originally Posted by rocket5 View Post

    only the gains are taxed. this is why roth is so good. the money you put in is after tax money so your original principal you can have back whenever you want. no tax.

    there are income levels for roth i think its 110k plus or so and you can't do one.

    not even the gains are taxed under current law.

    the only reason a roth isn't superior is if your income is too high to qualify.
  16. LDM LDM is offline

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    Dec 12th, 2009 (12/12/2009 3:36pm) in reply to Sokpuppet7

     
    Originally Posted by Sokpuppet7 View Post

    I've heard good things about Vanguard. I'll probably look into them. Thanks for the tips everyone.

    vanguard is good. try and spread it through at least 4 different mutual funds.

    growth, growth & income, small cap, and international.
  17. Sokpuppet7 Sokpuppet7 is offline

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    Dec 12th, 2009 (12/12/2009 3:38pm) in reply to LDM

    that just blew my mind... LDM, that's almost exactly what my plan was... and yeah, under a Roth IRA, nothing is taxable. (after youve paid the taxes on the money you were initially putting in) Principle and gains are all tax free.
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  18. MNGambler MNGambler is offline

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    Dec 12th, 2009 (12/12/2009 3:39pm) in reply to Sokpuppet7

     
    Originally Posted by Sokpuppet7 View Post

    Yeah, I kinda prefer paying taxes now over paying them later on on all my principle and gains... And one thing I do like is that you can pull money out of a Roth IRA up to the amount you've contributed without being penalized at all. (obv only for extreme emergencies, and if you pull out more than that then you'll get penalized)

    yup your right only capital gains are taxed just like a mutual fund etc. and like someone said using someone like vanguard is good for saving fees, or if your not comfortable doing it yourself, someone like like a edward jones will do it, you'll pay some small fees but some people like the peace of mind of having someone else do it
  19. Brandon6176 Brandon6176 is offline

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    Dec 12th, 2009 (12/12/2009 3:45pm) in reply to Sokpuppet7

     
    Originally Posted by Sokpuppet7 View Post


    By the way, if anyone knows much about rolling a 401K over to a Roth IRA, please PM me your AIM screen name. I have a few questions I'd love to ask if you dont mind. Thanks in advance

    https://personal.vanguard.com/us/home?fromPage=portal

    Vanguard has a section on IRA rollovers, I'd think it be best to get info there.

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  20. Sokpuppet7 Sokpuppet7 is offline

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    Dec 12th, 2009 (12/12/2009 3:54pm) in reply to Brandon6176

    tyty brandon
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  21. TiltinShoes TiltinShoes is offline

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    Dec 12th, 2009 (12/12/2009 4:49pm) in reply to Sokpuppet7

    Isn't the only question if exceed the Roth contribution cap? If not, you can't beat it I don't think...
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