ROTH IRA vs. Traditional IRA - Begin To Invest



How do you decide which account type is best for you? Here we compare ROTH IRAs to Traditional IRAs with several examples to help you determine which account type will leave you with more money at time of retirement. . Links at the end of the video send you to posts on www.begintoinvest.com which detail additional rules and regulations of IRAs that you should be aware of. The links set up for the last slide do not work, here are the physical addresses: Begin To Invest's Comparison of Account Types: http://www.begintoinvest.com/investment-account-types/ Wikipedia's ROTH IRA page: www.en.wikipedia.org/wiki/Roth_IRA IRS.gov website for ROTH IRAs: http://www.irs.gov/publications/p590/ch02.html#en_US_publink10006523 IRS.gov website for traditional IRAs: http://www.irs.gov/publications/p17/ch17.html#en_US_2011_publink1000172599

Comments

  1. You will NEVER invest $4125 into a Roth IRA, so all of these examples using these figures are not valid. I know this is very old, but many people may see this and need to understand that the comparison always needs to be the amount invested into the account. Otherwise, thank you for sharing.
  2. Another important factor is that the traditional IRA gets a tax deduction on schedule A for the $5,500. Pretty much the taxpayer would roughly get to keep 25% (used in your examples)*$5,500, which is about $1,375 per year. This amount is accurate if he was able to itemize before using the $5,500 IRA deduction.
  3. Thanks for breaking that down!
  4. What If a person already contributes the max to their 401K ($17,500) a year, but still wants to open up an eTrade account with money from a savings account.  Can they still invest in a Roth IRA?  (or is the max 17,500 per year no matter if the money for the IRA is post tax savings).
  5. Thank You Very Much. Easy and Clear.
  6. Thanks so much for this video, it answered a lot of my questions.
  7. Thank you. This is very clear and straightforward.
  8. Great description! Thanks for the solid video :)
  9. On the example you gave for the traditional IRA, why does the investor get taxed twice for the amount that went over, once for income tax and again for capital gains tax?
  10. Also for traditional IRAs there is an income ceiling that changes each year of when you cap out on getting the tax benefit for traditional IRA.  For 2014 the limit is $61K-$71K where starting past $61K you start to phase out in the amount you can claim as a tax deduction and past $71K you get zero tax deduction.

    So unless you are lower income, the Roth IRA is the hands down best option almost every single time.
  11. Can you explain to me why the $1833.00 could not be invested?
  12. make an instagram page
  13. thanks for sharing this information.
  14. Good vid, good examples.
    About that taxable account, why did you use 25% cap. gains rate? Because from '54 to now, the highest cap. gains was 25.5 in 1996, also the investor could just leave that taxable account alone until when cap gains rates are more favorable 30-40 yrs from now.
    Also for Roth, he also pays 28% sometimes in his career.
  15. You do NOT get a tax credit for Trad IRA contributions, you get a deduction.  Huge difference.
  16. I do have a question. When the payer have to pay the capital gains tax, should the amount, on which you tax, contain any inflation effect that could compare the initial investment to the future investment value? 


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Visibility: 50157

Duration: 13m 3s

Rating: 356