It does give you a little more time to plan if nothing else. It will sneak up on you though.
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Traditional or Roth IRA?
- Thread starter Eggmanmja01
- Start date
all depends on your financial situation now and where you expect to be at retirement, choose traditional if you expect to be in a lower tax bracket at retirement. Choose Roth if you expect to be in same or higher tax bracket to benefit from tax free withdrawals. but ultimately depends on your individual goals and several other factors. Hope this helped some!!
Something no one wants to think about, if your retirement funds are in a Roth, the surviving spouse does not have to pay taxes on them. If they are in a 401k, they have 10 years to withdraw funds and will have to pay a much higher single tax rate on the withdrawals. Also, when you both are gone, your heirs don't have to pay taxes on Roth, but will have to on 401k along with 10 year rule.
Yes. My father passed last year with a TSP account. The government took about 22% from his retirement before his money was dispersed to my brother's and I
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You always want to get a Roth, its tax free when you take it out, even the intrest you make on that money is intrest free
I’m pretty sure that’s incorrect. You will be taxed on your earnings. Put $100 in and you pay tax at the time of deposit (so say it’s now a $70 deposit). But if it grows to $1500 in 20 years you will pay tax on the $1430 earning you made. But that original $70 wont be taxed at withdrawal. BUT, in a traditional 410k you would have been earning interest those 20 years on the full $100 that you deferred tax on at time of contribution. Or at least that’s how it was always ‘splained to me.
What You Need To Know About Roth IRAs
Tax-free income at retirement — if you follow the rules
www.aarp.org
You pay tax on the contribution. That is all. You will never pay tax again on earnings. Also no required distributions. That's a big plus as well. It is all yours. When you pass, your heirs will get it tax free. But they have to dissolve the account in 10yrs. Even if your spouse survives you, it goes on as if you were living. It's the kids that have to dissolve the account back into regular funds
If you haven't already done so, open up a Roth IRA, even if you have to set up an account. Put $100 (could do less) and after 5 years, you have already satisfied one of the long-term requirements. Make sure to do this for your spouse also. Kids are a bonus if you can. Once Roth holder reaches 59.5 years old and it has been active for 5 years, no penalties and no taxes. Most 401k employer plans have a Roth option percentage you can do. If you already put in 6%, change it to 5% IRA and 1% Roth and you have started the clock. Also know that if you are converting IRA to Roth, it could screw your SS up bad with taxes if you took early payouts.
Govt is giving you the rules, so make sure to follow them and check the boxes. There is no telling what they will do to SS in the future, so plan for worst case scenario of it being gone.
Govt is giving you the rules, so make sure to follow them and check the boxes. There is no telling what they will do to SS in the future, so plan for worst case scenario of it being gone.
