Roth IRA vs Traditional IRA (for ALL incomes under $125,000). Deciding between making Roth IRA vs Traditional IRA contributions is a question many people ask themselves. Knowing your Traditional IRA Income Limits will help you make this decision. If you’re married and think you’ll make under $125,000 in 2021 OR if you’re single and will make under $76,000 in 2021 then this video is specifically for you!
If you fall into either of those 2021 IRA income limits then you are the ONLY people that can have the option of contributing to a 2021 Roth IRA OR a 2021 Traditional IRA ANNND get the deduction for your 2021 Traditional IRA contribution. If you make over those 2021 Traditional IRA income limits then you can still contribute to a Traditional IRA during 2021, but you simply won’t get the deduction. Additionally, you can make more than those 2021 income limits and still be able to do a Roth Contribution.
SOOOOO, if you have the option of contributing to your 2021 Traditional IRA and get the deduction OR not doing that and contributing to your 2021 Roth IRA instead….then in this video I outline WHY I think you should contribute to your 2021 ROTH IRA instead of your 2021 Traditional IRA.
Obviously, these examples are generic in nature & your MAGI (MAGI – modified adjusted gross income) is what matters as well as taking into consideration your standard or itemized deductions (which will bring your taxable income down) are important as well. Hope you enjoy the video and find a nugget or two of information to help you on your financial planning journey.
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Timestamps / Chapters:
0:00 – Intro
0:42 – Specific Reason
1:32 – Taxes on Roth & Traditional
2:18 – What nobody talks about
3:40 – Tax Example
4:32 – Pay Taxes NOW or LATER
5:19 – “I’ll be in a SMALLER tax bracket”
6:19 – Summary
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I’ve been involved in people’s financial decisions for 15+ years (7 yrs Real Estate experience & 8+ yrs as a former Financial Advisor)…I now bring the financial successes, mistakes, failures, and best financial habits/tips to you through these videos.
My mission is to bring Financial Awareness to the forefront of your daily decisions so you can: improve your quality of life, increase your net worth, and grow upon your financial literacy. My videos are a reflection of my real-world experience as a real estate investor, stock market investor, student of finance, entrepreneur, and of course…my experience as a Former Financial Advisor.
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DISCLAIMER: I am not a financial adviser or a certified public accountant. These videos are for educational purposes only. Investing of any kind involves risk. While it is possible to minimize risk, your investments are solely your responsibility. It is imperative that you conduct your own research. I am merely sharing my opinion with no guarantee of gains or losses on investments.
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LEARN MORE ABOUT: IRA Accounts
INVESTING IN A GOLD IRA: Gold IRA Account
INVESTING IN A SILVER IRA: Silver IRA Account
REVEALED: Best Gold Backed IRA
So, which one do you like more (Roth or Trad)?
You might also like these videos…
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5:13, well if you would invest the tax savings, this would be much bigger than 430,697. $500/mo for 30yrs at 7% -> $566,764 but if you would've invested your tax savings, ($1,320/12), so assumed investing $500 + $110 /mo for 30 yrs at 7% -> $691,452.
Assumed 7% for 30/yrs
So, Trad. IRA $500/mo + Additional $110/mo Tax Savings -> $691,452.
Roth IRA $500/mo -> $566,764
Net -> $124,688
Assumed 9% for 30/yrs
Trad. IRA $500/mo + Additional $110/mo Tax Savings -> $$997,771.
Roth IRA $500/mo -> $817,845
Net -> $179,926
Assumed 11% for 30/yrs
So, Trad. IRA $500/mo + Additional $110/mo Tax Savings -> $1,456,832.
Roth IRA $500/mo -> $1,194,125
Net -> $262,707
Investments good, taxes bad, must learn strategy.
Thank you very informative and helpful!
Wow thank you so much for this information. I’m a small business owner for a salon suite with my friend and We have been getting by honestly. All of this is hard to understand but you make it very easy to understand. I’m excited to learn more!
Great video, please I would like to know if filing single with an income $125 k I’ll be able to to put money in my Roth??? is from my gross income or net income??? Ty
Great video, I can watch this all day, well I have to say having multiple sources of income is the best peace of mind anyone can get. I have a construction firm that deals on repairs and renovations on buildings, I also decided to go into investment in stock. The firm however for some months has gone down revenue wise, I just manage to pay my workers from the little that comes in. Luckily for me I have my stock to fall back to, thanks to my stock broker Suzanne Stephens Ellis, I do not have to do anything, and I get my returns in due time. Get her valid information and contact online.
125000 gross or adjusted income??
Do you have recommendations on where to open an IRA? I've heard Betterment is a good one. Currently I use Vanguard where my employer 401K is stored but not sure if I should stay with that one. Again another great video – thanks!
Great video, fun and informative. Thank you for the clarification on the both of these, definitely setting up the Roth…and probably eat some M&M's
We prefer the traditional route right now because our taxable income is so low. Which your probably scratching your head right now. It all boils down to the EIC credit for every $100 we contribute to our traditional ira we get an extra $20 back in taxes… When we can't do this anymore we'll focus on the roth more.
I love my Roth IRA, also cool studio and congratulations on 1k!
dude, you hit 1k!! congrats brother! so well-deserved.