This is a rather poor explanation of the differences between a Roth IRA and a Traditional IRA. Luckily there are better videos on our channel that do a much better job then Dustin did on this video. To give him some grief tweet him @JazzWealth
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When it comes to planning for retirement, one of the most important decisions you can make is which type of retirement account to use. Two of the most popular retirement accounts are Roth IRAs and Traditional IRAs. Both of these accounts can help you save for retirement, but they have some key differences that you should understand before deciding which one is best for you.
A Traditional IRA is a retirement account that allows you to save money on a pre-tax basis. This means that you can deduct your contributions from your taxable income, which can reduce your taxes in the year that you make the contribution. When you withdraw money from a Traditional IRA in retirement, you will pay taxes on the amount withdrawn.
A Roth IRA is a retirement account that allows you to save money on an after-tax basis. This means that you do not get an immediate tax break for contributing to a Roth IRA, but you will not have to pay taxes when you withdraw money from the account in retirement.
When it comes to deciding which type of retirement account is best for you, there are several factors to consider. One important factor is your current income and tax rate. If you are in a high tax bracket now, a Traditional IRA may be more beneficial because you can get an immediate tax break. On the other hand, if you are in a lower tax bracket now, a Roth IRA may be better because you will not have to pay taxes on withdrawals in retirement.
Another factor to consider is whether you expect your tax rate to be higher or lower in retirement. If you expect your tax rate to be higher in retirement, a Roth IRA may be the better choice because you can lock in a lower tax rate now. If you expect your tax rate to be lower in retirement, a Traditional IRA may be the better choice because you can get an immediate tax break now.
Finally, you should consider how much time you have until retirement. If you have many years until retirement, a Roth IRA may be the better choice because you can take advantage of the tax benefits over a longer period of time. If you are closer to retirement, a Traditional IRA may be the better choice because you can get an immediate tax break.
Ultimately, the best retirement account for you will depend on your individual situation. It is important to consider your current income and tax rate, as well as your expectations for the future. By understanding the differences between Roth and Traditional IRAs, you can make an informed decision about which retirement account is best for you.
How does it work if u have dividends?
I'm an Public employee so I'll have a pension when I retire but really want more wealth when I retire. Really thinking about starting a roth. Got 35 years before I retire. May as well get all I can.
Hi. Im 22 y/o. Making roughly 55,000/year. Besides my traditional 401k. Which ira should I pick? I was gonna pick the traditional because of the tax benefits and just transfer it to ROTH IRA later (if possible)when my salary gets bigger.
Thank you for explaining this!
I've been looking into getting a roth ira, but I was told that I should get a 401k because retiring puts you into a lower tax bracket and it'll be more beneficial. What do you think
If I want to use as a tax deductible, which acct is best to open
The channel Next Level Life suckkkkssssss, too much jargon, starts simple but gets overly complicated almost immediately
This is the best explanation I've found so far, thank you
Is it possible to have both?
How do you put money in a trad ira that's not been taxed? Do you have to set that up thru workplace?
I am retired and have a 50-Stock/50-Bond mix of pre-tax traditional IRAs. I am converting them to ROTH, but was under the impression that only the stock should be converted to ROTH. That does not make sense to me as I thought both stocks and bond should both be converted to ROTH as long I have the cash to pay the taxes on the yearly conversions – what is your high-level advice?
Easiest explanation, thank you very much! Is there a first-time home-buying exception for both of them?
I want to retire early and spend big, and I have a lot of money in my IRA, like over $300k…..I really HATE the idea of income tax on it…should have done a Roth IRA….so now what do I do!?!?! (most of the money comes from GROWTH, not contribution, so saving on taxes now hasn't done me any good if I gotta pay income tax on the growth, vs long term gains tax of only 15%)
Your explanation gives no reason NOT to do the Roth, because it was never explained what happens when money is removed from Roths. Trad is taxed upon removal….what about Roth — never taxed?…
I have both as of now and just started at 45. I plan on retiring at 65. So being that i only have 20 years to invest which IRA should i use the Roth or Traditional?
Why are we obligated to pick between a Roth ira and a traditional ira in tha app to start investing?
Needs more balaclavas.
Listen guys
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This was a great explanation. Thank you.
Jazz and money, two things that typically don't go hand in hand lol.
I'm trying to see what would be the best investment Roth IRA or a Traditional. Registered nurse in my 40's . I need to open one asap but so confused on which will be the better option for me
PLEASE HELP….. My most confusing part is. Traditional IRA contribution is tax deductible, Roth IRA contribution is being taxed at contribution? How is the tax taken out? For explame, if I make 50000 in 2019 and I contribute 6000 into Roth, so the IRS will tax me 56000? And the tax is based on the 56000 tax bracket? Thank you in advance
So you can't take money out from traditional until 70.5. What about Roth? When can you start taking money out?
Why doesnt the link he said to go to work? I know this is a video from 2017, but I cant find it on his website either. Any suggestions?
I prefer the Provisional IRA
Up the 'Ra!
It's an easy decision when you make too much money for a Roth
You are the GOAT
As a 21 year old working a job with zero Benefits & zero retirement what’s the best option for a retirement besides getting a better job