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The Ultimate Retirement Guide: Roth IRA vs Traditional IRA | Average Joe on Money

Saving and investing for retirement can be a difficult or overwhelming task, especially when you are just starting out. This video is all about how to understand the differences and similarities between the Traditional IRA and the Roth IRA retirement accounts.

Both the Roth IRA Account and the Traditional IRA account have a maximum contribution limit in 2019 of $6,000 and if you are over the age of 50 there is a catch-up provision which allows you to contribute an additional $1,000 per year.

The Traditional IRA has what is called before-tax contributions wherein the taxes you would have normally paid at the time you contributed the money are DEFERRED until you start taking distributions from the account. This is a tax break for you upfront. However, at the time you start taking distributions from the account, ALL of the distributions are taxable.

The ROTH IRA account is significantly different in that the contributions to the account are made with AFTER-TAX dollars, meaning you are paying taxes upfront as opposed to at the end. There is no tax break upfront, however, when it comes time to take money out of the account, it is ALL TAX-FREE. Additionally, at any time in the future, you have 100% unrestricted access to the contributions you made to the Roth IRA retirement account. For any reason whatsoever, you can take your contributions out of the account.

There is always an argument over whether it is best to do a Roth IRA or Traditional IRA Account, but in my opinion, you should ALWAYS use the Roth IRA Account because you just DON’T KNOW what future tax rates will be.

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My name is JOE and I am just your AVERAGE JOE ON MONEY. This channel talks about ALL THINGS personal finance that help people like YOU and I, the Average Joe, learn the fundamental principles of money and win with our finances.

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INVESTING IN A SILVER IRA: Silver IRA Account

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