We look at the differences between a Traditional IRA and a Roth IRA, two of the most common types of retirement accounts in the US….(read more)
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Thanks for this!
For the viewers, if you're watching by the end of 2020, please check my video too! https://www.youtube.com/watch?v=IU0ksrZtQMM
So make sure you make huge investment with your Roth IRA. Grow the money a lot. And then withdraw bit by bit tax free, or all of it. At the right age.
What if I retire with a lowering paying/part time job at 60? Will I pay a lot less in taxes with the traditional ira?
Can you have both accounts at the same time ?
Can you loose money with a Roth IRA. I mean like very noticeable such as if i made steady contributions of $5000 each year and i was expecting to retire with $800,000 could there be a huge lose and i only retire with $600,000?
Is a RothIra like a savings account but with a bigger interest rate?
For the Roth IRA so if I contribute $300 per check your telling me its taxed so its really like $200 bucks instead
Does your growth rate lock in? Or does it change over time?
Thanks for the video! Something I do not understand is what happens if you withdraw from a traditional IRA once you actually stop working and your income is zero? Let's say all your money is tied up in a traditional IRA and a Roth IRA. Is the amount you are taxed based on the amount of money in that traditional IRA? Is the money in the Roth taken into account?
I didn’t know you had another channel?
I thought the Roth IRA taxes you at your current tax bracket? Because you make it seem in your first example as if you’ll be taxed the same amount either with a Roth or end the end with a traditional Ira? I mean if you are younger wouldn’t it make more sense to do Roth since you’re probably in a lower tax bracket then if you were 40 of age? Then if you did a traditional let’s say at 25 and then get taxed at your end of career tax bracket which would hopefully be higher??
Well I really want to lower my tax bill for the next couple years. I already put money in a 457. I'm looking to put some in the IRA. I want all my money and as less as possible to go to irs
Iras have too many restrictions for me. I just use brokerage accounts because I'm in a low tax bracket due to deductions then I'll pay 15% when I take it out whenever I choose.
6:15 'Tax paid on Roth contribution @ 25% = 48,250.' — Please elaborate on how you get $48,250 in taxes for a one time Roth IRA contribution of only $5,500.
I get it but my question is where did you get the 7% figure from ?
I like the traditional ira better. If you don’t pay taxes upfront, get a tax deduction each year, and can lower your tax rate by the time you reach 59.5 years old, then why not do the traditional? Also Business/Credit Shifu, can you do a video going over capital gains more from taxes like how much you pay depending on your income level etc? Great videos, thank you! Another point about the two iras: what if you take out the roth ira and get hit by a truck before you’re 59.5? Lol. I like the idea of getting my tax deductions upfront each year with the traditional ira and doing my best to reduce my tax rate before 59.5.
This is a good video.
I used to work as an investment analyst and a financial advisor.
I would just add – The best way is to pay for a financial advisor to run the numbers. There's a thousand different scenarios that you can run and a lot of the decision to invest in a Roth Vs Traditional will be the expectations of how much the IRAs will appreciate in value. The ideal situation is to max out both the roth and traditional because there are too many variables that can affect the taxes.
By investing in both Roth and Traditional, you'd want the Roth to be the more aggressive portfolio.
Here's a scenario to illustrate the reasoning – Say you invest $100,000 in the Roth over multiple years and you're in the 25% tax bracket. By not going the traditioanl IRA route, you forego a guaranteed 25% savings on the tax bill of 100,000 or $25,000. But if that $100,000 grows to $5,000,000, you won't have to pay a single penny in taxes when you withdraw.
Had you invested the same with the Traditional IRA, you may be saving $25,000 in taxes now, but when you withdraw (even if you're down to the 10% tax bracket), you're still giong to be paying $500,000 in taxes.
This is just an exaggerated example for illustration purposes.
But I think the best thing to do is invest in both. Keep the Roth as your aggressive portfolio.
You should discuss the backdoor and mega backdoor IRA. Especially mega backdoor isn't documented well (since not many people can do it, AFAIK).
I thought this was about the IRA in Ireland.
I do mostly Roth because I can pretty much guarantee we’ll have much more of a US nanny state in 40 years and I expect tax rates to be much higher (unfortunately)
What about theProvisional IRA vs the Official IRA?