What is a Traditional vs Roth IRA? || Explained in 5 Minutes || Bonus: Backdoor Roth

by | Sep 13, 2022 | Backdoor Roth IRA | 12 comments

What is a Traditional vs Roth IRA? || Explained in 5 Minutes || Bonus: Backdoor Roth




Traditional vs Roth IRAs. The biggest difference is how taxes are handled on each. With a Traditional IRA, you don’t pay any taxes up front when putting cookies in the cookie jar, but the taxes will happen when you take the cookies out during retirement. For Roth IRAs, you contribute AFTER you’ve already paid taxes, meaning the IRS took a bite of your cookies even before they go into the jar. However, all the growth of your cookies will be completely tax free upon retirement.

#cookiejarira

I PREFER THE ROTH IRA!

The Backdoor Roth is an advanced method that allows high income earners who can’t contribute directly, a method with which they can contribute through a conversion between their Traditional and Roth within the same short period, using a “backdoor”.

Some helpful links:

0:00 Intro
0:30 401K and IRA
0:56 IRAs are like a cookie jar!
1:27 Traditional vs Roth
2:16 I Prefer Roth over Traditional IRA
2:44 The Backdoor Roth
3:34 Thanks for watching!

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12 Comments

  1. asianamericanlegalfocus

    Excellent video. Now I want some cookies, but all the stores are closed….

  2. Twins Try

    Giving this another watch 🙂 loved this video!

  3. Tyler Tang

    Favoirte Cookie: Snickerdoodle. Ever since I started working, my parents helped me open a ROTH IRA account that I contribute to every month. On top of that, I would contribute to a Roth 401k because I'd rather tax now than later.

  4. Road to FIRE

    Might need the backdoor ROTH next year!!! Let see how our taxes come out! And no to cookies more into salty snacks than sweets hahah. Good video!

  5. nachopie

    wow.. this is really good! I always have a hard time explaining to people .. now I can just send this video!

  6. Chelsea

    First of all; I love all home made cookies. If I HAD to chose, I would go for either snickerdoodle, white chocolate macadamia nut, or cookie dough (like I said, hard to chose)

    Awesome analogy and great execution with the video! I personally prefer the roth IRA also. Thanks for another great video!

  7. Zach Ginn

    ROTH IRA's are the best! Nobody likes paying more in taxes!

  8. Christy Leung

    Love your tips & how easy you break this concept down. My fav cookie is double chocolate chunk LOL I like chocolate xD Never heard of back door IRA before, thanks for explaining!!

  9. LifeWithVinceLuu

    Great breakdown of traditional v roth. I prefer roth as well and max it out each year!

    Favorite cookie is definitely an ice cream sandwich! Now I'm craving one (luckily I have one in the freezer). HAHA!

  10. Mauricio Banuelos

    This just made it easier for me to learn why didnt my teachers think of this hahahaa

  11. Mike Wang Coaching

    Hmmm it’s hard for me to pick a favorite type of cookie. Not even sure I’ve ever even come across one I didn’t like haha. Great easy-to-understand explanation about traditional vs Roth IRAs! Thanks for sharing 🙂

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