Originally posted by InRomoWeTrust
The 2015 limits are pretty high. I want to say it's over 185k now for married couples.
Yeah, they've gotten much better.
Originally posted by InRomoWeTrust
Also, Roth's have no tax break. The trade and reason that you use a Roth is because you pay taxes on the income today, not the income in the future (assuming you don't withdraw prior to 59 1/2).
Not paying taxes in the future is a tax break my friend.
As an aside, what people often don't consider with IRAs is the delta between capital gains and income tax. They just think it's all an income tax issue.
If regular money, you pay income tax now and cap gains in future.
If IRA, you pay no tax now and income tax in future.
If Roth, you pay income tax now and no tax in future.
The other thing to factor in is that, especially early investments, the bulk of the final value is going to be cap gains vs original principal, so with an IRA you are trading up the tax rate on a lot of the final value and so you had better be able to earn some decent returns on the initial tax savings to make up for that.
On the flip side, in retirement, you can earn little income and pay low income tax rates despite sitting on a mountain of assets.
At least with any kind of IRA, you are essentially locking in tax treatment now, which has value if you assume there is risk that this country goes European socialist and tax rates sky rocket. A Roth especially as you have zero exposure to future tax policy.
The 2015 limits are pretty high. I want to say it's over 185k now for married couples.
Yeah, they've gotten much better.
Originally posted by InRomoWeTrust
Also, Roth's have no tax break. The trade and reason that you use a Roth is because you pay taxes on the income today, not the income in the future (assuming you don't withdraw prior to 59 1/2).
Not paying taxes in the future is a tax break my friend.
As an aside, what people often don't consider with IRAs is the delta between capital gains and income tax. They just think it's all an income tax issue.
If regular money, you pay income tax now and cap gains in future.
If IRA, you pay no tax now and income tax in future.
If Roth, you pay income tax now and no tax in future.
The other thing to factor in is that, especially early investments, the bulk of the final value is going to be cap gains vs original principal, so with an IRA you are trading up the tax rate on a lot of the final value and so you had better be able to earn some decent returns on the initial tax savings to make up for that.
On the flip side, in retirement, you can earn little income and pay low income tax rates despite sitting on a mountain of assets.
At least with any kind of IRA, you are essentially locking in tax treatment now, which has value if you assume there is risk that this country goes European socialist and tax rates sky rocket. A Roth especially as you have zero exposure to future tax policy.
