IRA vs Roth IRA

[Monte]

I know how both work, but I believe one of them you can take the money out with no penelties before retirement to buy a house....but I cant remember which one. I'm looking around and I cant find anything on it. Anyone?

[Monte]

Nevermind.....You can take it out of either, if you are a 1st time home buyer, or if you havent owned a home in 2yrs. Regular rules apply, where payments from a traditional IRA will be taxed, those from a Roth IRA will be tax and penelty free. Lifetime limit of $10000 may be removed to help with an unlimited amount of purchases.

[C-Murder]

gj! I started my roth about 2 years ago. I'm on track to be a millionare!!!!!!!!!! When i'm like 60. :(

[Logan]

With a Traditonal IRA, you can deduct your contributions if you meet certain income requirements. Seems to me like the traditional is better to start off with if you make less than six figures and then convert it to Roth later on.

If you convert you only have to pay tax for that year.

[P-SPEC]

Roth is still good in the long term, with a regular IRA the compounding effect of the money over the long term would still equal substantially more of a tax come withdrawal time, if held until retirement, even for a person making 30k a year

[Logan]

Roth is still good in the long term, with a regular IRA the compounding effect of the money over the long term would still equal substantially more of a tax come withdrawal time, if held until retirement, even for a person making 30k a year


But you also have to account for the fact that with a traditional you can lower you taxable income amount and that can be a huge benefit, esp over a period of time.

[P-SPEC]

sure theres tons of factors, like inflation, foreseeable growth, anticipated expenses, etc....but in a straight number for number comparison, a roth will yield anyone w/ a middle class income or higher a better yield over the long term.

[Logan]

sure theres tons of factors, like inflation, foreseeable growth, anticipated expenses, etc....but in a straight number for number comparison, a roth will yield anyone w/ a middle class income or higher a better yield over the long term.


What if your contributions can be deducted to bring you into a lower tax bracket altogether?

Thats why I'm starting traditional, and then when that no longer becomes a possibility, I'll convert to Roth.

I'm not arguing with you or anything, just a little convo.

:8)

[P-SPEC]

sure that'd be perfect if thats how it worked out in ur individual situation....did u research that scenario yourself or did u speak w/ a tax advisor?

[Logan]

sure that'd be perfect if thats how it worked out in ur individual situation....did u research that scenario yourself or did u speak w/ a tax advisor?


Research myself, and made projections on my tax bracket for the next five years.

And its never a problem to convert to Roth, so if in two years I decide to change, then so be it.

But for now its the best option for me.

:8)

[P-SPEC]

right, its not a problem to change, your just gonna hafta pay the backend loaded tax on the money accumulated to date in the trad. IRA

[Logan]

right, its not a problem to change, your just gonna hafta pay the backend loaded tax on the money accumulated to date in the trad. IRA


Thats why I'll change before I hit a higher tax bracket. I won't have been maxing out the IRA before then.

[P-SPEC]

werd....just hope dont you get a big raise too soon ;-)

[Logan]

werd....just hope dont you get a big raise too soon ;-)


I'm still a minimum of 4 years away from six figures unless my company is purchased.

:cry:

[P-SPEC]

hey at least 6 figures is in your sights........over 98% of Americans will never see a $100k salary.

[Logan]

hey at least 6 figures is in your sights........over 98% of Americans will never see a $100k salary.


Oh yeah, for the salaries in my region of the country, and my age in four years (27), I'm not depressed at all.

I benefited greatly from getting three years of real IT experience while working for a large publicly traded company and earning a Bachelors Degree in IT.

[Adrock350]

I've done some research and read this thread and I'm thinking of starting a traditional IRA, but I'm still not sure that's the better option.

I'm 20 yrs. old and have around 2 yrs. of school left. I make around 20k per year so I won't be able to max it out for a few years. It sounds like the traditional IRA is better until I start making around 50-60k per year, which is when contributions are no longer tax deductible.
Are there any drawbacks of converting to a Roth IRA down the road though? Is a traditional better for my situation?

Also, what are some good companies/banks to open an IRA with, because my bank doesn't offer them.

[SollyD]

I've done some research and read this thread and I'm thinking of starting a traditional IRA, but I'm still not sure that's the better option.

I'm 20 yrs. old and have around 2 yrs. of school left. I make around 20k per year so I won't be able to max it out for a few years. It sounds like the traditional IRA is better until I start making around 50-60k per year, which is when contributions are no longer tax deductible.
Are there any drawbacks of converting to a Roth IRA down the road though? Is a traditional better for my situation?

Also, what are some good companies/banks to open an IRA with, because my bank doesn't offer them.

Do a roth, and dont go to a bank to open it, do the real deal and go to an investment firm or the banks investment person. A bank ira is the safe way to go which will earn you nothing. Also, ask the advisors what would be better in your situation. I know there are some knowledgable people on this board but dont put your future in their hands

[P-SPEC]

I've done some research and read this thread and I'm thinking of starting a traditional IRA, but I'm still not sure that's the better option.

I'm 20 yrs. old and have around 2 yrs. of school left. I make around 20k per year so I won't be able to max it out for a few years. It sounds like the traditional IRA is better until I start making around 50-60k per year, which is when contributions are no longer tax deductible.
Are there any drawbacks of converting to a Roth IRA down the road though? Is a traditional better for my situation?

Also, what are some good companies/banks to open an IRA with, because my bank doesn't offer them.

solly's right, go for a big name investment company for the best long-term results...ill be fully licensed for metlife securities in a month so pm me if u want some info then