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Traditional IRA contributions are tax deductible on both state and federal tax returns for the year you make the contribution, while withdrawals in retirement are taxed at ordinary income tax rates. Roth IRAs provide no tax break for contributions, but earnings and withdrawals are generally tax-free.

« Last edited by Work-for-ur-muny on January 25, 2016, 03:49:52 PM »

Poll

which do you have?

Roth
IRA
Both
Who is Roth
Neither
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Author Topic: Roth IRA vs. Regular IRA  (Read 2172 times)

Offline ADG

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Roth IRA vs. Regular IRA
« on: January 25, 2016, 11:23:50 AM »
I am starting this thread to learn how to make the decision between the two. How am I supposed to know what tax bract I will be in, in 30-40 years or even how the tax system will work then?
 It seems to me the not paying tax on the principal is not as good the not paying tax on the gains. On the other hand if I dont pay taxes now it is like I am gaining 30% in principal which is working capital. Point is how do I decide?
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Offline Aaaron

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Re: Roth IRA vs. Regular IRA
« Reply #1 on: January 25, 2016, 11:57:35 AM »
Quote from: ADG on January 25, 2016, 11:23:50 AM
I am starting this thread to learn how to make the decision between the two. How am I supposed to know what tax bract I will be in, in 30-40 years or even how the tax system will work then?
 It seems to me the not paying tax on the principal is not as good the not paying tax on the gains. On the other hand if I dont pay taxes now it is like I am gaining 30% in principal which is working capital. Point is how do I decide?

Talk to a tax professional/financial adviser?  Honestly, both products work for the right person.
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Offline MarkS

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Re: Roth IRA vs. Regular IRA
« Reply #2 on: January 25, 2016, 12:50:07 PM »
The best advice I've heard is to just split between the two of them to hedge your bets since there is no telling what the tax rates will be when you retire.
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Offline stmark

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Re: Roth IRA vs. Regular IRA
« Reply #3 on: January 25, 2016, 01:12:36 PM »
My vote is Roth.  Hoping that in 30 yrs I have more income putting me in a higher tax bracket and I get my withdrawals tax free. (assuming we dont switch to a tithing tax system.)
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Offline MarkS

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Re: Roth IRA vs. Regular IRA
« Reply #4 on: January 25, 2016, 01:17:51 PM »
Quote from: stmark on January 25, 2016, 01:12:36 PM
My vote is Roth.  Hoping that in 30 yrs I have more income putting me in a higher tax bracket and I get my withdrawals tax free. (assuming we dont switch to a tithing tax system.)
You expect to have high income when you are retired??
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Offline ADG

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Re: Roth IRA vs. Regular IRA
« Reply #5 on: January 25, 2016, 01:20:17 PM »


Quote from: stmark on January 25, 2016, 01:12:36 PM
My vote is Roth.  Hoping that in 30 yrs I have more income putting me in a higher tax bracket and I get my withdrawals tax free. (assuming we dont switch to a tithing tax system.)
Quote from: MarkS on January 25, 2016, 01:17:51 PM
You expect to have high income when you are retired??

Shouldn't we all hope so?

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Offline ADG

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Re: Roth IRA vs. Regular IRA
« Reply #6 on: January 25, 2016, 01:22:41 PM »
Quote from: MarkS on January 25, 2016, 12:50:07 PM
The best advice I've heard is to just split between the two of them to hedge your bets since there is no telling what the tax rates will be when you retire.

I heard this advise too. It is basically saying there is no answer to the question... hence both
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Offline MarkS

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Re: Roth IRA vs. Regular IRA
« Reply #7 on: January 25, 2016, 01:23:11 PM »
Quote from: ADG on January 25, 2016, 01:20:17 PM

Shouldn't we all hope so?


Retired = you are no longer working. Possibly 78 and sitting in an armchair smoking a pipe with fuzzy bunny slippers.
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Offline ADG

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Re: Roth IRA vs. Regular IRA
« Reply #8 on: January 25, 2016, 01:27:17 PM »
Quote from: MarkS on January 25, 2016, 01:23:11 PM
Retired = you are no longer working. Possibly 78 and sitting in an armchair smoking a pipe with fuzzy bunny slippers.
aint that a pretty picture... What about other investments, that would be considered income.
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Offline MarkS

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Re: Roth IRA vs. Regular IRA
« Reply #9 on: January 25, 2016, 01:48:35 PM »
Quote from: ADG on January 25, 2016, 01:27:17 PM
aint that a pretty picture... What about other investments, that would be considered income.
Correct. If you are very early in your career and making very little then you may indeed have more investment income and IRA withdrawal 'income' at 78.

Typically though, during your working years you work and make more money so that you have enough to live off of when you are retired.
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Offline Work-for-ur-muny

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Re: Roth IRA vs. Regular IRA
« Reply #10 on: January 25, 2016, 03:25:55 PM »
Quote from: MarkS on January 25, 2016, 01:23:11 PM
Retired = you are no longer working. Possibly 78 and sitting in an armchair smoking a pipe with fuzzy bunny slippers.
Isn't all that a description of a typical DDFer regardless of age...?!  :P

On a serious note, I know the difference between the two but always confuse the them. Can anyone remind me "just one more time" which is which?
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Offline MarkS

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Re: Roth IRA vs. Regular IRA
« Reply #11 on: January 25, 2016, 03:34:52 PM »
Google?  :)
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Offline Work-for-ur-muny

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Re: Roth IRA vs. Regular IRA
« Reply #12 on: January 25, 2016, 03:50:15 PM »
Good idea and added to wiki.
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