Financial Planner

[12HRS]

I personally believe its always best to hold onto your money for as long as possible...

Till you die?

[george]

Till you die?

he means that instead of paying taxes upfront, he'd rather "hold onto his money" longer and pay taxes upon distribution in retirement.

[churnbabychurn]

he means that instead of paying taxes upfront, he'd rather "hold onto his money" longer and pay taxes upon distribution in retirement.

+1

[12HRS]

he means that instead of paying taxes upfront, he'd rather "hold onto his money" longer and pay taxes upon distribution in retirement.

Sorry I forgot to in my previous comment.

[PlatinumGuy]

Can't trust the Feds.

Can't trust anyone with a 15 trillion dollar hole in their pocket.

[gpapadop]

Everyone is different. These decisions must be made from a wholistic point of view. And before giving proper advice the advisor must/should have a better understanding of the person he/she advises!

Having said that, here are some simple guidelines:

The younger you are, the more the Roth IRA makes sense!
If you can deduct a Traditional IRA contribution it is probably better that you take it for the instant tax savings!
Same for 401k tax contributions, max them if you can!
The guarantee of tax free treatment on Roth IRAs may be there decades later...maybe not. Stuff happens. My mother lives in Greece and her "guaranteed" pension was cut 25%. Like I said, grab what you are given now...I do!

Regarding the FAFSA thing: I am really not that familiar about it as my clients definitely do not qualify for any need based aid at all! You need to be careful with them as scams in this area are very common. People get so hung up on being "fancy" with the goal of maximizing financial aid that jackases/thieves out there will "help" you maximize that angle by conveniently selling you crappy investment products like annuities or (heaven forbid) universal life or whole life insurance policies! Run away from this crap!

Hope this helps.

[Barryg]

The reasons to get the Roth IRA even though...

Correct.  Though know let's assume tax rate is 25% and retirement will be 10%.  It would make sense to invest in Traditional IRA and be taxed at 10% in retirement than putting in Roth IRA now and taxed at 25%.

Is this correct?

Tax brackets may be higher in the future especially seeing the national debt and everything else that's going on, like the fact that long term care/medicaid medicare expense is skyrocketing. You may very well have income during retirement, even though you don't know for sure now. The biggest factor is how much your IRA will make... For example if you put in $100k and it grows to $1MM the Roth is clearly better as it will all be tax free. If it grows to $200k by retirement then reg IRA prob better...

[Dan]

Or the IRS can be eliminated one day and there will be a 20% consumption tax with exemptions for the poor...

[LA2NYC]

The reasons to get the Roth IRA even though...Tax brackets may be higher in the future especially seeing the national debt and everything else that's going on, like the fact that long term care/medicaid medicare expense is skyrocketing. You may very well have income during retirement, even though you don't know for sure now. The biggest factor is how much your IRA will make... For example if you put in $100k and it grows to $1MM the Roth is clearly better as it will all be tax free. If it grows to $200k by retirement then reg IRA prob better...

Any reason to be worried that Roth will be taxed down the line (when we take on the money in 30 years)?

[mordyl19]

I am a financial planner. And no I am not looking for new clients. People in forums with "deals" in their URL would probably not make good clients

I can answer questions here or by PM.

There are lots of charlatans out there, so be careful and take  your time!

Who do you work for and how long have you had your CFP Designation?

[Barryg]

Any reason to be worried that Roth will be taxed down the line (when we take on the money in 30 years)?

According to the post before yours... apparently, yes.
There is also a change the IRA/Roth IRA loses money or breaks even...
We can only plan for what makes sense now or else you'll drive yourself crazy. That's why I always go by Hishtadlus to do what makes sense. If you think market will average 8% from now and there's over 30 years till you retire, it's about the equivalent of $100k ----> $1MM and then Roth would make more sense with factors we know of now. Not saying that I think it will avg 8%...

[mordyl19]

Regarding the FAFSA thing: I am really not that familiar about it as my clients definitely do not qualify for any need based aid at all! You need to be careful with them as scams in this area are very common. People get so hung up on being "fancy" with the goal of maximizing financial aid that jackases/thieves out there will "help" you maximize that angle by conveniently selling you crappy investment products like annuities or (heaven forbid) universal life or whole life insurance policies! Run away from this crap!

Why would you say that annuities and whole life insurance policies are "crappy"? As I financial planner with clients who definitely do not qualify for any need based aid at all, I find it interesting that you have not come to utilize either an annuity tradtional/immediate or an insurance policy to help anyone. 

[magnus]

So the only argument for Roth is when your present tax rate is less than expected tax rate retirement? Roth is so hyped, but it seems that if you're working/making money, Traditional will be a smarter option most of the time.

If your current income is too high to qualify you for a deductible Traditional IRA, then Roth IRAs (backdoor) would be better, I believe.

[mordyl19]

If your current income is too high to qualify you for a deductible Traditional IRA, then Roth IRAs (backdoor) would be better, I believe.

You can also use a Whole Life insurance policy as a Roth Ira.

[Ergel]

Or the IRS can be eliminated one day and there will be a 20% consumption tax with exemptions for the poor...

In your wildest dreams