Tax Questions

[aries4747]

A combination of both Roth and Traditional isn't bad. A lot depends upon your tax bracket. A Traditional reduces your taxes because it comes straight off your Gross when filing. If your Gross is under a certain amount (I'm not an accountant and forget what the high number is) you actually get a Credit deducted straight from the taxes. That's a really sweet deal. For example, because my kid made $20K and put about $2K into an IRA last year, her total tax was reduced from $800 to $0. Free money. You don't pay any taxes at all on Profits until you withdraw the IRA.

The Roth is sweet because unless they change the way the law is written now, you'll never pay any tax on Profits. Believe you can also withdraw the Principal BEFORE retirement. Negative is you can't deduct the amount you put in from your Gross revenue for taxes. You can still get the tax Credit, though, if your income is below a certain level.

I'm sure someone will show up who can fill in the blanks on the advantages of each. Cool idea for a board.