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@tacpoly wrote:
@Anonymous wrote:Oh, okay. So the Traditional Roth would be designated as pre-tax only if it was taken as a deduction on your annual filing; post-tax if it wasn't. That's interesting. Thanks for the clarification.
There is a line for the IRA deduction on the 1040 and you need to file a 1086 (or some number) for post tax IRA contributions.
There is a traditional IRA where contributions can be pre-tax (as long as you are under the maximum income limit) or post-tax (with no income limit). For both contributions, distributions of all gains are subject to income tax. If you withdraw any part of your IRA, even your principal contributions, there will be penalties if you are less than 59.5 years of age.
Then there is the Roth IRA where contributions are only post-tax. Any person may contribute as long as he/she is under the maximum income limit. The main advantage of the Roth IRA is that distributions are all tax-free (with no penalties if you meet certain criteria). Another great advantage of a Roth IRA is that your contributions (not gains) can be withdrawn without penalties (as long as you meet the 2 year holding period).
I suggest you do research on your own regarding various retirement contribution options and not solely rely on the information random people give out.
Of course. I take everything with a grain of salt. I won't be running to any financial institutions soon saying tacpoly said so!
But your guidance makes sense, so it's a start
I switched over to a Roth 401K with my latest employer. Same contribution limits as with a traditional 401K. There are no withdrawl requirements on a Roth at any age and if/when you do take money out NO TAXES. Most my savings are 401k which have the downside of forced withdrawls at 70 1/2 and tax obligations. Wish I had a better mix of traditional and Roth investments
At your age and income level (relatively low tax bracket) the Roth IRA is the way to go. Why go with a traditional IRA and likely pay a higher tax rate when you reach retirement age. Roth IRAs and Roth 401ks are sweet - investments grow tax free and no tax when you cash in. Wish they were around when I was in my 20s.
@Anonymous wrote:
Roth 401k is hard to come by. I will run my 5k limit Roth IRA into the ground until Mr Perfect puts a ring on it, and since that is an unknown factor, since I qualified, I accepted and ran with the Roth IRA.
Contact a financial advisor, research, find some investments. Don't forget to assess how aggressive you want to be with those Stocks/Bond!
My credit sucks but I'll be retired by 61.
I think you should change your mentality from buyaobuyao to yaoyao, haha.
Yeah, none of my friends or family have access to a Roth 401k either. I'm probably going to keep funding my Simple, start a Roth IRA, and keep playing around with the stock market; bonds aren't that appealing to me. I consider myself risky, but rationally risky.
What happened to your credit if you don't mind me asking?
I went Roth IRA and Roth 401k because my 401k match and HSA (which are pre-tax) will cover the floor end of the tax bracket when I retire.
One little caveat to remember for people with Roth 401Ks - Any employer
matching contributions are pre-tax money. The gains from employer contributions
are also pre-tax money. So the total balance you see reported for your Roth 401K
will not be all tax free upon withdrawal, some of it is taxable.
I still love my Roth 401k, but I remind myself its not all tax free.