Chapter 9
To Roth or Not to Roth
IN THIS CHAPTER
Mixing crystal balls and tax rates
Listing reasons not to Roth
Withdrawing from your Roth IRA before retirement
Switching to a Roth
A Roth IRA is a savings and investment account like a traditional IRA, except you pay taxes on the amount you put in, the money grows tax-free, and, if you follow the rules, you don’t pay any taxes on the investment gains when you withdraw funds.
Perhaps I should note up front that it doesn’t make any difference to me which type of IRA you choose. My sole objective is to give you information to help you make a decision.
Even if you don’t pay any federal income tax now, so that your future tax rate is bound to be higher and a Roth IRA seems a sure bet, review this chapter before you conclude that you want to go with a Roth IRA. Life’s uncertainties are one reason I recommend taking advantage of pre-tax opportunities to save for retirement via your 401(k) or a traditional IRA rather than after-tax Roth savings. Roth IRAs have some definite advantages; however, they are oversold as a huge tax break.
When ...
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