Quote:
Originally Posted by ThaVirus
Regarding traditional vs Roth IRAs:
How do you determine whether or not you are likely to be in a higher tax bracket at the time you start to withdraw?
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Just a wild ass guess.
Typically if you are not earning income you'll be in a lower bracket, but who knows.
The big thing with ROTH is you put the principal investment in after tax. Any gain/growth/appreciation is tax free. So if you put 300K in after tax over the life the account, and the value of the account is 500K when you retire, you got 200K tax free. You paid tax on the 300K before it went in and nothing on the back end is taxable.
That's the big draw of a Roth.
EDIT: Should include the comparison.
For a traditional, If you put in 300K over the life of the account and it's worth 500K at retirement, sure you get to deduct the contributions going in, but the whole 500K is taxable on the back end.