Quote:
Originally Posted by benn600
So contributing to a traditional IRA and then rolling it over, to roll it over you would have to pay tax on the original investment amount? In other words, it would potentially be expensive (but worth it in the long run).
I understand now...it's the value of an investment. I was comparing to a CD where you basically just get dividends and it doesn't further raise in value when you sell it. You don't pay tax on your investment's value....just on what its value is when you SELL.
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a roth may or may not be worth it in the long run. it all depends if you will be in a higher bracket. truthfully i dont know many people in a higher tax bracket with no pay checks coming in then they are with paychecks or multiple paychecks..
considering that taxes have actually been falling for 40 years and more and more income is allowed to go through each year by about 3% at lower and lower tax brackets it may or may not be a better deal.
alot of folks retire from high tax states to low tax states making it even harder still to come out a head.
we cant predict future rates but with 80 million retired baby boomers eventually i cant imagine any political party telling the masses they are raising their income taxes. the upper income levels may get hit but not middle america in my opinion.
the real power of a roth is in its wealth passing ability .the fact that you can pass money on and if your kids get a fairly decent return on it they can actually end up with more money during their lifetime then they started with even after their mandatory withdrawls and pass it on again. .
the best deal of all may be tax efficiant stocks held outside in taxable money that appreciates . your heirs can inheirit that totally tax free as that gets a step up in basis with no taxes paid ever on it