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No, I'm not. You're not understanding what you're reading.
Oh really? So let's decipher what you said:
Quote:
Originally Posted by bUU
If you have $5500 of income to put toward retirement, you have a choice of putting the whole $5500 into a traditional IRA or amount significantly lower than that ($5500 minus the taxes you'd pay on that money) into a Roth IRA. If you had enough to put a full $5500 into a Roth IRA, then that means you have enough money to put $5500 into a traditional IRA plus the additional amount, minus the taxes only on the additional amount, into a traditional brokerage account.
You are saying that if you have enough to put a full 5.5k into a Roth IRA, you could alternatively put 5.5k into a Traditional IRA, and put the rest in a brokerage account. But, (this is what I would say) since the brokerage account will cost you extra taxes, you would end up with less money. So, my conclusion is, the Traditional IRA is worse in this case.
If you have 5.5k pre-tax income and contribute the after tax amount into a Roth IRA, then you did not max out your Roth IRA.
Am I understanding what I'm reading?
If my interpretation of your text is correct, then you have to admit that the Roth's contribution limit is higher. Contribution limit is defined as the maximum you can contribute. If you have the means to contribute an equivalent amount of 5.5k after tax but can't under the Traditional, that means the Traditional's limit is lower.
And my point is, the Roth IRA's contribution limit is effectively higher than the Traditional IRA's contribution limit. If you agree with this, then this is an advantage of the Roth IRA, one of the three I mentioned above.
Quote:
Originally Posted by bUU
The discussion here is about whether it is better to use traditional retirement accounts versus Roth retirement accounts. The matter of taxable accounts is relevant only in the context I raised it.
Exactly. That's why I said what I said. Completely within the context.
Nope, you did not have to google that for me. I understand what the word means in a dictionary. I asked you what you meant in the particular context, so please explain yourself. In case you meant categorically as definitely, then I don't understand why you said that since nobody in this thread has said the Roth is definitely better than the Traditional.
I actually agree with the OP. Roths don't make sense for the average investor, who is better off taking the tax benefit now than in the future. And 'poo-poo' this all you like, who knows if Roths will still be tax free 15, 20, 30 years from now? It may already be starting to come undone. President Obama, in his new budget, is proposing that there be RMDs on Roths just like on traditional IRAs. So they will be able to indirectly tax that money. They are greasing up the slippery slope, folks. Bottom line, take the dollar today over a dollar tomorrow. A bird in the hand...
they should require rmd's on roths. if you are going to require that folks take money out of a traditional account at 70-1/2 and pay the taxes and then pay future taxes on all gains if you put that money into a taxable account they should require that of roths too.
after 70-1/2 the new gains on anything in a taxable account would be taxed just the same.
right now you have a choice of deferring taxes on a traditional only up to 70-1/2 so by right if you decid to prepay the taxes up front that should cover you tax free up to the same 70-1/2.
after that both are taxed on future gains they get outside the retirement plans.
And then you proceeded to demonstrate clearly how you misunderstood what you read...
Quote:
Originally Posted by AmFest
You are saying that if you have enough to put a full 5.5k into a Roth IRA, you could alternatively put 5.5k into a Traditional IRA, and put the rest in a brokerage account. But, (this is what I would say) since the brokerage account will cost you extra taxes
You're attempting to prove your point by assuming that you're correct (assuming that the extra taxes on the gains from the amount put into the taxable brokerage account exceeds the tax you paid on the Roth IRA contributions minus the tax you'd pay on the traditional IRA contributions when you withdraw them, at a time when many people expect to be in a lower tax bracket). It is an interesting self-gratifying intellectual exercise you're engaging in there, but not really very illuminating.
Quote:
Originally Posted by AmFest
Am I understanding what I'm reading?
It seems not, but let's do this: You may not be inclined to accept an explanation from some random person online, so why not do some research outside of the forum, reading the explanations posted by experts who point out how Roth is not the panacea that it is made out to be. Maybe seeing the explanation coming from someone else will help you.
And then you proceeded to demonstrate clearly how you misunderstood what you read...
You're attempting to prove your point by assuming that you're correct (assuming that the extra taxes on the gains from the amount put into the taxable brokerage account exceeds the tax you paid on the Roth IRA contributions minus the tax you'd pay on the traditional IRA contributions when you withdraw them, at a time when many people expect to be in a lower tax bracket). It is an interesting self-gratifying intellectual exercise you're engaging in there, but not really very illuminating.
It seems not, but let's do this: You may not be inclined to accept an explanation from some random person online, so why not do some research outside of the forum, reading the explanations posted by experts who point out how Roth is not the panacea that it is made out to be. Maybe seeing the explanation coming from someone else will help you.
Hmm, not sure how to comment on this. There is clearly some misunderstanding between you and me, and while I'm trying to understand you, all you want to do is to look down on and belittle me. I guess this conversation is done. I have pointed out before that the Roth allows a higher effective contribution limit and even created a thread dedicated to this topic. If you're interested in a serious discussion perhaps you should read what I wrote and think more about your prior conclusion. I don't mind explaining, but only if people are willing to listen.
A comment that should reasonably used as the last comment in a posting.
Quote:
Originally Posted by AmFest
I have pointed out before that the Roth allows a higher effective contribution limit
You've claimed that. I effectively called that BS explaining why I see it that way with as much detail as I care to provide. Let's just leave it at that.
Location: Prescott Valley,az summer/east valley Az winter
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In all the discussion I really haven't seen the real answer to the advantage of ROTH of traditional IRA~~ which is for those young people who are at a lower tax rate right now and are putting their money away for the retirement in the far off future. Lower tax rate when you are just starting out and gaining decades of dividends on the money that they get to withdraw tax free. Although I keep hearing about how much lower the tax brackets are today remember that $1 an hor was a good paycheck in the 50's when I started saving for retirement. Now my money has increased but cost of living has also. The people that are finally using ROTH for the last few years of their savings or are converting already missed tht boat. The younger and closer to just starting in the workforce are the ones that need to vigorously save into a self directed ROTH.
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