![]() You can verify that for yourself by downloading the calculator. However, the PERCENT DIFFERENCE between the Traditional and Roth IRA (based on the simplifying assumptions I've explained above) depends only on the tax rates. The amount of the contribution, the rate of return, and the years before retirement, and the years of withdrawals all affect the amount you can withdraw during retirement. However, if we ignore these types of issues and look only at the basic math, the difference between the Traditional and Roth IRA boils down to just the difference in tax rates before and after retirement. I personally think that the ability to withdraw needed principal from the Roth for an emergency (penalty free) is a big advantage to the Roth. Roth IRA: You pay NO tax on withdrawals during retirement, not even on the capital gains or interest earned. That is why the general rule of thumb is to use a Traditional IRA if you think you will be in a lower tax rate during retirement. Traditional IRA: You pay income tax on the FULL amount of the withdrawals during retirement.
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