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Zecco.com » General Investing » Tax Matters » tax benefits related to a roth IRA
Last post 05-11-2008, 4:17 AM by jackg1606. 5 replies.
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  •  04-09-2008, 7:22 PM 26710

    tax benefits related to a roth IRA

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        I put in $4000 to open a roth IRA last year. i was wonder if i can get any kind of tax discount for that, besides the obvious tax free money i make in it already.

  •  04-09-2008, 9:52 PM 26718 in reply to 26710

    Re: tax benefits related to a roth IRA

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    Contributions to Roth IRA's are not deductible.

  •  04-10-2008, 12:25 AM 26725 in reply to 26710

    Re: tax benefits related to a roth IRA

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    turningpoint84:
        I put in $4000 to open a roth IRA last year. i was wonder if i can get any kind of tax discount for that, besides the obvious tax free money i make in it already.


    No. Exactly that.

    You get future earnings tax free, in exchange for getting no deduction on it now.

    Roths are really great, especially if you expect to be in a higher tax bracket in the future than you are now, (say when you're really young)

    Only contributions to a standard IRA can you claim a tax deduction.

    For example, if you already have a 401k that you contribute to at work, a Roth IRA is a good option because that money will grow tax free, and once you hit the minimum age to start taking distributions, you'll owe no money in taxes!

  •  04-10-2008, 12:55 AM 26726 in reply to 26710

    Re: tax benefits related to a roth IRA

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    In addition to what the previous posters said there are a couple of other bonuses to this type.

    You don't ever have to take a distribution like you do with other types of retirement accounts.  In fact when you reach retirement age it's advantageous to hold off on taking the distributions until you've taken any necessary distributions from other accounts.

    It's also something which has estate planning benefits should any of the money be left at that point.

    So there is quite a bit that you are getting for the tax deduction sacrifice. In many cases though it makes sense to have more than one type of retirement account.

    The downside is that the regulations on the Roths could change at some point in the future.

  •  05-10-2008, 12:02 PM 28860 in reply to 26726

    Re: tax benefits related to a roth IRA

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    hedwards:
    The downside is that the regulations on the Roths could change at some point in the future.


    In general, whenever the tax laws are changed, Congress usually includes a “grandfather” clause  to protect those with existing accounts.  If they don't do that, they probably have a tough time during the re-election.  IMO, the downside may be minimum in the future.

  •  05-11-2008, 4:17 AM 28881 in reply to 28860

    Re: tax benefits related to a roth IRA

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    Assuming Congress will not screw you in taxes is a risky assumption.  Especially, if Obama is elected president with Democrats in control of Congress.  Obama and democrats will reverse the Bush tax cut meaning each of the tax rates will increase.  So, if you pay any taxes at all now those taxes will be increased under Obama.  Obama will not only raise the taxes on the wealthiest individuals but also on everyone who owed taxes for 2007.  Obama has also expressed an interest in raising capital gains taxes which were lowered by Clinton.  Obama is a socialist.  It is in my opinion, the socialist in the Democratic party and a few in the Republican party want to destroy our capitalist economic system in order to install a socialist system.  When you hear of Congress wanting to bail out our mortgage crisis by expanding  government loan programs we should be very fearful.  We don't want government to have claim to individual property ownership.

    Maybe I am seriously paranoid, but I also think it is possible for this mortgage bubble to have been created by our government in order to setup a condition where it would be easier for them to change our economic system into one resembling Cuba's.  An economic depression caused by a broken financial system would enable them to have reason to nationalize our financial system.  Their desire to nationalize our healthcare system is just another step in this process of converting us to a socialist state.

    When you hear of Obama stating he wants to bring about CHANGE in America, exactly what kind of change is he talking about?
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