Comments on: The Ever Unpopular Traditional IRAs http://www.bargaineering.com/articles/the-ever-unpopular-traditional-iras.html personal finance blog with anecdotes, advice and commentary. Sun, 08 Nov 2009 13:09:32 -0500 http://wordpress.org/?v=2.8.5 hourly 1 By: katy http://www.bargaineering.com/articles/the-ever-unpopular-traditional-iras.html/comment-page-1#comment-286135 katy Thu, 25 Sep 2008 18:24:17 +0000 http://www.bargaineering.com/articles/the-ever-unpopular-traditional-iras.html#comment-286135 some of us have a traditional ira because we couldn't afford the taxes of the roth - too little income. (pfffft) some of us have a traditional ira because we couldn’t afford the taxes of the roth – too little income.

(pfffft)

]]> By: Mase http://www.bargaineering.com/articles/the-ever-unpopular-traditional-iras.html/comment-page-1#comment-165504 Mase Thu, 11 Oct 2007 14:50:59 +0000 http://www.bargaineering.com/articles/the-ever-unpopular-traditional-iras.html#comment-165504 I started a Traditional IRA this year, anticipating a 2010/11 conversion with the phase-out of the income limitation, as this was the first year I could not contribute to my Roth IRA. As I will only pay taxes on the <b>earnings, but not principal</b> of my Traditional IRA, I thought it a good way to continue to sock away money into my IRA, knowing I can transfer it to my Roth come 2010/11 (and spread the tax hit, if significant, over both those years). I started a Traditional IRA this year, anticipating a 2010/11 conversion with the phase-out of the income limitation, as this was the first year I could not contribute to my Roth IRA. As I will only pay taxes on the earnings, but not principal of my Traditional IRA, I thought it a good way to continue to sock away money into my IRA, knowing I can transfer it to my Roth come 2010/11 (and spread the tax hit, if significant, over both those years).

]]> By: jim http://www.bargaineering.com/articles/the-ever-unpopular-traditional-iras.html/comment-page-1#comment-159538 jim Wed, 26 Sep 2007 16:31:16 +0000 http://www.bargaineering.com/articles/the-ever-unpopular-traditional-iras.html#comment-159538 Well, I haven't heard much about future Roth taxation so I don't know if it's overplayed, I merely mentioned it because it deserved at least a little air-time, you know? I've actually had extensive conversations on the subject with <a href="http://www.mightybargainhunter.com/" rel="nofollow">MightyBargainHunter</a> on it and I took the same side as you, Matt. Well, I haven’t heard much about future Roth taxation so I don’t know if it’s overplayed, I merely mentioned it because it deserved at least a little air-time, you know? I’ve actually had extensive conversations on the subject with MightyBargainHunter on it and I took the same side as you, Matt.

]]> By: Matt http://www.bargaineering.com/articles/the-ever-unpopular-traditional-iras.html/comment-page-1#comment-159527 Matt Wed, 26 Sep 2007 15:23:15 +0000 http://www.bargaineering.com/articles/the-ever-unpopular-traditional-iras.html#comment-159527 I think that the possibility of future Roth taxation is overplayed. If the government ever decided to tax Roths they would have to turn the tanks out on all the old people rioting and marching in the streets. It would be serious political suicide for anybody that even considered voting for it. While I have absolutely nothing to back it up with, I would bet that an overwhelming percentage of the people who make political contributions have Roths and that counts more than voting these days. There would be hell to pay if it ever happened (and I'm not just talking about the IRS). I think that the possibility of future Roth taxation is overplayed. If the government ever decided to tax Roths they would have to turn the tanks out on all the old people rioting and marching in the streets. It would be serious political suicide for anybody that even considered voting for it. While I have absolutely nothing to back it up with, I would bet that an overwhelming percentage of the people who make political contributions have Roths and that counts more than voting these days. There would be hell to pay if it ever happened (and I’m not just talking about the IRS).

]]> By: CreditWithdrawal http://www.bargaineering.com/articles/the-ever-unpopular-traditional-iras.html/comment-page-1#comment-159494 CreditWithdrawal Wed, 26 Sep 2007 12:50:50 +0000 http://www.bargaineering.com/articles/the-ever-unpopular-traditional-iras.html#comment-159494 One minor correction. For the statement <blockquote>"if you make an early withdrawal on your Traditional IRA, you will have to pay taxes plus a 10% penalty. With a Roth, you can withdraw them at anytime...</blockquote><br><br> that is true only <strong>for the money you contributed.</strong> Any earnings from that money, if withdrawn, will have to have taxes paid and possibly penalties. i.e. You contribute $4000 and it accrues $200. If you take out the total ($4200) you will have to deal with paying taxes on the $200 and whatever penalties necessary. One minor correction. For the statement
“if you make an early withdrawal on your Traditional IRA, you will have to pay taxes plus a 10% penalty. With a Roth, you can withdraw them at anytime…

that is true only for the money you contributed. Any earnings from that money, if withdrawn, will have to have taxes paid and possibly penalties.

i.e. You contribute $4000 and it accrues $200. If you take out the total ($4200) you will have to deal with paying taxes on the $200 and whatever penalties necessary.

]]> By: Peter http://www.bargaineering.com/articles/the-ever-unpopular-traditional-iras.html/comment-page-1#comment-158877 Peter Tue, 25 Sep 2007 04:33:22 +0000 http://www.bargaineering.com/articles/the-ever-unpopular-traditional-iras.html#comment-158877 Traditional IRA's are also better for those who believe that they will be in a lower tax bracket after retirement, than when they are setting the money aside. Traditional IRA’s are also better for those who believe that they will be in a lower tax bracket after retirement, than when they are setting the money aside.

]]> By: jim http://www.bargaineering.com/articles/the-ever-unpopular-traditional-iras.html/comment-page-1#comment-158850 jim Tue, 25 Sep 2007 02:29:02 +0000 http://www.bargaineering.com/articles/the-ever-unpopular-traditional-iras.html#comment-158850 JohnnyB: I didn't recommend anything and this article was just an overview of the Traditional IRA, where do you find it lacking? JohnnyB: I didn’t recommend anything and this article was just an overview of the Traditional IRA, where do you find it lacking?

]]> By: Joshua http://www.bargaineering.com/articles/the-ever-unpopular-traditional-iras.html/comment-page-1#comment-158767 Joshua Mon, 24 Sep 2007 21:06:27 +0000 http://www.bargaineering.com/articles/the-ever-unpopular-traditional-iras.html#comment-158767 It's easy to criticize someone else's writing. It also sounds like your talking about someone who has a lot of money to invest. If your like me and don't have much, but still want to get started on saving for retirement a ROTH IRA is one of the best ways to go. It’s easy to criticize someone else’s writing. It also sounds like your talking about someone who has a lot of money to invest. If your like me and don’t have much, but still want to get started on saving for retirement a ROTH IRA is one of the best ways to go.

]]> By: JohnnyB http://www.bargaineering.com/articles/the-ever-unpopular-traditional-iras.html/comment-page-1#comment-158754 JohnnyB Mon, 24 Sep 2007 20:29:14 +0000 http://www.bargaineering.com/articles/the-ever-unpopular-traditional-iras.html#comment-158754 Is that all the choices someone has? Does it really make sense to make deductible IRA contributions when 100% of the withdrawal is for sure going to be taxed, at ordinary income rates no less! Wouldn't someone be better off saving into a taxable account using index funds or stocks (if they have enough capital to diversify)? Sure the long term cap gains taxes could go extinct (especially if a democrat takes over the WH) but choices could be made then. Also Congress enacted to keep the tax benefits of the Roth IRA going and most experts feel that if any changes would happen those already in Roth IRA would be grandfathered. Never say never but it would be unthinkable for the gov't to ever change existing 529 or Roth IRA tax codes on accounts already set up. It would be the largest bait and switch ever recorded. I like some of your commentaries but too often they are written with limited financial knowledege. This blog is good on the basics then it is on more complex financial situations. Just my opinion. Is that all the choices someone has? Does it really make sense to make deductible IRA contributions when 100% of the withdrawal is for sure going to be taxed, at ordinary income rates no less!

Wouldn’t someone be better off saving into a taxable account using index funds or stocks (if they have enough capital to diversify)? Sure the long term cap gains taxes could go extinct (especially if a democrat takes over the WH) but choices could be made then.

Also Congress enacted to keep the tax benefits of the Roth IRA going and most experts feel that if any changes would happen those already in Roth IRA would be grandfathered. Never say never but it would be unthinkable for the gov’t to ever change existing 529 or Roth IRA tax codes on accounts already set up. It would be the largest bait and switch ever recorded.

I like some of your commentaries but too often they are written with limited financial knowledege. This blog is good on the basics then it is on more complex financial situations. Just my opinion.

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