Could a Roth IRA be Better Than a 401(k)?
Very few people whom I know are familiar with the benefits of the Roth IRA. It was named for the late Senator William Roth of Rhode Island, who proposed it. It is similar to a traditional IRA except contributions are never tax-deductible. Contributions to traditional IRAs are sometimes deductible or partially deductible, depending on your income and whether or not you have a retirement plan like a 401(k) at work. With Roth IRAs, individuals are limited to incomes of $95,000 ($150,000 for couples) to be eligible for full contribution amounts.However, unlike the traditional IRA, you can withdraw your contributions from a Roth IRA at any time, at any age without penalty.
Earnings are not taxed if you wait until at least age 59 1/2 to begin withdrawing them and have held your Roth IRA for at least five years. With a Roth IRA, the contributions are taxed without any deferment, but they grow tax-free and the gains are never taxed (see above). With a 401(k), contributions are tax-deferred, but eventually the contributions and gains will be taxed. By the time most people retire, the earnings from their retirement accounts will far exceed their contributions, due to compounding. With that in mind, one could make the case for a Roth IRA possibly being better than a 401(k).Here's an illustration.
Let's suppose that over the course of 25 years you contributed a total of $75,000 to your 401(k) and your employer kicked in $30,000 during that same period for a total of $105,000. By the end of those 25 years, your compounded gains (assuming you're getting a decent rate of return) could total $500,000. When you retire, you will eventually pay taxes on the entire $605,000 as well as the gains you receive from it after retirement. Now, let's assume that, instead of contributing to your 401(k) for those 25 years, you contributed only $50,000 to your Roth IRA (without a matching contribution from your employer, of course). The assumption is also that you would not be able to contribute as much because you are using post-tax dollars for the Roth IRA vs.
pre-tax dollars for the 401(k). However, because you generally have more investment options with the Roth IRA money than with the 401(k) money, you are likely to find a better rate of return. With that in mind, let's say your compounded gains could total $400,000. When you retire, you could have the entire $450,000 as well as the gains you could receive from it post-retirement, completely tax free!As you can see, it is possible that many people could come out better putting at least a portion of their retirement funds into a Roth IRA. Judge for yourself.
I actually contribute more to my Roth IRA than I do to my 401(k). I put just enough into my 401(k) to get my employer's maximum matching contribution, and that's all. However, I'm not a financial advisor and I don't play one on TV, so check with your financial advisor to see what would be right for you. For more information about the Roth IRA, see the following link: http://www.rothira.com..
Terry Mitchell is a software engineer, freelance writer, and trivia buff from Hopewell, VA. He also serves as a political columnist for American Daily and operates his own website - http://www.commenterry.com - on which he posts commentaries on various subjects such as politics, technology, religion, health and well-being, personal finance, and sports. His commentaries offer a unique point of view that is not often found in mainstream media.terrymitchell@verizon.netRules of Simple IRA Your Business Needs to Know
A Savings Incentive Match Plan for Employees plan, better known as a SIMPLE plan, is an IRA-based retirement plan available to employers with fewer than 100 employees. Under a SIMPLE IRA plan, an employee can contribute a portion of his pay to his SIMPLE IRA account. An employee can make a maximum contribution of $9,000, ($10,500 if age 50 and over), to his SIMPLE IRA account for 2004. You, the employer, are required to make a contribution for every worker who receives $5,000 or more in compensation. You can match up to 3% of the salary for the employees who contribute to their SIMPLE IRA account.
You only have to match for those employees who contribute to the plan. In any 2 years out of a 5 year period, after notification to the employees, you may elect a lower matching contribution percentage but not less than 1% of salary. Your business also has the option to select a "non-elective" mandatory company match of 2% of annual salary for every employee. Under the "non-elective...
Rules of Simple IRA Your Business Needs to Know
Ira > Rules of Simple IRA Your Business Needs to Know
Could a Roth IRA be Better Than a 401(k)?
Very few people whom I know are familiar with the benefits of the Roth IRA. It was named for the late Senator William Roth of Rhode Island, who proposed it. It is similar to a traditional IRA except contributions are never tax-deductible. Contributions to traditional IRAs are sometimes deductible or partially deductible, depending on your income and whether or not you have a retirement plan like a 401(k) at work. With Roth IRAs, individuals are limited to incomes of $95,000 ($150,000 for couples) to be eligible for full contribution amounts.
However, unlike the traditional IRA, you can withdraw your contributions from a Roth IRA at any time, at any age without penalty. Earnings are not taxed if you wait until at least age 59 1/2 to begin withdrawing them and have held your Roth IRA for at least five years. With a Roth IRA, the contributions are taxed without any deferment, but they grow tax-free and the gains are never taxed (see above). With a 401(k), contributions are tax-deferred,...
Could a Roth IRA be Better Than a 401(k)?
Ira > Could a Roth IRA be Better Than a 401(k)?
Roth IRA Conversion
A Roth IRA is an individual retirement account wherein a person can save his or her tax-deducted income for retirement and get tax-free earnings in returns. It is different from the traditional IRA account, in that the earnings are tax-exempt, but the earnings may or may not be tax-free.
There are two ways to contribute funds to the Roth IRA account. One is by simply depositing compensation income, which can be the income obtained in the form of wages, earnings from a self-employed work, or even alimony. The other way is to convert funds from a traditional IRA to the Roth IRA.
This can be done by taking funds from the traditional IRA account and depositing them into the Roth IRA account within 60 days of receiving the funds. Therefore, a Roth IRA Conversion account is a retirement account created when a person converts his or her regular IRA account into a Roth IRA account. To convert a regular IRA account into a Roth IRA account, you have to meet certain eligibility...
Roth IRA Conversion
Ira > Roth IRA Conversion
Roth IRA Rules
If you are thinking in terms of saving for your retirement, then the Roth IRA can prove to be a fruitful option. You can contribute a certain amount of your compensation income into a Roth IRA account. The amount contributed is nondeductible and so Roth IRAs, or individual retirement arrangements or individual retirement accounts, as they are commonly called, are the ideal way to enable your earnings to grow tax-free. In fact, the Roth IRA provides earnings that are tax-deferred and possibly tax-free. The contributions themselves are subject to tax deductions, but the distribution or withdrawals are not.Yet there are some Rules and regulations associated with the Roth IRA, and not all people are eligible for this retirement savings option.
First of all, the maximum amount that you can contribute to this account in one year cannot exceed $4,000 or 100% of your gross adjustable income, whichever is less.
To contribute to the Roth IRA, you need to have taxable income,...
Roth IRA Rules
Ira > Roth IRA Rules
'How To' for Checkbook Control Self Directed IRA
Las Vegas, NV (ContentDesk) August 8, 2006 -- American Equity Corporation (http://www.americanequity.org) announced that its subsidiary SelfDirectedIRA.org has implemented a new free consumer website and it is now live online. SelfDirectedIRA.org provides consumers with a source for news, instruction, strategies and tips for implementing a
truly self directed IRA with checkbook control.Due to fact that we are a society concerned with providing adequately for retirement,
there has developed a need for a single source for the consumer to obtain the information necessary to fund their retirement programs in the most effective manner. While there are many sources that provide limited information to the consumer there is no single unbiased source.SelfDirectedIRA.org will fulfill the need for a single source. It will enable consumers to find everything they need related to self directed ira issues at a single site. SelfDirectedIRA.org provides free information for establishing...
Ira > 'How To' for Checkbook Control Self Directed IRA
Invest In Real Estate With a 401K or Roth IRA: Wisconsin And Michigan Recreational Properties, Waterfront Or Acreage Can Qualify
Wisconsin Rapids, WI (ContentDesk) February 4, 2006 --A new trend to consider for investors thinking about their retirement funds involves the same idea that many people are utilizing for todays wealth-building mechanisms; real estate.Most banks and brokerage companies limit your choices for retirement investment to certificates of deposit, stocks, mutual funds, annuities, and similar financial instruments. But Section 408 of the Internal Revenue Code permits individuals to purchase land and other real estate with funds held in many common forms of IRAs, including a traditional IRA, a Roth IRA, and a Simplified Employee Pension plan, or SEP-IRA.While some restrictions apply to properties and their uses, a person who intends to utilize the property primarily as an investment tool for retirement can derive the benefits of appreciative land values to enhance their nest eggs.
Also, the ability to locate and lock into a property that one may decide to build a retirement home on...
Ira > Invest In Real Estate With a 401K or Roth IRA: Wisconsin And Michigan Recreational Properties, Waterfront Or Acreage Can Qualify
Ink cartridges - shopping online
Getting ready to buy printer ink cartridges online? It really is amazing how much you can save versus store bought ink cartidges. The ability to compare prices really makes shopping online a sweet deal. There are however a few things you should look for in an online printer supply store before buying those ink cartridges. The first thing you want is a low price. To determine this you will need to comparison shop.
This can be fun. The next thing to consider is the store's reputation. You...
Could a Roth IRA be Better Than a 401(k)? Ink cartridges - shopping online photo printer Ira
Ira > Ink cartridges - shopping online
Could a Roth IRA be Better Than a 401(k)?
Adjustable Beds - Not Just For the Elderly!
In an ever increasing market for the ultimate Sleep System, most people still believe that the Adjustable Bed which was originally used in Hospitals and Homes for the Elderly are still that. A bed that can help the elderly in and out of bed! Although they are extremely helpful in these situations, they can also be very important for anybody in today's lifestyle.
Now any sincere knowledgeable mattress salesman won't push the watching TV or reading in bed, it's not something that...
Ira > Adjustable Beds - Not Just For the Elderly!
Don?t Delay in Managing IRS Tax Debt
SAN MATEO, CA March 24, 2005 ?- With tax day, April 15, less than one month away, consumers and business owners who have looming tax liabilities are likely breaking a sweat just about now. For those with serious tax problems, Freedom Financial Network, LLC, can help by working directly with the IRS to reduce past-due tax penalties and payments, and offering tips on managing tax season.Because Americans are carrying more debt than ever, today's consumers are more likely to have tax problems than...
Could a Roth IRA be Better Than a 401(k)?
Ira > Don?t Delay in Managing IRS Tax Debt
Mobile Ticketing and Mobile Retail Services - Aided by New Mobile Phone Based Payment Schemes - to Generate Over $63bn Worth of Revenue by 2010
Hampshire, UK (ContentDesk) January 26, 2006 -- Revenues from mobile ticketing and mobile retail services will assist the global mobile commerce market by generating over $63bn worth of revenue by 2010, according to a new report from Juniper Research. Mobile phone users, familiar with purchasing digital content such as ringtones and games, equipped with intelligent smartphones and accessing the mobile internet via faster mobile data networks will increasingly use their devices for mobile commerce....
ringtones Could a Roth IRA be Better Than a 401(k)? Mobile Ticketing and Mobile Retail Services - Aided by New Mobile Phone Based Payment Schemes - to Generate Over $63bn Worth of Revenue by 2010 Ira
Ira > Mobile Ticketing and Mobile Retail Services - Aided by New Mobile Phone Based Payment Schemes - to Generate Over $63bn Worth of Revenue by 2010
FinanceNewsToday.com Adds Financial Calculators to Its Website
Johnsonville, SC (ContentDesk) February 14, 2006 -- Many people everyday use the internet to search for personal finance related information and tools to no avail. In addition to providing constantly updated financial news and money saving tips, Finance News Today has added a extensive list of financial calculators to its website covering a broad range of personal finance issues.One of our largest collections due to the vast array of information available is our mortgage calculators. We provide...
FinanceNewsToday.com Adds Financial Calculators to Its Website Could a Roth IRA be Better Than a 401(k)? mortgage calculator
Ira > FinanceNewsToday.com Adds Financial Calculators to Its Website