ira pretax post tax?

Question

how does it work as far as contributions are concerned.traditinal ones not roth.also im a substitute teacher,is there any ira that take money pretax.the main answer i am looking for are ira contributions pretax dollors or after tax dollars

Answer 1

IRA - You contribute pre-tax dollars, and pay tax when you withdraw.

Roth IRA - You contribute after-tax dollars, and no tax when you withdraw.

As far as which is better for your situation will depend on what your expect your income level to be at retirement. If you expect to be at a higher tax bracket, then Roth IRA might be better for you. Pay the tax now rather than when your earnings later at a higher tax bracket later.

Best wishes.

Answer 2

Your pre-tax contributions can stay in your SEP IRA (which will function the same as a Traditional IRA in regards to taxes.) You can also open a Roth IRA which will be a retirement vehicle where post-tax contributions can be made. The two will be completely separate and function independently. On a side note, you can roll your SEP IRA into a Traditional IRA and still make pre-tax contributions, and furthermore, have the option of converting your new Traditional IRA into a Roth IRA in any tax year (paying taxes on the converting money now instead of at retirement)

Answer 3

Most financial planners will recommend a Roth IRA to you... unless you already have a great deal of funds in a traditional IRA or anticipate a different tax picture than most retirees, you should do the Roth. I'd check with a financial planner or your CPA to be sure it's right for you.