2006-11-01 06:48:31 · 4 answers · asked by norbnfw 1 in Business & Finance ➔ Taxes ➔ United States
An after taxes IRA.You dont pay taxes on it when you cash it out
2006-11-01 06:59:27 · answer #1 · answered by Shadowmarvin 2 · 0⤊ 0⤋
A Roth IRA is sort of the opposite of a Traditional IRA. You put money into a Roth IRA after taxes rather than before taxes. The benefit here is that you do not have to pay taxes on the earnings in a Roth IRA. The disadvantage is that you are usually making more money per year when you add to the Roth IRA. Therefor, you pay higher taxes on the earnings that the money going into the Roth IRA came from.
Because Roth IRA's are after tax money, you can pull the money out before you retire and use that money for certain things, such as a home or college costs.
The benefit of a Traditional IRA is that you defer your taxes on the money going into the IRA. That is to say that you subtract the money from your annual income on your taxes. When you retire and withdraw that money, you are usually in a lower tax bracket and pay less income taxes on the earnings from your IRA.
The traditional IRA cannot be withdrawn from until you are age 65 without paying a 20% penalty. This IRA is only good for retirement.
Take care,
Troy
2006-11-01 15:06:17 · answer #2 · answered by tiuliucci 6 · 1⤊ 0⤋
Simply google for ROTH IRA and you will know more than what you will get from this website.
Net: It differs from regular IRA. You can take the money out w/o penality for sickness, college or buying home. All earnings are free in Roth IRA.
2006-11-01 14:52:15 · answer #3 · answered by Anonymous · 0⤊ 0⤋
No tax deduction for money going in and if you follow the rules there is no tax on money coming out at retirement
2006-11-01 15:25:17 · answer #4 · answered by waggy_33 6 · 0⤊ 0⤋