when ur in ur late 20's or 30's, when they take out 10% for taking it out early, would you still make alot of money in return?
2007-01-28 22:16:00 · 5 answers · asked by beach_babe971 1 in Business & Finance ➔ Investing
If you think you will be taking it out then you should go with a ROTH IRA. With a ROTH, you can touch all the money you put in, just not the interest it has accumulated over the years.
Taking out YOUR money from this type of IRA will not bring about any penalty or tax.
Stick with a ROTH IRA and you will be fine. BUT be sure to be saving for retirement in a different IRA as well, for only YOU can make your retirement life worth living !!
2007-01-29 03:18:50 · answer #1 · answered by Kitty 6 · 0⤊ 0⤋
If you plan on taking it out after only ten years then you would lose quite a bit of your initial investment and earnings with the 10% penalty and if you are in a traditional IRA the earnings would be taxed as income as well when you take a distribution.
If you are planning on taking the money out for a down payment on a first home (emphasis on first), then I would suggest a Roth IRA. They allow you to take out money for a down payment on a first home penalty free from your Roth. The earnings in a Roth also grow tax free because you are putting in dollars that have already been taxed by the government.
If the down payment for a home is not the case, your best method would be to put the money in an individual account with a broker and then choose your stocks, bonds, mutual funds, etc. This money will not be penalized if you want to take it back, but the earnings would be taxed as regular income or capital gains depending on when you take the money out.
2007-01-29 00:57:50 · answer #2 · answered by mth83vt 4 · 0⤊ 0⤋
If you plan on taking it out, don't put it in an IRA in the first place. Not only will they charge you the 10% early withdrawl penalty, it will be taxed as income as well, both state and federal. So it could end up costing you 30% or more to take it out, if you decide to do so.
2007-01-28 22:51:43 · answer #3 · answered by crazydave 7 · 0⤊ 0⤋
Don't invest in an IRA unless you're coomitted to the long term. Besides getting hit with the 10% penalty you also get hit with taxes (which in future years may be higher)
If you invest outside an IRA (shorter term) than you'll be capped for taxes for any holding you've had more than one year (capital gains).
Good luck!
2007-01-29 02:54:27 · answer #4 · answered by Common Sense 7 · 0⤊ 0⤋
Don't even put it in if you are going to be foolish enough to take out early. No excuse for that
2007-01-29 01:04:06 · answer #5 · answered by vegas_iwish 5 · 0⤊ 0⤋