A Traditional IRA is a retirement account where your contributions may either be tax-deductible or non-deductible, but you will still likely have to pay deferred-taxes on your earnings when you withdraw your money. Deductibility for a Traditional IRA may be limited if you or your spouse are ...
AMega Backdoor Rothmeans making non-Roth after-tax contributions to a 401k-type plan and then moving it to the Roth account within the plan or taking the money out (with earnings) to a Roth IRA. If you’re looking for the regular backdoor Roth, where you contribute to a Traditional IR...
A Roth IRA is one of the most popular ways to save for retirement, and it offers some big tax advantages, including the ability to withdraw your money tax-free in retirement. Traditional IRAs offer the potential for tax deductibility in the present, while Roth IRAs are funded with after-...
“Tax bracket arbitrage” makes a lot of sense (defer income when we are in high brackets until later when hopefully we are in lower tax brackets) but there are some important considerations. No one can predict future tax laws. If you are a 401(k) multi-millionaire, however, it makes...
The main benefit of a Roth IRA over a traditional IRA is if your tax rate upon withdrawal is lower. What you believe the future tax rate will be is the biggest determinant of whether you should contribute to a Roth IRA or not. If you think your tax rate will be higher in retirement,...
A Roth 401(k) is an account funded with after-tax contributions; withdrawals are tax-free. Traditional 401(k)s allow pre-tax contributions & taxable withdrawals.