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Life, Love, & Money
With Kimlee
Long Island Advice
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 Welcome~
Life,
Love and Money are all such essentials in the regular day-to-day…
When
was the last time that you did or didn’t think about your life, love or your
money? What is life without love?
How about life without money? What is going on in your life? What
would you like to share? Do you need some advice?
Let me hear what is going on in your day-to-day…
~Kimlee |
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EDITORIAL OF THE WEEK
Friday,
September 10, 2006
Author: Kimlee, Financial & Advice Specialist
IRA—ROTH or Traditional???
Save for your retirement—
you make the choice
Well first, it depends on whether
or not you are eligible for either one.
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ROTH |
TRADITIONAL |
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Eligibility |
Any age with compensation
Single=income up to $95k
Joint=income up to $150,00 |
Under age 70 ½ with compensation
No income limit |
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Max Annual contribution |
$4,000 or 100% of compensation |
same |
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Contribution Deductibility |
Contributions are not tax-deductible |
Contributions may be tax deductible |
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Federal Tax Advantages |
Federal tax-free growth (no taxes paid on income earned when
withdrawn) |
Federal tax-deferred growth
(taxes must be paid when withdrawn) |
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Withdrawals |
Can withdraw contributions anytime without penalty or tax |
Only withdraw after age 59 ½ without penalty or tax |
If you cannot deduct your contributions to a Traditional IRA and you
qualify, a Roth IRA might be the better choice for you to consider
since withdrawals of earnings are generally tax-free.
If you aren't eligible for a Roth IRA, anyone under age 70½ who has
compensation can take advantage of the benefits of a Traditional
IRA, including tax-deferred growth and the potential for
tax-deductible contributions.
If you can deduct your contributions to a Traditional IRA, the
decision to open a Roth or Traditional IRA generally depends on how
you think your tax situation in retirement will compare to what it
is today, and how likely you are to withdraw money before age 59½.
Money in a Traditional IRA grows tax-deferred and is taxed when
withdrawn. If you withdraw the money before age 59½, you generally
must pay a penalty, subject to certain exceptions that you should
educate yourself on. If you think your tax rate in retirement will
be lower than it is now and you do not plan to withdraw the money
before age 59½, a Traditional IRA may be the better choice for you.
Money in a Roth IRA is not federally taxed when it is withdrawn, and
you can withdraw your contributions at any time without paying a
penalty. If you think that when you retire your tax rate will be
higher and/or you might need the money before age 59½, the Roth IRA
might be the better choice for you to consider.
 have
the courage to question & challenge the status quo... refuse to
accept "traditional" thinking and answers as fact....
~Kimlee
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