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    Roth IRA - A Really Stupid Idea
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    It's tax time. For those of you who contribute to an IRA, you may have wondered about traditional vs Roth. Now that I am taking contributions from my IRA, I see how dumb a Roth IRA is. I always thought a Roth was a bad idea, but now I have the proof.

    Back in the day I figured that I was ahead of the game by having tax free interest or capital gains re-invested for 30 or 40 years rather than pay up front. Some argue otherwise. Last year I took money out of my IRA and having filled out the federal and state tax forms, I owe nothing. Not a dime. What a waste it would have been to have paid the tax up front.

    Note - never listen to anyone for financial advice, including me.
    Awarded Best Clear Com Chatter, 2001, PBS Television


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    Senior Member Peter C.'s Avatar
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    I don't know if you're joking, but the way I understand it all gains are taxed even if its from a tradition IRA where as the Roth they are not. When you file your annual Federal taxes (properly) that's when you'll need to pay.

    https://www.investopedia.com/ask/ans...wals-taxed.asp
    Last edited by Peter C.; 04-04-2021 at 12:03 PM.


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    I have a Hyman Roth IRA because Hyman Roth always makes money for his partners.


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    Admin Luis Caffesse's Avatar
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    Quote Originally Posted by DLD View Post
    I have a Hyman Roth IRA because Hyman Roth always makes money for his partners.
    That sounds better than my David Lee Roth IRA.
    It's offshore in Panama.


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    Quote Originally Posted by Peter C. View Post
    I don't know if you're joking, but the way I understand it all gains are taxed even if its from a tradition IRA where as the Roth they are not. When you file your annual Federal taxes (properly) that's when you'll need to pay.

    https://www.investopedia.com/ask/ans...wals-taxed.asp
    It's no joke Peter. Indeed, what you are saying is what people are telling us and what I believed would happen; I would pay taxes on my IRA distributions from a traditional IRA. Knowing that, I still considered a traditional IRA to be an advantage over a Roth for two reasons:

    - Instead of paying tax up front, I would rather invest that money in the IRA. Over 30 or 40 years, that is a significant gain.
    - I figured my tax rate would be much lower when I was withdrawing money. That's the key. My tax rate is lower now. So I benefit from not paying as much tax now as I would have when I was earning. It's so low, it is zero. Even if it weren't zero, it would be much lower than during the earning years, which would tax at a higher rate.

    People have been writing for years about the benefits of a Roth IRA. I never bought into it and I'm glad I didn't. My IRA withdrawal is tax free baby!
    Awarded Best Clear Com Chatter, 2001, PBS Television


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    Senior Member Peter C.'s Avatar
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    Quote Originally Posted by Paul F View Post
    It's no joke Peter. Indeed, what you are saying is what people are telling us and what I believed would happen; I would pay taxes on my IRA distributions from a traditional IRA. Knowing that, I still considered a traditional IRA to be an advantage over a Roth for two reasons:

    - Instead of paying tax up front, I would rather invest that money in the IRA. Over 30 or 40 years, that is a significant gain.
    - I figured my tax rate would be much lower when I was withdrawing money. That's the key. My tax rate is lower now. So I benefit from not paying as much tax now as I would have when I was earning. It's so low, it is zero. Even if it weren't zero, it would be much lower than during the earning years, which would tax at a higher rate.

    People have been writing for years about the benefits of a Roth IRA. I never bought into it and I'm glad I didn't. My IRA withdrawal is tax free baby!
    It's better to pay tax on an initial investment of $2,000 rather than on the return after it grows to $100,000. It doesn't really matter as long as save money for your retirement.


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    That's what is so misleading. The statement sounds correct, but that's not what happens. You're not paying taxes on $2000. You're paying tax on your total income and that tax rate is high due to high earnings during earning years. The tax rate is lower during retirement. I my case, it is zero.

    Every Roth article agrees with you; that the Roth IRA is better. The assumption being that withdrawals are high and in a high tax bracket. It just isn't true. I planned on retiring with a big income from my IRA. It turns out I don't need near what I anticipated. Not even close. The wife and I are living very comfortably on half as much money as anticipated. If I knew what I know now, I would have retired a lot earlier.

    If I had invested in a Roth for 30 years, I'd be really upset after finishing this years tax forms.

    Meh, it's just one person's experience. Everyone has to make their own choice, but I'm here to tell everyone, the advice out there is often misleading and not worth the pixels it's printed on. I don't present this as advice. I'm just relaying my experience, which may be useful to others. Or it may be a pile of hot horse manure. Who knows.
    Awarded Best Clear Com Chatter, 2001, PBS Television


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    Senior Member JPNola's Avatar
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    My investment method has been put it in a checking account.

    I’ve had my bank contact me with suggestion that I put it into investment accounts.

    They don’t know me very well at my bank.
    Big sources matter.


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    Yea, that's that guy that needs to make his commission by having you take money out of your checking account and putting it into an investment that could lose money at any time. Nice guy.
    Awarded Best Clear Com Chatter, 2001, PBS Television


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    #10
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    Quote Originally Posted by Luis Caffesse View Post
    That sounds better than my David Lee Roth IRA.
    It's offshore in Panama.
    That's where Vladimir Putin keeps his too and you want to avoid any mishaps there. I mean, if you find your account suddenly $200 billion richer, you'd know that someone might be looking for it.


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