Roth IRA Vs. Traditional IRA
the u.s. government offers two kinds of individual retirement accounts, traditional iras and roth iras. both are tax advantage retirement accounts that include stocks, bonds, mutual funds, cds and other investments. the most important factor to consider is whether your tax rate will be higher or lower during retirement. for example, tim maxed out his 401(K) contributions at work and decides to invest through an ira. if he chooses a traditional ira, contributions will be tax deductible. sometimes, this is referred to as investing pre tax dollars. tim is in a 30% tax bracket. if he puts $2,000 into his traditional ira, he would not have to pay the $600, an income tax on this amount. yet, his original contribution, $2,000, as well as whatever capital gains, dividends and interest is accumulated. let's say an additional $2,000 are now taxed as ordinary income. tim is now retired and is earning less than when he ?. so, he is taxed at 25%. when he withdraws the funds, he is left with $3,000. now, let's look at what would happen if tim invested using a roth ira. he sets aside $2,000 for the account, but this time the contributions are not tax exempt. if he is in the same 30% tax bracket today, only $1,400 is going into the account. the other $600 goes in taxes. his investments double in value as in the previous example. so, they worth $2,800 by the time tim is ready to withdraw the funds. because he is using a roth account, ? distributions during retirement are completely tax free. he would have $2,800 in his pocket. because tim was in a lower tax bracket in retirement, it was a good decision to invest in a traditional ira.
- individual retirement account・・・個人退職口座→https://ja.wikipedia.org/wiki/IRA_(%E3%82%A2%E3%83%A1%E3%83%AA%E3%82%AB)