|
DebtFreeGuru.com's - Tip of the Week - Monday, July 21, 2003 |
|
|
If you can't read this newsletter or it's in any way garbled, just click the Reply button and type a brief note explaining that you can't read the newsletter. We'll get you one you can read right away! (Always feel free to forward) |
|
|
My Money Center "...a new thought company" If you or someone you know is struggling or unable to meet your obligations Contact Me for a FREE no obligation evaluation to see if one of the My Money Center Programs is right for you! Or Call 813-354-2563
Click here to order your credit report, credit monitoring service or Credit Scoring Analysis!
•
My
Personal Invitation |
(Please
read my commentary at the end of this article!)
Roth Or Traditional IRA's? Both
Can Lead To Solid Retirement Foundations, But There Are Differences To Be
Aware Of.
NEW
YORK (CNN/Money) - Although your employer may not offer a 401(k) plan,
investing wisely in an individual retirement account can create a solid
foundation for your golden years. But the question becomes: Roth IRA or
traditional IRA?
This
week's "Armchair Millionaire" takes a look at the different
advantages of investing in Roth IRAs and traditional IRAs. Question: My current employer doesn't offer a 401(k) but I'm determined to continue saving for retirement on my own. I've started to look into individual retirement accounts, but I'm not sure which choice is best -- the traditional IRA or the Roth IRA. What do you think? -- Naomi G.
Dear Naomi, When you open your IRA, you'll be in plenty of good company. According to the Investment Company Institute, about 42 percent of U.S. households owned IRAs as of last year. The reason for their popularity is simple: IRAs offer terrific tax advantages that mean you keep significantly more of your money than if it was invested in a regular taxable account.
Your first step in IRA investing is to understand the key differences between the two major types of IRAs. The traditional IRA allows your money to grow tax-deferred until you withdraw it and, in some cases, lets you deduct your contribution. The Roth IRA, on the other hand, allows your money to grow tax-free, but you are never allowed a deduction for your contribution and can contribute only if your income does not exceed a set limit.
When we asked members of the Armchair Millionaire community which type they prefer, we got a range of responses:
Go for the Roth. "For me, hands down the best choice is the Roth. The reason is two of the greatest words ever put together in the English language: TAX FREE!" -- Sean D.
Go for the traditional. "I love getting that tax deduction every year, so I always invest the maximum I can in my traditional IRA." -- Seattle Sailor
Go for both. "I'm equally invested in both. My income fluctuates, so if I make more than the Roth limit, I invest in a traditional. If not, I invest in a Roth." -- Josh L.
To help you decide which type is right for you, use my overview of IRA rules.
The Armchair Millionaire checklist of IRA rules Who can contribute. Traditional IRAs are available to anyone under age 70-1/2 who has any amount of earned income. If you participate in an employer retirement plan, your contribution may not be tax deductible, depending on your income. Roth IRAs are available to anyone earning less than $110,000 (for single filers) or $160,000 (married filing jointly).
How much you can contribute. Both types let you contribute up to a combined total of $3,000 for 2002. If you're age 50 or older, this amount is $3,500.
When you can make withdrawals. In general, you'll have to pay a 10 percent penalty, plus taxes, if you withdraw money from a traditional IRA before age 59-1/2. For the Roth, you can withdraw your contributions at any time without penalty, but will have to pay the penalty and tax on withdrawals of your earnings if you're under 59-1/2 and have had the account open less than five years. There are some important exceptions that allow you to avoid these penalties for both types of IRAs, so be sure to check with a tax advisor before making withdrawals.
When you must make withdrawals. You're required to start making withdrawals from (and paying taxes on) a traditional IRA by age 70-1/2. The Roth has no such requirement.
The bottom line When
it comes to choosing between a Roth IRA and a traditional IRA, don't
ignore the forest because of the trees. The most important move is to
begin and maintain any kind of long-term savings plan. Either choice will
help to ensure a long and fulfilling retirement.
Commentary
by John Moore After the last newsletter, my friend, Gary Davis of Thumbs Up! Coaching, challenged the conclusions of the article about deferred plans versus the Roth IRA and suggested that I read "Rich Dad's Prophecy" by Robert Kiyosaki.
I ran to the library and started reading. I'll be commenting about Robert's book in two weeks, so stay tuned.
I
wanted to thank Gary and encourage all of you to help me "think
outside the box!" Gary's expertise in "thinking outside
the box" is
what makes him an exceptional coach. Thumbs Up! coaching specializes
in coaching estate
planning business professionals and small-business entrepreneurs to be the
best at who you are and what you do. For more information email Gary
at TheCoach@ThumbsUpCoaching.com
or go to his website www.ThumbsUpCoaching.com
and signup for his FREE Weekly Coaching Ezine! |
|
DebtFreeGuru.com - Tip of the Week - Monday, July 21, 2003 • PO Box 3782 • Clearwater Beach, FL • 33767 • Voice/Fax: 813-354-2563 • Copyright 2003 DebtFreeGuru.com All Rights Reserved. |
|
|
Please
Forward this to Everyone You Care About! It's
Your Money – Keep More of It! DebtFREEGuru.Com
is proud to offer: Conscious Prosperity: The
Secret to Simple and Lasting Personal Wealth By
John Moore - $49.95 - 312 Information Packed Pages! A part of all proceeds is donated to the Ministerial Endowment Fund created to provide financial assistance to ministerial students while in school! Generous Bookseller Discounts for Bookstores! We've partnered with PayPal to facilitate you ordering online! FREE Shipping! - !Order Now! It's
Your Money – Keep More of It! |
|
|
Here's What People Are Saying About Conscious
Prosperity: "Your practical approach to debt resolution has made a difference in my life and in the lives of several members of this congregation. If anyone wants to know how to apply spiritual principles to become debt-free, I'll be glad to send them your way." - Rev. Thomas W. Shepherd, Sr. Minister, Sunrise Unity Church, Citrus Heights, California and author of Glimpses of Truth "People
in our congregation are using John Moore's program to literally change
their lives. His workshop attracted a large crowd and prompted calls to
"bring back that 'debt-free guy!"" "Thanks, John! Your workshop was the best of any kind we've attended
in 36 years of marriage. You
gave us a step-by-step way to manage our money, and now we're debt-free
and watching our savings grow."
"We did not have to cut way back to succeed. The only thing that we had to do was stop spending on credit. We have gone from 12 debts to 4, soon to be 3. We are looking forward to NO DEBTS! Amazing program. Simple and doable!" – Holly and Mark G., Dietitian and Registered Nurse, Tallahassee, Florida |
|
The Author John S. Moore has been facilitating financial planning, cash management, investment and personal growth workshops throughout the United States for more than twenty years.
In hundreds of workshops over the past 10 years, John has taught thousands of people how to live a debt-free, stress-free lifestyle. He teaches primarily at Unity, Religious Science and Science of Mind churches, as well as other churches, schools and corporations around the United States. |
|
Copyright © 2003 John Moore • PO Box 3782 • Clearwater Beach, FL • 33767 • Voice/Fax: 813-354-2563 • |