• http://financialmoneytips.com/ Kody

    I’ve always thought traditional IRA’s were the ones that are tax deductible. You are the expert though, so now I know that Roth’s are better to roll over to. I’m glad I read this post as I learned something new today!

    • Kira Botkin

      I’m not sure I follow you – there is a difference between tax deductible and tax exempt, and it depends on whether you are putting money in or taking money out. Traditional IRAs are tax deductible, so when you put the money in you get to deduct that money on your taxes, but when you take it out, you must pay taxes on all the money including earnings. Roth IRAs don’t give you any tax deductions when you put the money in, but they’re tax exempt, which means that when you take the money out, you don’t pay taxes on that money, including earnings. That’s why if you’re planning to leave the money alone for decades, and hope it’ll grow a lot, it often makes financial sense to pay the taxes now so you can avoid paying them later.

  • N8

    Good points Kira. Even though we’re years from retirement, we were fortunate to sell a home that stretched us a little much so that we’d have money to get out of debt and save for things like retirement. This is something that should be at the forefront of our thinking.

  • http://www.nuviewira.com/ NuViewIRA

    Planning for retirement is no easy task. With all the rules, exceptions, and various places to put your money it can be a challenging endeavor. Placing money into Traditional or Roth IRA’s is a safe way to grow your accounts. Opening a self-directed IRA can increase your returns further. But I definitely agree that knowing what you can and cannot afford when retirement comes is especially important to maintaining your financial freedom.

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