p******r
发帖数: 1279 | 1 why do we need tax-deductable IRA? especially "self-created" traditional IRA
? (I know Roth IRA can avoid tax on earnings)
as far as I know, the only difference between you put money into IRA account
and you don't, is that you pay tax for those money RIGHT NOW or you pay IN
THE FUTURE.
But either way you still have to pay!
The only only benefit i can think of is that if your employer provides IRA
for you, then he should match your contribution like 3%-----that's the only
"extra money" you can benefit from IRA.
so why bother??
correct me if my understanding is wrong. |
T*********e
发帖数: 9208 | 2 税率不一样，退休后还可以用deduction
IRA
account
IN
only
【在 p******r 的大作中提到】
: why do we need tax-deductable IRA? especially "self-created" traditional IRA
: ? (I know Roth IRA can avoid tax on earnings)
: as far as I know, the only difference between you put money into IRA account
: and you don't, is that you pay tax for those money RIGHT NOW or you pay IN
: THE FUTURE.
: But either way you still have to pay!
: The only only benefit i can think of is that if your employer provides IRA
: for you, then he should match your contribution like 3%-----that's the only
: "extra money" you can benefit from IRA.
: so why bother??
|
p******r
发帖数: 1279 | 3 I know i will be in "lower tax bracket" if I put money into IRA account
but if in the future I want to withdraw the bulk money, how do they caculate
the money? since it is a "bulk" money, would it be taxed more?
Thanks!
【在 T*********e 的大作中提到】
: 税率不一样，退休后还可以用deduction
:
: IRA
: account
: IN
: only
|
f*****n
发帖数: 44 | 4 you do not have to pay tax on earning every year even if you trade stocks/
funds frequently, that will affect a lot in the 30year horizon
IRA
account
IN
only
【在 p******r 的大作中提到】
: why do we need tax-deductable IRA? especially "self-created" traditional IRA
: ? (I know Roth IRA can avoid tax on earnings)
: as far as I know, the only difference between you put money into IRA account
: and you don't, is that you pay tax for those money RIGHT NOW or you pay IN
: THE FUTURE.
: But either way you still have to pay!
: The only only benefit i can think of is that if your employer provides IRA
: for you, then he should match your contribution like 3%-----that's the only
: "extra money" you can benefit from IRA.
: so why bother??
|
h********8
发帖数: 7355 | 5 干嘛非＂take out in bulk＂？第二年不过了？每次提一点儿呗。
caculate
【在 p******r 的大作中提到】
: I know i will be in "lower tax bracket" if I put money into IRA account
: but if in the future I want to withdraw the bulk money, how do they caculate
: the money? since it is a "bulk" money, would it be taxed more?
: Thanks!
|
Q***u
发帖数: 433 | 6 The power of compounding. You don't have to pay taxes right away, so the
taxes stay in your account, working for you. That's free money lent to you
by the government and, compounding for 30 years, it can make a huge
difference. |
a*****n
发帖数: 5158 | 7 你算过么?
如果税力不变，for traditional ira 你算算看看是不是一样的
【在 Q***u 的大作中提到】
: The power of compounding. You don't have to pay taxes right away, so the
: taxes stay in your account, working for you. That's free money lent to you
: by the government and, compounding for 30 years, it can make a huge
: difference.
|
Q***u
发帖数: 433 | 8 Don't understand what you meant. Aren't we talking about traditional IRA
here? Or...is the LZ trying to compare Roth and traditional IRA? Didn't see
that in the original post.
【在 a*****n 的大作中提到】
: 你算过么?
:
: 如果税力不变，for traditional ira 你算算看看是不是一样的
|
K****D
发帖数: 30533 | 9 I have done calculation.
401k/traditional IRA beats regular investment account, even
considering same tax bracket at retirement; even if you only
do long term investment in regular account.
The conclusion is actually quite sad to me. I am a 401k hater.
【在 a*****n 的大作中提到】
: 你算过么?
:
: 如果税力不变，for traditional ira 你算算看看是不是一样的
|
K****D
发帖数: 30533 | 10 Actually even if your current tax bracket is 15% and it is 25%
at retirement, the conclusion may still hold. I forgot the details
and my excel file was lost due to a hard disk failure.
【在 K****D 的大作中提到】
: I have done calculation.
: 401k/traditional IRA beats regular investment account, even
: considering same tax bracket at retirement; even if you only
: do long term investment in regular account.
: The conclusion is actually quite sad to me. I am a 401k hater.
|
|
|
p******r
发帖数: 1279 | 11 To my knowledge,
I think only Roth IRA can have tax exemption on earnings.
traditional IRA DOES need pay tax for earnings...
【在 f*****n 的大作中提到】
: you do not have to pay tax on earning every year even if you trade stocks/
: funds frequently, that will affect a lot in the 30year horizon
:
: IRA
: account
: IN
: only
|
a*****n
发帖数: 5158 | 12
如果现在的税率同将来一样的话，
roth and traditional,两个税后的钱是一样的
【在 p******r 的大作中提到】
: To my knowledge,
: I think only Roth IRA can have tax exemption on earnings.
: traditional IRA DOES need pay tax for earnings...
|
a*****n
发帖数: 5158 | 13 u r right,i had thougt roth vs traditional
see
【在 Q***u 的大作中提到】
: Don't understand what you meant. Aren't we talking about traditional IRA
: here? Or...is the LZ trying to compare Roth and traditional IRA? Didn't see
: that in the original post.
|
p******r
发帖数: 1279 | 14 Did you do this in a 30-year-long horizon?
what if I plan to buy a house within 5 or 8 years?
is it still worth putting money in traditional IRA right now?
【在 K****D 的大作中提到】
: Actually even if your current tax bracket is 15% and it is 25%
: at retirement, the conclusion may still hold. I forgot the details
: and my excel file was lost due to a hard disk failure.
|
Q***u
发帖数: 433 | 15 In that case, I strongly suggest you to invest in Roth. That way, you can
withdraw your contributions anytime AND you can withdraw up to $10,000 of
your gains per Roth account for qualified first time home purchase without having to pay penalties and taxes.
【在 p******r 的大作中提到】
: Did you do this in a 30-year-long horizon?
: what if I plan to buy a house within 5 or 8 years?
: is it still worth putting money in traditional IRA right now?
|
K****D
发帖数: 30533 | 16 I did 30-year, and assuming regular account only buy-and-hold
(i.e., only gets charged capital gain once in the end at 15%
tax rate). However, due to distribution/dividend, you still have
to pay a little tax every year.
If you need to buy a house and cannot afford the downpay, then
I suggest not doing traditional IRA. You may consider to get
a loan from 401(k) though. That's a very cheap way, but you
MUST make sure you can pay back in time (time limit 5 years?),
otherwise it becomes a tragedy which you will regret for life.
【在 p******r 的大作中提到】
: Did you do this in a 30-year-long horizon?
: what if I plan to buy a house within 5 or 8 years?
: is it still worth putting money in traditional IRA right now?
|
K****D
发帖数: 30533 | 17 LZ asked about traditional IRA, which indicates he/she doesn't
qualify for Roth, or do not have a big amount in existing Roth.
If that's the case, it's too late to start now even if he/she
does the conversion. The benefit is not obvious.
having to pay penalties and taxes.
【在 Q***u 的大作中提到】
: In that case, I strongly suggest you to invest in Roth. That way, you can
: withdraw your contributions anytime AND you can withdraw up to $10,000 of
: your gains per Roth account for qualified first time home purchase without having to pay penalties and taxes.
|
Q***u
发帖数: 433 | 18 五年，两个人光本金就能放进Roth至少50,000。八年的话当然更多。到时候光本金取出
来就差不多够downpayment了（当然取决于买什么样的房子）。这样即使没有太多
return，那也是tax free的，可以继续保留在Roth里。可如果不存Roth，你这笔
downpayment saving这5-8年里的return都是taxable的，有什么好处？
当然，如果他们收入超过了Roth contribution limit，那就当我白说了。 |
s********n
发帖数: 1962 | 19 I guess your confusion is here:
For simplicity, let's assume before tax each year you get a
return of 5% on your money, your tax rate is 40%, and this holds
true for 30 years. And suppose you have 100K before-tax money
right now.
If you invest it in IRA, after 30 years, you get
100K*1.05^30*(1-0.4)=259.3K
If you do it in regular account, after 30 years, you get
100K*(1-0.4)*(1+0.05*(1-0.4))^30 = 145.6K
It's not hard to see that the benefit comes from the difference
between 1.05^30 and 1.03^30.
traditional IRA
account
pay IN
IRA
only
【在 p******r 的大作中提到】
: why do we need tax-deductable IRA? especially "self-created" traditional IRA
: ? (I know Roth IRA can avoid tax on earnings)
: as far as I know, the only difference between you put money into IRA account
: and you don't, is that you pay tax for those money RIGHT NOW or you pay IN
: THE FUTURE.
: But either way you still have to pay!
: The only only benefit i can think of is that if your employer provides IRA
: for you, then he should match your contribution like 3%-----that's the only
: "extra money" you can benefit from IRA.
: so why bother??
|
K****D
发帖数: 30533 | 20 Smart guys like you would not day trade in regular account.
They buy and hold and sell once after 30 years to pay 15%
tax on capital gain.
However, even with that, IRA/401k still comes ahead...
【在 s********n 的大作中提到】
: I guess your confusion is here:
: For simplicity, let's assume before tax each year you get a
: return of 5% on your money, your tax rate is 40%, and this holds
: true for 30 years. And suppose you have 100K before-tax money
: right now.
: If you invest it in IRA, after 30 years, you get
: 100K*1.05^30*(1-0.4)=259.3K
: If you do it in regular account, after 30 years, you get
: 100K*(1-0.4)*(1+0.05*(1-0.4))^30 = 145.6K
: It's not hard to see that the benefit comes from the difference
|
|
|
S**C
发帖数: 2964 | 21 Not if your 401(k) plan charges you 1% "administration" fee and the fund
lineups are lousy and ERs close to 2%.
【在 K****D 的大作中提到】
: Smart guys like you would not day trade in regular account.
: They buy and hold and sell once after 30 years to pay 15%
: tax on capital gain.
: However, even with that, IRA/401k still comes ahead...
|
D*****I
发帖数: 8268 | 22 但是你不用每次买卖都付
【在 p******r 的大作中提到】
: To my knowledge,
: I think only Roth IRA can have tax exemption on earnings.
: traditional IRA DOES need pay tax for earnings...
|
K****D
发帖数: 30533 | 23 Ouch! There are actually 401k plans like that?
【在 S**C 的大作中提到】
: Not if your 401(k) plan charges you 1% "administration" fee and the fund
: lineups are lousy and ERs close to 2%.
|
D*****I
发帖数: 8268 | 24 yep
【在 K****D 的大作中提到】
: Ouch! There are actually 401k plans like that?
|
S**C
发帖数: 2964 | 25 You wonder why there are so many terrible funds out there thriving? That is
why.
【在 K****D 的大作中提到】
: Ouch! There are actually 401k plans like that?
|
t*m
发帖数: 4414 | 26 there is a "5 year rule" if you want to withdraw your ROTH principle
【在 Q***u 的大作中提到】
: 五年，两个人光本金就能放进Roth至少50,000。八年的话当然更多。到时候光本金取出
: 来就差不多够downpayment了（当然取决于买什么样的房子）。这样即使没有太多
: return，那也是tax free的，可以继续保留在Roth里。可如果不存Roth，你这笔
: downpayment saving这5-8年里的return都是taxable的，有什么好处？
: 当然，如果他们收入超过了Roth contribution limit，那就当我白说了。
|
a*****n
发帖数: 5158 | 27 在这都抄了n次了，还在提神马5 year rule
【在 t*m 的大作中提到】
: there is a "5 year rule" if you want to withdraw your ROTH principle
|
K****D
发帖数: 30533 | 28 There is NOT.
【在 t*m 的大作中提到】
: there is a "5 year rule" if you want to withdraw your ROTH principle
|
t*m
发帖数: 4414 | 29 what? 5-year rule only apply to the earnings? not principle?
【在 a*****n 的大作中提到】
: 在这都抄了n次了，还在提神马5 year rule
|
s****i
发帖数: 2993 | 30 apply to rollover.
【在 t*m 的大作中提到】
: what? 5-year rule only apply to the earnings? not principle?
|
|
|
p******r
发帖数: 1279 | 31 yes your are right. That's the benefit coming from the tax i should pay
right now but instead i pay after 30 years.
Then it comes with my second question:
the "investment return" is always positive, isn't it? Any chance that I
invest some risky mutual fund and lost money? or I just invest all my money
in U.S bonds?
【在 s********n 的大作中提到】
: I guess your confusion is here:
: For simplicity, let's assume before tax each year you get a
: return of 5% on your money, your tax rate is 40%, and this holds
: true for 30 years. And suppose you have 100K before-tax money
: right now.
: If you invest it in IRA, after 30 years, you get
: 100K*1.05^30*(1-0.4)=259.3K
: If you do it in regular account, after 30 years, you get
: 100K*(1-0.4)*(1+0.05*(1-0.4))^30 = 145.6K
: It's not hard to see that the benefit comes from the difference
|
Q***u
发帖数: 433 | 32 "The investment return is always positive". --Pal, you must have been living
in a different world from us. Return is always associated with risk. You
want something better than a CD? Then you need to live with the added risk
of losing some of your money. It's that simple. No pains, no gains. If money
comes in as easy as you have assumed (guaranteed high and constant positive
returns without any risk), we'd all be quitting our jobs by now...
money
【在 p******r 的大作中提到】
: yes your are right. That's the benefit coming from the tax i should pay
: right now but instead i pay after 30 years.
: Then it comes with my second question:
: the "investment return" is always positive, isn't it? Any chance that I
: invest some risky mutual fund and lost money? or I just invest all my money
: in U.S bonds?
|
s********n
发帖数: 1962 | 33 What are you talking about? Nobody ever said the return is
always positive. It's 100% sure that during certain period
your return will be negative, and sometimes could be very
negative, like in 2008, many people lost 50% or even more.
money
【在 p******r 的大作中提到】
: yes your are right. That's the benefit coming from the tax i should pay
: right now but instead i pay after 30 years.
: Then it comes with my second question:
: the "investment return" is always positive, isn't it? Any chance that I
: invest some risky mutual fund and lost money? or I just invest all my money
: in U.S bonds?
|
p******r
发帖数: 1279 | 34 so like I said the return of the U.S treasury bond is always positive, isn't
it??
Or the traditional IRA "investment pool" doesn't have such option like U.S
bonds?
living
money
positive
【在 Q***u 的大作中提到】
: "The investment return is always positive". --Pal, you must have been living
: in a different world from us. Return is always associated with risk. You
: want something better than a CD? Then you need to live with the added risk
: of losing some of your money. It's that simple. No pains, no gains. If money
: comes in as easy as you have assumed (guaranteed high and constant positive
: returns without any risk), we'd all be quitting our jobs by now...
:
: money
|
p******r
发帖数: 1279 | 35 So then if I cannot invest my money to something like US bond which can
provide positive return always, under the constrain of IRA account which
only provide a limited range of investment. Why shall i put my money in it?
With the risk of losing money or the undelying value, I'd rather invest my
money on like Gold or U.S bonds.
【在 s********n 的大作中提到】
: What are you talking about? Nobody ever said the return is
: always positive. It's 100% sure that during certain period
: your return will be negative, and sometimes could be very
: negative, like in 2008, many people lost 50% or even more.
:
: money
|
Q***u
发帖数: 433 | 36 Yes. But you'll have to take inflation into consideration. If you buy some
long-term treasuries today, which has pretty low returns and gives you--just
as an example--3% annual return, then when the inflation becomes higher
than 3% (pretty normal thing when the economy is good), you will in effect
lose money in treasury. Also, I'm assuming you're buying treasuries mutual
funds, then their prices can go down, too, especially when the Feds start to
increase the interest rate, which means you can potentially lose some money
with treasuries, too. Stocks are risky, but historically they give you
better return over 20-30 years.
If you really want to be conservative and yet beat the inflation, you may
consider TIPS. The yields are low, but they are guaranteed by US government
to beat inflation.
't
【在 p******r 的大作中提到】
: so like I said the return of the U.S treasury bond is always positive, isn't
: it??
: Or the traditional IRA "investment pool" doesn't have such option like U.S
: bonds?
:
: living
: money
: positive
|
p******r
发帖数: 1279 | 37 Thank you for explanation and infor!
would like to know more about TIPS
i'll be googling first~
just
to
money
【在 Q***u 的大作中提到】
: Yes. But you'll have to take inflation into consideration. If you buy some
: long-term treasuries today, which has pretty low returns and gives you--just
: as an example--3% annual return, then when the inflation becomes higher
: than 3% (pretty normal thing when the economy is good), you will in effect
: lose money in treasury. Also, I'm assuming you're buying treasuries mutual
: funds, then their prices can go down, too, especially when the Feds start to
: increase the interest rate, which means you can potentially lose some money
: with treasuries, too. Stocks are risky, but historically they give you
: better return over 20-30 years.
: If you really want to be conservative and yet beat the inflation, you may
|
l***s
发帖数: 259 | 38
i thought there is practically NO roth contribution limit starting 2010??
you can always do non deductible tradition and convert right away
【在 Q***u 的大作中提到】
: Yes. But you'll have to take inflation into consideration. If you buy some
: long-term treasuries today, which has pretty low returns and gives you--just
: as an example--3% annual return, then when the inflation becomes higher
: than 3% (pretty normal thing when the economy is good), you will in effect
: lose money in treasury. Also, I'm assuming you're buying treasuries mutual
: funds, then their prices can go down, too, especially when the Feds start to
: increase the interest rate, which means you can potentially lose some money
: with treasuries, too. Stocks are risky, but historically they give you
: better return over 20-30 years.
: If you really want to be conservative and yet beat the inflation, you may
|
P******A
发帖数: 260 | |
