Roth IRA

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Home : 2001 : October : 24

Roth IRA
By Nancy

Laurie,
A Roth IRA is an Independent Retirement Account. Unlike a traditional IRA, where the money you put into the IRA is untaxed but you pay taxes on the entire retirement amount at the time you retire, with a Roth,
you pay the taxes on the money you are putting into the retirement account, but, you do not have to pay taxes on it at retirement (which I think is 59 1/2 or 60 something). So, any money that your Roth retirement account makes, basically is tax free because you paid taxes on the amount that you invested. But with the traditional IRA, you are paying taxes on you investment plus anything

you investment makes.

The downside with the IRA (both traditional and IRA), is that they rely on the stock exchange. In the last year and a half, both my traditional IRA and Roth IRA have lost over 40% of their value (ouch)