Rocking Roths

Roth IRAs are a supplements to 401Ks

  • A Roth IRA is a retirement account that is funded with post tax dollars instead of pre-tax dollars. It usually has limits of how much you can contribute per year. For 2019 it is $6000.
  • You can use this as a supplement to 401Ks. They work much the same
  • As the funds are paid for by post-tax dollar you are not taxed when you withdraw the money in your golden years.
  • The advantage to these is changes in tax rate. If you expect your tax rate to go up over time putting in when you rate is low and taking out when you rate is high would be the idea. That is you become richer.
  • I say max out your 401K annual limit first before you put in anything here as these are post tax. I don’t this for example as I have too many expenses associated with children. I want to max out 401K to reduce my taxes too.
  • Lots of financial firms offer these and will be happy to tell you all the gory details about early withdrawl fees, maximums etc.
    • Fidelity Investments is one such place
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