The Roth IRA was first authorized in 1998. It offered an opportunity to do the opposite of what the Traditional IRA (TIRA) offered. As you may know, the TIRA is tax deductible , but withdrawals are taxed. The Roth is funded with after tax money, but it grows and is withdrawn with no further tax due.
Seems simple, no? If it were that easy, there wouldn’t be any reason for RothMania, and there wouldn’t be hundreds of articles every week both in the financial press as well as the blogosphere. The strategies are not so obvious, nor are they commonly understood. Understanding the Roth IRA options can help you save quite a bit of taxes over your lifetime and that should be your goal, to minimize your lifetime tax bill. So, after five years of writing at my main site JoeTaxpayer.com I wanted to have an opportunity to focus on this one important retirement account option.
As we move forward, I’ll be discussing strategies for the early stages, the deposit decision, then whether the conversion of traditional (IRA or 401(k)) assets makes sense, and finally the withdrawal strategies. Along the way, you see that tab above, “Ask A Question”? If you have a specific scenario you’d like discussed please ask. I’ll quickly respond either as a simple Q&A or detailed article to address the question.
Again, welcome to RothMania,