What is the difference between a traditional 401(k) or IRA and a Roth?
The traditional 401(k) is a vehicle where you put money in and you get a tax deduction on it. But when you take it out, it is all taxable, plus the earnings. So to me that is really a trap for the future. With a Roth, it is the other way around. You put the money in and you don’t get a tax deduction up front, which costs you a little more, but the big back end is that you get a windfall tax-free for the rest of your life. The last thing on Earth you want in retirement is to have to pay taxes on the money you are pulling out. And because you will have already paid the taxes up front, you avoid the risk of tax rates going up. I believe tax rates will go through the roof because of several impending financial crisis involving Social Security, Medicare and pension. If you have a few hundred thousand in a Roth IRA, that is really worth twice as much as a fund with traditional money, half of which could go to the government. Are there any other benefits to a Roth? Another huge benefit that m
