A traditional IRA is a lot like a Roth IRA except that there are no income limits – anyone can open one. You have to pay income taxes on the money you take out in retirement. However, if your workplace doesn’t offer a retirement plan, then the first $5,500 you contribute to a traditional IRA is tax deductible (with a few loopholes, as there always are with these things). You can make non-deductible contributions to a traditional IRA, too, meaning you pay taxes on your contributions now, but taking advantage of that requires a lot of bookkeeping
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This is really only a good idea
This is really only a good idea if you’re very concerned about high taxes in retirement or if you’re extremely young and can bank on your i...
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So, if you have $8,000 in a traditional IRA and want to convert it to a Roth IRA, you can do so, but you’ll have to pay income taxes on tha...
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One final note: you’ll occasionally hear talk of a “mega backdoor Roth IRA.” This is a similar tactic that’s perfect for people who want to...
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This is really only a good idea if you’re very concerned about high taxes in retirement or if you’re extremely young and can bank on your i...
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