Traditional IRA vs Roth IRA

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Traditional ira versus roth ira what are the differences between the two today i’m going to share with you guys all the differences between the two as well as the similarities so you guys can decide for yourselves do you want a traditional ira or do you want a roth ira i cannot wait to share this with you guys today good day subscribers thank you so much for

Joining me today i am jeremy this is the financial education channel and today we’re talking traditional ira versus a roth ira and i’m going to explain to you guys the similarities between the two and the differences so you can decide for yourself do you want to get a traditional ira or do you want a roth ira because almost every workplace you’re ever going to work

For in your life is going to ask you that question at some point in time when you’re trying to set up an individual retirement account do you want a traditional or roth and it’s sad that most people have no clue between the differences between the two and they just pick one oh i’ll just take a traditional or whatever because they don’t really know the differences

Between the two so i’m going to explain all that to you guys give you some examples give you some context on both them so hopefully after this video is over you will be an expert on iras and you will be able to tell a friend or family member so you can help them out guys go ahead and hit this thumbs up button if you guys enjoy this today let’s get into this so

Number one difference between the two is a traditional ira you it’s basically taxes that’s the main difference and we’re getting some other differences but taxes is the main reason a traditional ira you can put money into that account basically tax-free for right now but you do have to pay taxes when you start to pull that money out in retirement so whatever tax

Bracket you’re in at that time you’re gonna have to start paying taxes at that point but right now it can go in tax-free a roth ira you pay taxes now so you pay taxes at your current tax rate and then that money goes in and when you actually pull that money out later in retirement you pay no taxes on it so that’s the main difference that’s a key difference because

You got to ask yourself are you paying a lower tax rate then you’ll be paying are you paying a lower tax rate currently then you’ll probably be paying in retirement or are you paying probably a higher tax rate rate now than you will in retirement i tend to be of the belief that a roth ira is better when it comes to taxes for sure and overall i’m a little biased

Toward a roth ira but this is the main reason because i believe tax rates will go up in america over the long term i believe 20 30 40 years from now or i’ll probably be retiring in 40 50 years ago or whatever that i believe the tax rates will be much higher than they are currently now why do i believe tax rates will be a lot higher let’s go into a few i’ll give

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You guys a few quick examples here on why i think tax rates are going to be going up a lot over the next 20 30 40 years so number one is we know republican presidents and republican administrations generally speaking they like to lower tax rates right well the problem is the last two presidents we had in this country that were republicans were very weak when it

Came to private sector jobs uh you know bush senior was not very strong at all as i’m showing you on the chart here these are the amount of private sector jobs created in the millions and then then bush bush junior was just a a wreck you know he was horrible so and then basically we had clinton very strong and then obama was just you know good but nothing amazing

So when you look at that right there alone the next four to eight years is going to kind of decide whether we start going to more of a democratic tank maybe even socialist system in this country because if there’s a third president that’s very weak when it comes to private sector jobs i believe a lot of the independent voters which are the ones you really need

To push you and get you to be president in this country the independent voters are really who decide that because there’s a certain amount of people that are are always going to be die-hard republicans there’s a certain amount of people are always going to be die or democrats it’s the independents that really can decide elections so if an independent looks at it

And if say if trump has a weak presidency that could hurt the republican party long term big time which would then have a much higher chance of tax rates being much higher over time because generally speaking democrats like to raise taxes over time and then we have this new kind of party kind of forming which is more like a socialist type party almost we saw

Bernie sanders come out of nowhere and nearly beat hillary clinton he came out of nowhere he was a nobody and he be almost one of the most famous people in america oh one of the most famous people hillary clinton he almost beat her he came out of nowhere and with very little media attention so america is definitely pushing more toward a socialist system when you

Have a socialist candidate run like that and honestly if if he would have gotten more media attention the way he was the way he was starting to pull them the way he was kind of rising he probably could have beat hillary clinton and he maybe even would have been president right now so that that shows i mean i’ve never seen that in my lifetime where a socialist

Candidate had a legit a legit shot of winning the presidency so that’s definitely a sign that we could be kind of going that way also uh that that will raise a lot of taxes socialist systems you’re gonna look around most social systems in europe and one dollar tax rates are generally very high next one up you see the national debt in this country the national

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Debt is unbelievable we’re nearly at 20 trillion dollars in national debt i mean this is a this is a meme here we have and this is kind of a funny meme but it’s kind of sad at the same time says welcome to america it’s a little baby on the ground there welcome to america your share of the national debt is 42 344.37 will that be cash or credit card that meme is

Like hilarious but it’s so sad and the number is probably higher now and it’s true so how do we pay off that debt over time probably probably speaking we’re probably gonna have to raise taxes in this country so it’s a big it’s a big thing that i’m kind of like do would i rather just pay my taxes now and then not pay taxes down the road or would i rather risk

Being you know who knows more more in a socialist system where maybe my tax rate might be 50 60 something like that in retirement that’s a big question guys so for me that’s the number one reason that i would go with a roth ira you got to ask yourself are your tax rates going to be lower now than they will in the future or higher now than they will in the future

And that’s going to really decide on which plan you pick let’s get into a couple more points here so you guys can understand a couple more differences and similarities so withdrawal rules a traditional ira makes you start require taking out basically the minimum amount at age 70 and a half now these rules can always change because congress they change rules all

The time but as of right now that’s the rule so traditional iras you have to you’re forced to start taking out at least minimum payments at age 70 and a half so keep that in mind guys a roth ira you don’t ever have to take money out of that roth ira if you don’t want to that can grow for your entire lifetime meaning if say you’re you’re doing pretty well in life

And you don’t ever need to touch that roth ira you can transfer that to your son or whoever you want or your daughter or whatever family member or whatnot so it’s really good as far as transferring wealth and you know some people understand that are kind of higher up but not a lot of people really understand it’s a great way of transferring wealth because it can

Grow for your entire lifetime until the day you die and then you can just you know have that transferred over so that’s a big plus for a roth ira if you’re someone that’s not even going to really need that money might be something you want to do it’s a roth ira number three when can you start taking out qualified distributions that’s age 59 for both of them age


59 is when you can start taking out without penalties and things like that so keep that in mind number four income limits a traditional ira anyone with earned income can contribute to a traditional ira so that you can make 10 million dollars a year you can make 10 000 a year you can contribute to a traditional ira that you know as much as you want a roth ira you

Cannot contribute if you’re making over 194 000 as a couple if you’re you’re married with somebody or if you’re single 132 000 so you’re really limited on how much you can actually contribute to a roth ira the reason being is i think i think the reason the government does that is probably because of the wealth transfer thing i was talking about where you can you

Can just have it grow for your whole lifetime and then transfer wealth and imagine if some you know super wealthy person was doing 20 million dollars in that a year 30 million dollars i think the government doesn’t want that happening so i think that’s why they limit the roth iras to 132 000 uh income or 194 000 if you’re if you’re a couple so uh that’s another

Thing to take into account guys but basically these are the differences between a traditional ira a roth ira like i said a roth ira is a way i’ve gone in the past and when i create iras in the future i’ll probably do roth iras just because i feel like tax rates will be much more expensive 20 30 40 50 years i mean when i i’m 27 now so when i’m you know thinking

About taking out some money is 30 40 50 years from now guys that’s a long time from now and i think tax rates will definitely be higher especially especially if for some reason the trump administration does not do a good job as far as creating jobs in an economy over all because i can i do not believe the republican party can take a third big hit as far as a

Third poor president and in a row as far as job creation goes and the economy goes so this will be something to keep an eye out for guys pay attention to this what do you guys think would you sign up for a traditional roth uh traditional ira or roth ira and if you have one at your workplace or you’ve created one you know you’re a business owner like myself and

You created one did you do a traditional or did you do a roth and why did you do it i would love to hear from you guys in the comment section leave this video a thumbs up if you enjoyed i hope you did i hope you learned a lot from it if you have not subscribed yet you may want to we talk personal finance in the channel this is a personal finance video we talk

Entrepreneurship i’m a business owner i give away a lot of business tips and we talk the stock market the most in this channel and how to make your money into money thank you for watching guys and have a great day

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Traditional IRA vs Roth IRA By Financial Education

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