Comments on: Response to Comments on the 10% Compounding Myth http://www.lazymanandmoney.com/response-to-comments-on-the-10-compounding-myth/ Saving, Earning, and Investing Money Sat, 11 Feb 2012 03:58:23 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Yosef Katz http://www.lazymanandmoney.com/response-to-comments-on-the-10-compounding-myth/comment-page-1/#comment-593103 Yosef Katz Thu, 21 Jul 2011 00:44:41 +0000 http://www.lazymanandmoney.com/response-to-comments-on-the-10-compounding-myth/#comment-593103 People that are less schooled reading about Roth IRA might think it is tax free. It is definitely not, there is no escape from taxes. The dollars that go into the Roth IRA are from taxable compensation or post tax dollars. Your reward for paying up front is that on the back end your earnings do not get taxed. This is actually potentially huge, so there is a limit as to how much you can put in your Roth IRA (sorry this sounds obvious but to some newer to the Roth concept it is not obvious). Tax Deferred is just that, this chart should be helpful to newer folk, specifically the line Tax Implications. Some are pre-tax dollars but no deduction (however employer may match or partial match) and some are post-tax with a filing deduction, etc... People that are less schooled reading about Roth IRA might think it is tax free. It is definitely not, there is no escape from taxes. The dollars that go into the Roth IRA are from taxable compensation or post tax dollars. Your reward for paying up front is that on the back end your earnings do not get taxed. This is actually potentially huge, so there is a limit as to how much you can put in your Roth IRA (sorry this sounds obvious but to some newer to the Roth concept it is not obvious).

Tax Deferred is just that, this chart should be helpful to newer folk, specifically the line Tax Implications. Some are pre-tax dollars but no deduction (however employer may match or partial match) and some are post-tax with a filing deduction, etc…

]]> By: Lazy Man http://www.lazymanandmoney.com/response-to-comments-on-the-10-compounding-myth/comment-page-1/#comment-1098 Lazy Man Sat, 06 Jan 2007 23:13:57 +0000 http://www.lazymanandmoney.com/response-to-comments-on-the-10-compounding-myth/#comment-1098 Well they are mitigated in both, but in the Roth IRA you just pay the taxes when the income is earned. Well they are mitigated in both, but in the Roth IRA you just pay the taxes when the income is earned.

]]> By: My Financial Journey http://www.lazymanandmoney.com/response-to-comments-on-the-10-compounding-myth/comment-page-1/#comment-1097 My Financial Journey Sat, 06 Jan 2007 23:02:01 +0000 http://www.lazymanandmoney.com/response-to-comments-on-the-10-compounding-myth/#comment-1097 <i>And while taxes can be somewhat mitigated, even with 401k and Roth IRAs they are far from eliminated. I take issue with this statement. How are taxes not mitigated in a Roth IRA account? And while taxes can be somewhat mitigated, even with 401k and Roth IRAs they are far from eliminated.

I take issue with this statement. How are taxes not mitigated in a Roth IRA account?

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