Dear Ephemeral or anyone else who probably has an IRA

[Fit of Rage]

Is there realistically any reason why I would choose to do a Roth IRA over a traditional IRA?

Example: Say I had 5000 to invest. My marginal tax rate is 25%.

If I did a traditional, I defer the taxes and invest the full 5000. At a 7% return, I would have 74872 after 40 years. In retirement I'll probably be married (which will adjust my marginal tax rate to 15%). That would mean that my net on that investment if I start withdrawing in retirement is 63641.

If I did a Roth, I would pay my taxes up front, (1250 on 5000) and leave 3750 to invest. The same math over 40 years yields 56154.

In what world would I choose to do a Roth IRA over a traditional IRA? The reason I ask is that I have T Rowe Price and other investment calculators recommending me Roth IRAs.

[Ephemeral]

I think they only make sense for those with special distribution needs. High end income, later in life, and wanting certain ways to control the disposition the funds.
eph

[Pandagirl!]

I do a traditional 401k and a Roth IRA just in order to diversify my risk. Plus, my tax rate later might be higher due to the fact my future husband and I will be making bank.

[Fit of Rage]

My only argument against that is that I think each of you can only invest 5k annually into an IRA (so 10k combined) and then each of your 401ks has a 16k limit annually. If you and future husband are indeed making bank, how much you put away now will probably not affect you quite as much (since most of the worries of middle aged people have to do with sending their kids to college while trying to pay off their mortgages and save for retirement.

[gran guerrero]

Maybe you should of put Ilya's name in the title, you chased him away from the forums by not thinking of him.

[Zeebu]

i throw money in a shoe box and hope it works out

[Pandagirl!]

My only argument against that is that I think each of you can only invest 5k annually into an IRA (so 10k combined) and then each of your 401ks has a 16k limit annually. If you and future husband are indeed making bank, how much you put away now will probably not affect you quite as much (since most of the worries of middle aged people have to do with sending their kids to college while trying to pay off their mortgages and save for retirement.

Fair point, but I don't think it'll matter too much in the long run since I won't even be eligible to contribute to a Roth IRA within the next 5 years, and I'm already ineligible for tax deductions for a traditional IRA. I guess I like the Roth because there are fewer restrictions on distributions.

[DoTheFandango]

i just stash my money in my mattress.

[the_paul]

Hi Zeebu!

[Zeebu]

hello, paul

[gran guerrero]

No one ever says hello to me

[gran guerrero]

So I pick the world up and drop it on its fuckin head!

[Zeebu]

the world doesnt have a head the world is a head (and people live inside it DARRRRRRRRRRRRRRRRRRRRRRRRRR)

(hi gran)

[gran guerrero]

See I only get Hi's never a fucking Hello. ARRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRR RRRRRRR

[gran guerrero]

(Hi Zeebu)