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Learning, Sharing, and Teaching => Investor Alley => Topic started by: FLOW on August 31, 2018, 10:57:27 AM

Title: I feel sheepish asking this, but...
Post by: FLOW on August 31, 2018, 10:57:27 AM
I believe I can fly, I believe I can touch the sky...
Think about it every night and day...

-Honus  Wagner-
Title: Re: I feel sheepish asking this, but...
Post by: markbike528CBX on August 31, 2018, 11:02:59 AM
If you contribute to a traditional tIRA, you are taxed on _everything_ that comes out,  so in the case of tIRA post tax adds, you'd be getting taxed twice.

The Roth IRA you only pay the tax on the income at contribution year, but not taxed at all for withdrawals after 59.5.
Title: Re: I feel sheepish asking this, but...
Post by: EvenSteven on August 31, 2018, 11:09:03 AM
I believe for traditional IRA contributions made after tax, that you are not taxed on those contributions again when the money comes out, but the gains from those contributions will be taxed at your marginal income tax rate when withdrawn. Generally capital gains tax rate will be lower than your regular income tax rate, so you would be better off with a regular taxable account than a post tax tIRA contribution (if you are not doing a back-door Roth.)

The Roth IRA will have those gains be tax free.
Title: Re: I feel sheepish asking this, but...
Post by: reeshau on August 31, 2018, 11:50:42 AM
I believe for traditional IRA contributions made after tax, that you are not taxed on those contributions again when the money comes out, but the gains from those contributions will be taxed at your marginal income tax rate when withdrawn. Generally capital gains tax rate will be lower than your regular income tax rate, so you would be better off with a regular taxable account than a post tax tIRA contribution (if you are not doing a back-door Roth.)

The Roth IRA will have those gains be tax free.

This is correct, which is why everyone just does this to move on to a back-door Roth.  (Because direct Roth contributions also phase out, but at higher income level)  If you can make a Roth contribution, that is the best of these 3 choices, because gains are also tax-free.
Title: Re: I feel sheepish asking this, but...
Post by: EvenSteven on August 31, 2018, 01:42:57 PM
I don't believe you include the standard deduction for determining your MAGI for IRA deductability limits, so add that back on. Looks like a regular front door Roth IRA contribution is the way to go.