Pick one peer’s post and review. Then comment in no less than one paragraph why you found the information helpful, informative, etc. You must present new ideas and/or thoughts.
Peer Discussion Post:
Both a Roth IRA and a Traditional IRA are both ways to of
saving money. However there are some key differences between the two. Like how
with a Roth IRA you have to pay tax and contributions when you put money into
them. This allows you to have tax free withdraws later down the road. With a
Traditional IRA you do not pay taxes when you put money in but, you do have to
pay taxes when you withdraw your money. When thinking about which saving
account you should contribute to you should think of what your tax bracket is
now and what it will be later in your life. If your tax bracket is low right
now than it would be a good idea to start a roth IRA because you will pay less
in taxes. However if you think your tax bracket is going to decrease that a
traditional IRA might be the right option for you. Both traditional and roth
IRA have the same contribution limits for 2022, which is $6,000. With a roth
IRA contributions are tax free and penalty free at any time however, your
earnings have some stipulations on them. You have to wait 5 years after your
first contribution and once you hit 59 and 1/2 then your earnings are tax free
and penalty free too. With a traditional IRA your withdrawals become penalty
free once you hit 59 and 1/2 years. With a traditional IRA distribution are
required once you reach the age of 72 but with a roth IRA distributions are not
required at a certain time. Both a traditional IRA and a roth IRA do not have
age restrictions on them when it comes to contributions. In the long run if you
can afford to pay the taxes now then a roth IRA is better for you. Not having
to worry about paying taxes when you want to withdraw your money is a huge
benefit.
