The Motley Fool Discussion Boards

Previous Page

Investing/Strategies / Retirement Investing

URL:  http://boards.fool.com/heres-the-table-comparison-using-my-rational-of-10890110.aspx

Subject:  Re: IRA'S Date:  5/24/1999  3:09 PM
Author:  whd23 Number:  10737 of 74759

Here's the table comparison using my rational of
fully funding both types of IRA and investing the
tax savings of the Traditional IRA.  Since the tax
savings are invested in a non-IRA account, you will
be paying taxes on the gain.  To break even with
the Traditional IRA, your tax rate would have to
drop to %21 at the time of withdrawal.

-Bill

Traditional IRA     +   Non-IRA
--------------------------------------------
capital:     $2     |  $1
Double #1:   $4     |  $1.50 ($2 - Tax: $0.50)
Double #2:   $8     |  $2.25 ($3 - Tax: $0.75)
Double #3:  $16     |  $3.37 ($4.50 - Tax: $1.13)

Total: $11.36
(IRA $16 less $8 tax + $3.36 of Non-IRA balance)

Roth IRA (Uncle Sam gets the $1 of tax)
---------------
capital:     $2
Double #1:   $4
Double #2:   $8
Double #3:  $16

Total:      $16 (tax free)

Copyright 1996-2014 trademark and the "Fool" logo is a trademark of The Motley Fool, Inc. Contact Us