Message Font: Serif | Sans-Serif
 
No. of Recommendations: 0
I've been trying to figure out how to make it to 20 years in the military and then call it quits.

As a new investor I'm trying to decide between a Roth IRA and a traditional IRA if I'm going to pull money out for quite a while before hitting traditional retirement age.

From what I understand, the benefit of a Roth IRA is that withdrawals up to your contributions total, and 'qualified withdrawals' after 59.5 are all tax free.

But if I want my money out before I'm 59 and a half years old, I'm going to be stuck paying income tax, plus 10% if I don't use a 72(t) distribution plan.

No matter what, it sounds like I'm going to pay tax on what goes in and on what comes out!

Assuming I do manage to retire early, I'm thinking a traditional IRA would make a lot more sense. I'll get taxed on the way out just like I would making early withdrawals on a Roth, but at least this way I can dodge taxes on the way in. Am I missing something here?
Print the post  

Announcements

What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.