An Oldie But A Goodie

Let me preface this entire discussion by saying that regardless of what I say here, you must talk to your tax advisor before you do anything. Why? Because it’s entirely possible that I have absolutely no idea what I’m talking about!

ira-351x217Be that as it may, there is still at least one good way to save taxes and get a bigger refund for 2014. As boring as it may sound, it’s the good old-fashioned IRA. It is my understanding, based on information that I have received from people far smarter than me, that one can contribute up to $5500 for 2014. In addition, for those of us fifty years old or older, we can contribute an additional $1000 using the ‘catch-up’ provision. These rules apply to both the ‘Traditional IRA’ and the ‘ROTH IRA’. The difference being that the Traditional IRA provides for a tax deduction currently while being taxed on distributions and the ROTH provides for no tax deduction now but no taxes being due on distributions.
This is one of the reasons that you need to talk to your tax advisor. Do you need the tax deduction today or would it be better for you to have a tax free distribution later? That is the $5500 question. Remember, not everyone qualifies for an IRA.

So, let me ask you a question. While it may matter to you individually which of the IRA options you use, from a purely mathematical prospective, do you end up with more money using a Traditional IRA or a ROTH IRA? If you think you know the answer, please visit The Wealth Creator Company’s Facebook page by clicking on The question has already been posted. The first person to get the correct answer and ‘like’ our page will receive a $10 Starbucks card.

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