When I was in law school, I borrowed extra money from my student loans to fund two years of Roth IRA contributions. By my reasoning, the Roth IRA accounts were “use it or lose it” space and it would be silly not to take on additional debt at 6.8% in order to take advantage of $11,000 of tax-free growth forever. It’s probably the only time in my life were I invested on margin, but the benefits of Roth IRA are too big to pass up. They’re wonderful investment vehicles and you should be taking advantage of them too.
Every year around bonus time, inevitably someone will ask why bonuses are taxed at a higher rate than ordinary income.
How you can use these strategies to build a mega Roth IRA balance.
The answer is that it depends on various factors, but on average the Traditional 401(k) is the way to go.
Are you skipping 401(k) contributions because you’re afraid you might have to pay the 10% early withdrawal penalty? It’s not such a big deal.
One benefit of a taxable investing account is that you can take advantage of tax loss harvesting.
It pays to make sure you have access to tax-free money, tax-deferred money and some taxable money, especially during the withdrawal phase of retirement.
Readers should be thankful that Senator William Roth sponsored the legislation back in the 1990s to establish the Roth IRA.
Many people don’t know if they’re paying AMT and what steps they can take to avoid the tax if possible.
Donating appreciated stock to charity is a win-win for both you and the charity as neither party will have to pay taxes on the capital gains.
Funding a Roth IRA in law school could give you an early start on retirement savings and be a helpful way to force some extra savings.