IRA accounts for TAX filing benefits..Help

[Pavanonline]

1 hour ago, ameriprise said:

oh so next yr if I take it back,,I will loose 1500 + 600 penalty. total 2100$ if I take it before 59 yrs every yr.so saving 1500$ a yr  with a investment of 6000$...

 

Guys long term ki benefit ayi undachu..but naku ee yr tax saving ki checking...in my case i want to take it back after few month/yrs so for shot term benefits ki IRA contribution waste we pay Tax bracket amount + 10% penalty so in my case for 6000$ if i save 1500$ this yr, next yr I f i take it I have to pay 1500$+ 600$ total 2100$ anthey kada...

Yes.

One more caveat. In short term, investment can go down as well. Few years(5 years) ithe you are relatively safe, but if you plan take money out for few months, my advise is don't open it.

[SwamyRaRa]

Ltt

[SwamyRaRa]

Ltt

[KasakRaja]

On 5/17/2021 at 9:47 AM, ameriprise said:

could you explain Bro...how we get benefit...59 yrs varaku 6000$ unchuthey tax free antunnadu almost 4+ laks kada next 30 yrs andulo pedithey manaku labam enti.

you can get that 6000 later anukunta if it is ROTH IRA. 

but if want to get profits out of it before 59.5 years, then you have to pay penalty.

 

LTT for experts

[astalavistaa]

On 5/17/2021 at 9:01 PM, phatposts said:

Short answer - Go for IRA. Your CPA is right.

Long answer  - 

From a maturity stand point IRA is similar to 401K

From a capital gains point - IRA is winner over 401k

The money you invest in 401k is eligible for tax deduction at the time of contribution (now) and the money grows in 401k without tax (correct term is tax deferred). From now till 59.5 age - 401k grows tax deferred. When you withdraw after 59.5 the withdrawn amount is considered as income and you pay taxes on that. For example you put $5000 now in 401K - that $5000 is eligible for tax deduction in this year's taxes. Now that $5K got invested till you are 59.5 age (say for 30 years) and it becomes $50000 (dont laugh it is very possible over 30 years). Now you are 59.5 age and the balance is $50K - you withdraw the$50K in one shot - now that $50k gets added to your taxable income at that year.

IRA - The money you invest now is AFTER tax. It gets invested till 59.5 and if you decide to withdraw after 59.5 you will not have to pay additional tax. Depending on your Adjusted Gross Income (AGI) you may be eligible for deducting up to $6500 ( check this to be sure) and still contribute in IRA. If your AGI is high you can still contribute to IRA but it does not qualify for eligible deduction. There are more caveats like you cannot have rollover IRA and Roth IRA at the same time, etc. but that is getting in to next level of complexity. Also look for backdoor roth, mega back door roth etc. if it interests you.

IRA is a golden option in my opinion. 

In your case think like this - If you put $6K in IRA - all of it is yours and it grows tax free till you are 59.5

If you do not put that $6k in IRA - you pay $1500 in taxes to IRS and you will never see that in your life again. Think long term and invest in IRA.

 

IRA and ROTH IRA both same ?

[SwamyRaRa]

@vampire @csrcsr @sri_india @shamsher_007 @k2s @TensionNahiLeneka @Sarvapindi 

traditional IRA lo 6k vuntey for now .

how to invest and what to pick? What’s the strategy? 

enlighten for beginners 

keep the flow flowing 

[k2s]

6 minutes ago, SwamyRaRa said:

@vampire @csrcsr @sri_india @shamsher_007 @k2s @TensionNahiLeneka @Sarvapindi 

traditional IRA lo 6k vuntey for now .

how to invest and what to pick? What’s the strategy? 

enlighten for beginners 

keep the flow flowing 

Just buy spy or other etfs 

 

[SwamyRaRa]

11 minutes ago, k2s said:

Just buy spy or other etfs 

 

Suggest some bro…will check 

[SwamyRaRa]

Ltt

[Sravanikushi]

So if we contribute 6k in Roth IRA will save $1500? Is there any link or ref?

[Sravanikushi]

Ltt

[SwamyRaRa]

On 2/17/2022 at 10:30 AM, SwamyRaRa said:

@vampire @csrcsr @sri_india @shamsher_007 @k2s @TensionNahiLeneka @Sarvapindi 

traditional IRA lo 6k vuntey for now .

how to invest and what to pick? What’s the strategy? 

enlighten for beginners 

keep the flow flowing 

Ltt

[Son_of_surredu]

401k Roth aithe you can withdraw all after 5 years with out penalty 

[Mr Mirchi]

On 5/17/2021 at 10:52 AM, ameriprise said:

if we invest long term Ok bro...But lets say if we to take that money after 6 months (any time before 59.5) after investing i guess we have to pay penalty charges 10% - 6000-600= $5400  anthena.... or any other taxes we pay ?

Nuvvu invest chesina account anytime thisukovachu…. Tax anedhi gains meedha maatrame kadathaav

[RajuDonga]

On 5/17/2021 at 10:31 AM, phatposts said:

Short answer - Go for IRA. Your CPA is right.

Long answer  - 

From a maturity stand point IRA is similar to 401K

From a capital gains point - IRA is winner over 401k

The money you invest in 401k is eligible for tax deduction at the time of contribution (now) and the money grows in 401k without tax (correct term is tax deferred). From now till 59.5 age - 401k grows tax deferred. When you withdraw after 59.5 the withdrawn amount is considered as income and you pay taxes on that. For example you put $5000 now in 401K - that $5000 is eligible for tax deduction in this year's taxes. Now that $5K got invested till you are 59.5 age (say for 30 years) and it becomes $50000 (dont laugh it is very possible over 30 years). Now you are 59.5 age and the balance is $50K - you withdraw the$50K in one shot - now that $50k gets added to your taxable income at that year.

IRA - The money you invest now is AFTER tax. It gets invested till 59.5 and if you decide to withdraw after 59.5 you will not have to pay additional tax. Depending on your Adjusted Gross Income (AGI) you may be eligible for deducting up to $6500 ( check this to be sure) and still contribute in IRA. If your AGI is high you can still contribute to IRA but it does not qualify for eligible deduction. There are more caveats like you cannot have rollover IRA and Roth IRA at the same time, etc. but that is getting in to next level of complexity. Also look for backdoor roth, mega back door roth etc. if it interests you.

IRA is a golden option in my opinion. 

In your case think like this - If you put $6K in IRA - all of it is yours and it grows tax free till you are 59.5

If you do not put that $6k in IRA - you pay $1500 in taxes to IRS and you will never see that in your life again. Think long term and invest in IRA.

 

I have both rollover IRA and Roth IRA.  No problem with that, the total contribution should not exceed 6000 .