IRA accounts for TAX filing benefits..Help

[RajuDonga]

16 hours ago, Son_of_surredu said:

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

No 

[RajuDonga]

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.

It is for your savings , you are going to invest in stocks market which yields better than a savings account with interest. Also if you keep money it looses its value due to inflation. You better invest in low risk stocks or etfs.

[RajuDonga]

On 5/17/2021 at 9:56 AM, Pavanonline said:

IRA is a retirement account which can be used to invest in stocks, etfs etc. Advantage is that contributions to it are not taxed upto a limit ($6000 for this year). So if you max out this 6000 contribution then you need not pay tax on it. 

Disadvantage is if you want this amount to be pulled out for any reason you need to pay the tax you saved before and additional penalty. So if you don't need that $6000 until retirement(same thing next year) you can safely contribute.

You can take money for few cases without penalty. If you have 401k (employer sponsored) in the future, you can transfer IRA funds into it and take a loan (if plan permits), you need to payback with interest which goes to your own account. Basically borrowing from your own account and paying back to yourself. 

[RajuDonga]

On 5/17/2021 at 10:16 AM, ameriprise said:

Adhe bro..6000$ ante 4+laks kada..to save 1500$ this yr... invest cheyali...

suppose adhe 4+ laks India Bank lo  50 paise vaddi vasthayi kada... ante 2000 rupees for month yearly 25 thousand vasthayi ..next 5 years lo 1 lakh 25 thousand which is equally wat we save 1500$ kada..

5 years lo save cheyachu kada 1500$ instead of waiting for 60 years...I am wrong calcuating here ?

 

India marchi po, technically you need pay tax on interest earned anywhere in the world. So you shouldn’t do it . 

[RajuDonga]

On 2/17/2022 at 9:24 AM, astalavistaa said:

IRA and ROTH IRA both same ?

Different, the example give about is about Roth IRA (after tax dollars). If you are having a 401k plan which you max out , you can still contribute to IRA account but there will be tax benefits. 

[RajuDonga]

Let’s say federal tax brackets are below. 
0-40k — 10%
40-80k — 15%

80–120k — 20%
 

Now your income . 
100k — salary 

10k — short term capital gains( you 10k invested in stocks or crypto  and solid it for 20k within an year , making 10 profit)— normal income brackets 

20k — long term capital gains ( investment kept for more than a year) — 20% tax .

so now your tax for the year.

110k( salary plus short term capital gains) 

0-40k == $4000

40-80k== $6000

80-110k== $6000

20k (Long term capital gains) 

== $4000

Total $20000

 

401k: if you have regular 401k (employer sponsored)

And you contributed $20 k into it . 
 

Your new salary+ capital gains is $110k -20 k = $90k 

As per above calculations, this should save you $4000 in tax , your total tax is $16000

 

IRA: if you don’t have a 401k , you can open an individual retirement account and contribute up to $6000 per year. 
 

if you do that your new salary + capital gains  will be $104 k

As per above calculations, this should save you $1200 , your total tax is $18800

——  To be continued based in response

pros and cons , tax now or later, Roth vs traditional, investing regular account vs retirement accounts etc.