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Slight correction Posted by Ari [Email] ![]() ![]() In Reply to: Re: OT: Capital gains in a Roth IRA, ussakl, Wed, 15 Jun 2005 13:23:35 Members do not see ads below this line. - Help Keep This Site Online - Signup |
I think you meant to say that the REGULAR IRA is taxed upon withdrawl (not regular Roth IRA).
In a regular IRA, you can deduct what you put in from your income, so you get a tax savings up front. You put in 'before tax' money. It grows due to interest, etc, and you pay taxes on withdrawl. So you DEFER the taxes until later.
In a Roth, you put 'After tax money'. This is money you paid taxes on when you earned it, so it has no impact on today's taxes. It grows tax free, and when you take the money out, you pay no taxes on it (assuming you follow the age/etc. rules).
How an IRA, Roth or regular, earns money can vary, and it doesn't impact the taxes. If you put it into a bank and it earns interest, the interest is tax free upon withdrawl in a Roth, taxable in regular. If you put the money in stocks, dividends and cap gains are tax free upon withdrawl in a Roth, taxable in regular. If you set up an IRA to trade in pig futures and bet on cockroach racing in Las Vegas, the gains are tax free in a Roth.
posted by 192.249....
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