Financial Planning Week #1: Roth IRA

Whiel PSOTD would like to remind us that this week is Pandemic Flu Awareness Week, in Pennsylvania it is, among other things, Financial Planning Week. In keeping with that I hope to post a daily financial planning tip, with relevant links. I missed Sunday and may miss a few more days this week, but here is today's: (Lawyer note: I am not trained in financial planning or any other aspect of financial work. These tips are to be read for entertainment value only. The intrigued should consult trained professionals before doing anything with their money.)

A Roth IRA differs from other IRAs in that you pay tax on the money as it goes in. People often try to find ways of investing money without having to pay tax on it now, but that usually means you have to pay tax on it when you take it out. There are pros and cons. Those earning good money now may prefer to pay taxes on retirement money when they are no longer working and in lower tax brackets. On the other side, we currently have a relatively low tax rate generally and there is no telling what will happen in the future.

This is one difference. There are others. For more information, talk to a financial planning specialist. For more background, look here and here.