At what rate is money invested into a Roth IRA taxed?
I heard it gets taxed before you invest it compared to a traditional which is taxed when you take it out – so how much do they tax before you put it into the account? And is there a maximum of 2K/year you can put into it like I heard in the past to be the case? Can anyone open one and where would you go to do so and do you get taxed on the dividends earned each year or no taxes at all period once it’s pre-taxed?
You contribute to Roth IRA from your post tax dollars. Just as deposting your money to any bank account and you don’t claim any tax credit for doing so. On the oterh hand when you deposit money for regular IRA that amount can be reduced from your taxable income in tax filing and you’d get a tax credit now.
When you withdraw from your Roth IRA you pay no taxes on your deposits(contribution) but pay tax only on earnings. On the otehr hand when you withdraw moeny from Traditional IRA you pay taxes on your deposits as well as earnings. Maximum contribution is 5000 put together, and will be reduced based on your other retirement plans such as 401K, your income etc.
Investment Finance Tips : ROTH IRA Retirement Tips