What are the tax advantages of using a Roth IRA?
In the Video above, Scott Farnsworth, Central Florida's Tax-Free Retirement Expert answers a frequently asked question: What are the tax advantages of using a Roth IRA?
"The tax advantages of a Roth IRA are that you get to take that money out when you retire tax free. Now, what you trade in return is you don't get a deduction this year for what you put in. The growth is going to be tax free from the time you contribute until the time you take it out but the big opportunity is you don't have to pay taxes at the end of the row.
Now, if you believe, like I do, that we are in historical low tax rates and that tax rates are going to be climbing as we start coming to grips with this 19 trillion dollar deficit and this 100 trillion dollar unfunded liability for social security, medicare, medicaid and such. If taxes are going to be substantially higher when you retire it makes a whole lot more sense to give up a deduction this year in order to avoid a huge tax later on. That is going to have a big effect on the quality of your retirement."