Week 27 - Traditional vs Roth IRA

Traditional IRA’s give you tax benefits now while Roth IRA’s give you tax benefits in retirement.

• True

• False

You can contribute to both a Roth IRA and a Traditional IRA in the same tax year.

• True

• False

What is the difference between a Traditional and Roth IRA?

• A traditional IRA's contributions are not taxed until you withdraw them at retirement. A Roth IRA's your contributions are taxed when you invest.

• A Roth IRA's contributions are not taxed until you withdraw them at retirement. A Traditional IRA your contributions are taxed when you invest them in.

What account is a good idea if you are in a lower tax bracket than you will be at retirement?

• Traditional IRA

• Roth IRA

The money put into this type of account has already had taxes taken out.

• Pension

• Roth IRA

• 401K

• Traditional IRA

Saul put $1500 in his savings account at 4.5% interest. 6 years later, how much interest has he earned? (Hint: A=Prt)

• $45

• $4,050

• $405

• $445

When is the best time to open a Roth IRA?

• When you first start working

• After working for 10 years

• After working for 30 years

• After the company goes out of business

The main difference between Roth and Traditional IRA

• Roth is after-tax (taxed first)/ grows tax free

• Traditional is pre-tax (taxed first)/ grows tax free

• Traditional makes you invest more

• Roth has penalities

A company match is "free money"

• True

• False

401(k) and 403(b) can be matched by companies

• True

• False