3/22    I got this advice from a friend - is he on crack?  I always thought
        roth iras were Always A Good Thing To Do (tm):
        Subject: Roth IRA v Trad IRA
          You can contribute up to 3k in either of these for retirement
        savings
          A Roth does not provide any tax advantages (initially). The funds
        are deducted "after tax" the benefit is down the road the returns
        the funds generate are tax free.
          A traditional IRA provides a significant initial tax advantage.
        The funds are deducted "pre tax" and thus reduce your current tax
        payments, and in most cases give you a very nice tax rebate.
          The reason why the ROTH was created was for 40-60 yr olds who
        already make plenty of money and aren't running into liquidity
        constraints and because congress wanted more money being taxed
        NOW.
          The way I see it is simple- If you have very low purchasing power
        and debt and are young go with a traditional regardless of what
        any tax advuisor or anyone says.
        If you make bank with no debt go with ROTH
          Also of note is that a traditional has some benefits if you
        choose to go back to school at some later point in time (
        actually these benefits are huge if done properly )
        \_ Note that down the road the funds have grown.  Significantly.
           The long-term tax advantages are HUGE.  So you pay a piddlingly
           small amount of tax now for a massive tax-savings in the future.
          A traditional IRA provides a significant initial tax advantage.
        The funds are deducted "pre tax" and thus reduce your current tax
        payments, and in most cases give you a very nice tax rebate.
          The reason why the ROTH was created was for 40-60 yr olds who
        already make plenty of money and aren't running into liquidity
        constraints and because congress wanted more money being taxed
        NOW.
          The way I see it is simple- If you have very low purchasing power
        and debt and are young go with a traditional regardless of what
        any tax advuisor or anyone says.
        If you make bank with no debt go with ROTH
          Also of note is that a traditional has some benefits if you
        choose to go back to school at some later point in time (
        actually these benefits are huge if done properly )
        \_ I would think "if you can, do both."  Saving, good.  Having to
           eat gravel so you can pay hospital bills, bad.
           \_ You can do both but the annual max conbribution applies
              to the combination of ALL IRA types.  So if you have both
              Roth and tranditional IRA account, the max is still $3000
              for tax year 2002.  For op, your friend's advice makes sense
              if your tax bracket is very high now and you know when
              you retire, it is going to be really low.
              \_ just so you know, that was kinney's advice.  (hence the
                 formatting) - see he sorta makes sense on occasion.
        \_ My understanding is that the gains on Roth IRA is all yours
           while those on the Traditional IRA will be taxed.  Is that true?
           Of course for traditional, you start up with a higher base,
           since you will have the additional money you would have paid
           out as taxes if you go the Roth route.  This "additional" money
           would unfortunately be outside of any IRAs.  Of course you can
           put them in your 401k unless you maxed that one out also.
           In short, if you maxed out everything, Roth essentially let
           you tax shelter a little more money since $3000 in Roth is
           worth more than $3000 in Traditional.
           \_ Isn't there a limit on how much you can be making and still put
              $3000 in a ROTH?
        \_ WSJ's Smartmoney magazine advice on where to put your money for
           most people:
                1. Max out 401k portion with company match.
                2. Max out Roth IRA.
                3. Max out unmatched portion of 401k
                4. Other stuff.