To Roth or Not to Roth Redux with Darin Hayes

Summary: We’re talking Roth and traditional IRA’s today with Darin Hayes, author of Beer Money: A Beer Drinker’s Guide to Personal Finance and Investing.<br> Let’s put this in drinking terms.  Taxes are a hangover.  A Roth IRA gets the hangover out of the way before the drinking even commences because the money contributed is taxed before the contribution.  A Traditional IRA let’s you drink first and the hangover comes later because the money is taxed once it’s withdrawn.<br> How should you decide when you want to suffer your hangover?  A very simple way to determine is whether or not you receive a tax refund.  If you get money back, do a Roth.  You likely are in a lower income bracket and don’t need the tax deduction.  A lot of young people with years ahead to work and invest will fall into this category.  If you’re older, making more and in a higher tax bracket, a Traditional IRA will give you that deduction that may drop you into a lower bracket.<br> A Roth IRA also has the advantage of having no penalties for early withdraw on the principal.  This makes a Roth a good place to invest your emergency fund.  If you pull out any gains, there will be penalties but not on the initial investment.<br> What is the difference between an IRA and a 401K?  A 401K is an employer sponsored program.  For those whose employer does not offer a 401K or are self-employed, an IRA can be set up by an individual and serve as your retirement account.<br> A <a href="http://en.wikipedia.org/wiki/SEP-IRA" target="_blank" rel="noopener">SEP-IRA</a> is something for self-employed individuals to consider as well.  You can contribute up to $52,000 a year depending on income.  A SEP-IRA can be opened with a brokerage firm or an on-line investment account.<br> How’s that for a simple break down?  Putting things in drinking terms makes everything easier to understand!<br> Show Notes<br> <a href="http://www.amazon.com/Beer-Money-Drinkers-Personal-Investing/dp/1477646140" target="_blank" rel="noopener">Beer Money: A Beer Drinker’s Guide to Personal Finance and Investing</a>:  Darin’s easy to understand book on managing your money.<br> <a href="http://getbeermoney.com/" target="_blank" rel="noopener">Get Beer Money</a>:  Darin’s website.<br> <a href="http://www.ommegang.com/#!beer_hennepin" target="_blank" rel="noopener">Ommegang Hennepin</a>: A rustic golden ale.<br> <a href="http://www.sierranevada.com/beer/variety-packs/blindfold-black-ipa" target="_blank" rel="noopener">Blindfold Black IPA:</a> A light bodied IPA with a bold, hoppy character.<br> <br>