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Strategies & Market Trends : Roth IRA ideas

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To: sea_biscuit who wrote (64)	3/13/1998 9:23:00 AM
From: Jim O'Hare	Read Replies (2) of 388

Is a Roth IRA a smart idea? I guess I might be missing something. The Roth IRA contributions are post tax investments. If I took the money and put it in a Roth IRA I would have to pay ordinary income tax when I withdrew the funds after retirement. If I took the same funds I could invest them in a S&P Index fund or Spiders which currently pay only about 1.45 % a year in dividends. When its time to retire I would only pay 20% in capital gains (18% on funds invested after Y2K)vs the current federal income tax rate of either 28% or 30%. In addition, this option would not have the million restrictions on withdrawal of funds that IRA's have. I ran the numbers on a spreadsheet and the investor in Spiders comes out slightly ahead (including yearly dividend tax payments) than the investor in the Roth IRA. Am I missing something?

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