Retirement Planning/Roth IRA Withdrawals


QUESTION: I have some money in a Roth IRA, but I won't need to withdraw any
of it for some time. However, on a radio talk show the host told a caller that he should beware, when he takes "tax-free" money from his Roth IRA, that the amount he takes does not put him into a higher tax bracket. Is that true? Roths have been touted as being tax-free upon withdrawal. That was the big advantage.
But if what the radio host said is correct, that means the Roth money is not at all tax-free. In fact, it will be taxed at a much
higher rate than money in regular taxable accounts when withdrawn. The latter money would be truly tax-free since taxes are already paid. Can you please clarify this? I hope the radio host is incorrect, otherwise, what is the point in having a Roth IRA at all?

ANSWER: Hi Frank,

Keep in mind, the people you hear on radio and TV are entertainers first and foremost. Most if not all are not even licensed to sell the financial products and investments they talk about so they have no liability for incorrect information. This radio guy is just plain wrong! Withdrawals from a Roth are absolutely tax free and do not count as income for tax purposes. You paid tax on the funds before you contributed them so they do not tax them again. Hope this helps. Best of luck!


---------- FOLLOW-UP ----------

QUESTION: Thank you for your prompt reply, and also for giving me the answer I was
hoping for. I will take radio talk show "advice" with great care, and
research their words as carefully as I did this time! Note that I have never called one of them. I only listen, but with extra caution now!

No problem Frank. Yes, these entertainers are not held accountable if they give bad advice. I have heard them, many times, say things that were just plain wrong. They also give advice that is "one size fits all". People all have different needs and without a review of each individuals situation, giving specific advice can be quite irresponsible. What works for you may not work for someone else and vice verse.


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David M Iannopollo


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