Traditional IRA Explained in 5 Minutes (Tax-Deferred Retirement Account in 2024)

[@OptimizedPortfolio]

Do you have a Traditional IRA?

[@Bravesailor95]

No

[@yigitcantekin4796]

Will have soon

[@dannyrand1733]

I like this guy. Straight to the point. No fluff.

[@OptimizedPortfolio]

😎

[@HYNKZL]

What happens to dividends if you have already maxed your contributions for that year?

[@OptimizedPortfolio]

Nothing. Dividends are not contributions. They are not free money.

[@HYNKZL]

@@OptimizedPortfolio So you cannot reinvest them into the traditional ira? Not many youtube vids on dividends and IRA's. Can you take them out of the account if you maxed it?

[@OptimizedPortfolio]

@@HYNKZL You can reinvest them.

[@fadisalem2710]

I have a question about this matter. So if I were to draw out only the principle money from one roth ira to my bank account and then transfer the same money to the other roth ira account, could that be considered like an indirect rollover?

[@OptimizedPortfolio]

Doesn't make sense. Why would you have 2 Roth IRA's in the first place?

[@fadisalem2710]

@OptimizedPortfolio Honesty I thought there would be more of a benefit. Like more insurance more security.

[@OptimizedPortfolio]

@@fadisalem2710 Nope

[@alrocky]

@@fadisalem2710 You can transfer more than just contributions from one IRA custodian to another IRA custodian. A direct custodian to custodian is preferred but if you choose to receive the withdrawal, you have 60 days to deposit it to new custodian.

[@premshankar9395]

Can someone who filed taxes as married but filing separately got traditional or Roth IRA opened? The Magi is very less for that. How to work on that?

[@pedrolambrusco8190]

I don't think that you mentioned what is the oldest age that you can contribute to a traditional IRA. Do you know what it is? Thanks.

[@OptimizedPortfolio]

There's not one.

[@markm3477]

So basically the system (which is designed by the rich) is designed to benefit people who have alot of extra money, vs those who dont. Does that sound about right?

[@OptimizedPortfolio]

Not sure why this video in particular would make you think of that. The threshold to disallow Traditional IRA contribution deduction is pretty low.

[@mattgoldberg4335]

But where, specifically, do you enter the deduction on your income tax form(s)?

[@OptimizedPortfolio]

Line 32

[@ASHANTIGHAZIKHALIF]

Awesome!

[@OptimizedPortfolio]

Glad you think so!

[@russellgray3303]

Thank you for the video!!! We learn a lot from you! Thank you!

[@OptimizedPortfolio]

Glad to hear it!

[@brendafleming231]

Help me understand please (no judgement please!) I make monthly contributions to an IRA from my paycheck so that money has been taxed. Then, when I go to withdraw that money someday from my IRA I’ll be taxed again. How am I not being double taxed?

[@OptimizedPortfolio]

That sounds like a 401k. IRA contributions do not come out of one's paycheck. If it's a regular/traditional 401k, contributions are made pre-tax and withdrawals are taxed later. If it's a Roth 401k, contributions are made post-tax and withdrawals later are tax-free. If a Traditional IRA like I discussed here, you get a current-year tax deduction for those contributions and pay taxes later. If a Roth IRA, contributions are made with after-tax dollars and withdrawals later are tax-free. There is no double taxation in any of these scenarios. Roth IRA video is here: kzbin.info/www/bejne/mmerqoqDmdaSldE I've got a video coming soon on how it compares to a 401k.

[@brendafleming231]

It’s a traditional IRA that I make monthly payments to so what I must be forgetting is when I file my taxes I get a tax deduction for that IRA account correct? Sorry, I must sound pretty uneducated.

[@OptimizedPortfolio]

@@brendafleming231 Correct

[@Tahimate]

@@brendafleming231 how do you make that deduction, I meant, on what tax form you claim that deduction at? In addition, what proof you must provide?

[@d.lami.6990]

What about dividends paid inside the IRA Can they be reinvested automatically

[@OptimizedPortfolio]

Yes

[@d.lami.6990]

@@OptimizedPortfolio The 55 rule does that allow me to move my 401k into a traditional IRA. Since I am 58 and my job was eliminated due to the factory shutting down.??

[@OptimizedPortfolio]

@@d.lami.6990 You can rollover your 401k to a Traditional IRA in that instance, yes.

[@epic5945]

What's the point of having a beneficiary for a Traditional IRA if you're going to have to take deductions at age 73? It seems like there would be less money to leave the beneficiary.

[@OptimizedPortfolio]

In case you die. Good observation, though. That's why the Roth is the preferable choice for a wealth transfer vehicle, which I mentioned in my video on it: kzbin.info/www/bejne/mmerqoqDmdaSldE

[@skippersvr7852]

but where do u mention the car bombs?

[@OptimizedPortfolio]

wut

[@DzDivz]

Seems pretty solid, but there are always exceptions. Can't beat the return on a matched 401k. Also, depending on income, you may have to contribute to a traditional IRA so you can backdoor into your Roth. Always good to know all the options. 😀

[@lanilaura90]

You will not get all that money from yoyr 401k, you will pay the taxes later, and you will pay a lot especially as taxes will increase. Go with IRA, ROTH, and IUL