What is a Roth IRA?

Roth IRA Rules

Roth IRA Contributions

Roth IRA Withdrawals

Roth IRA Taxes

Roth IRA Conversions

What is double taxation?

Investment Tip - If it seems too good to be true....

...it probably is.

Simply.

In the personal finance world, double taxation occurs when an individual uses after-tax dollars to make investments and the return generated by those investments is taxed as well (again!).

Extended.

Roth IRAsavoid double taxation if used correctly.

Example

Double Taxation.

James is a young employee eager to begin investing. James decides to open a personal account without researching his options. James makes $35,000 per year as a junior web designer. After paying total taxes of $5,000, James decides he is able to contribute a lump sum of $3,000 into his investment account. After 5 years, James is happy to know that his $3,000 investment has grown to $4,200. Appreciating the $1,200 of earnings, James withdraws the $4,200 to make a down payment on a new car.

When James withdraws his total sum, he will be taxed on his $1,200 gain.

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