Why do people have to pay back money they take out from their retirement, it’s their money right?
In: Other
It’s still earned income, and you will ALWAYS pay taxes on any documented money you earn. The real question is, do you want to pay them now or later?
401k/IRA: Skip tax now, pay tax later (when you withdraw)
Roth IRA : Pay tax now (before you deposit), skip tax later.
Prefer the Roth since I plan to make more as I get older, avoiding the higher tax bracket later in life when withdrawing.
If for some reason you plan to be in a lower tax bracket toward retirement, the IRA is more beneficial.
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