Question about IRA's:

[progree]

7. "a Roth IRA might have more advantages. You'd pay taxes on the $1000 now,"

If a person decides to contribute to a Roth IRA, he/she doesn't pay any taxes. One just writes a check or transfers money from their regular checking account or other regular account to the IRA custodian to set up or contribute to a Roth IRA (its been years since I contributed to any IRA). One's taxes will be completely unaffected by this. And one will never pay taxes on any of it in the future, not even on withdrawal.

Contributing to a Roth is a no-brainer, other than I'm pretty sure there is a 10% penalty for withdrawing before age 59 1/2, and there's some 5 year rule, where one must pay taxes on the earnings (but not on the original contribution) if withdrawing during the first 5 years or setting up the account, or before age 59 1/2. Something like that anyway.

Otherwise, it's just turning taxable money in a regular taxable account to a tax free forever account.

Edited: contributing to a traditional IRA may be a better move in some circumstances. There are Roth calculators out there (ones that compare contributing to a traditional IRA vs. a Roth IRA, or ones that analyze a Roth conversion), but be wary, particularly of financial planners' advice, most of whom have more bias than analytical skills https://www.democraticunderground.com/11212619