I understand that a Roth IRA offers the benefit of paying taxes up front so that when the investor withdrawals the money at retirement, the funds won't be taxed.
My confusion is that I have yet to see my Roth investment taxed. Here's my scenario:
- Fund my Roth IRA account's brokerage site with $1000 from my checking account
- Invest in two mutual funds at $500 each
- When I look at my statements I see $500 in each fund, gaining growth with the market. The only decrement being fees. There's nothing about taxes.
Part of me expected to see my $1000 immediately reduced by a portion of funds going to the govt in the form of tax. I expected to deposit $1000 and suddenly my account has say $850 (for example) since with Roth you pay tax up front. Why didn't this happen?