|
Roth vs. Traditional IRA
So let's say you're eligible for both a traditional IRA and a Roth IRA. Which should you choose?
Choose a Roth IRA if you can do without the tax break right now. It's a more flexible instrument, because:
- It allows you to withdraw your contributions at any time, penalty- and tax-free.
- You do not have to take mandatory distributions at age 70 1/2.
Choose a traditional IRA if you need that tax deduction right now, or you anticipate paying taxes at a significantly lower rate in retirement.
We should also point out that there is a traditional nondeductible IRA, but you won't realize tax benefits comparable to those available through Roth or traditional tax-deductible IRAs. However, if your income prohibits you from making contributions to the other IRAs, a traditional nondeductible IRA is still attractive because of the tax-deferred growth.
Once you've solved the "traditional vs. Roth" dilemma, there's just one thing left to do: Open an account.
|
Home › IRA Center
