Which is better for me, a Roth or traditional IRA? April 17, 2015

So if you’re not sure, another rule of thumb is to keep your retirement savings tax diversified, meaning you have accounts that will be both taxable and tax-free when you cash out in retirement.

Let’s say you’re eligible for both a Roth and a traditional IRA. Generally, you’re better off in a traditional if you expect to be in a lower tax bracket when you retire. When you retire and start withdrawing money, you’ll be in a lower tax bracket, thereby giving less money overall to the tax man. For example, if you already have a tax-deferred 401(k) plan through your employer, you might want to invest in a Roth IRA if you are eligible.. By deducting your contributions now, you lower your current tax bill. If you expect to be in the same or higher tax bracket when you retire, you may instead want to consider contributing to a Roth IRA, which allows you to get your tax bill settled now rather than later.

The Roth also offers more flexibility: You can withdraw your contributions (but not the earnings) without incurring a penalty so you have more access to your 12bet money. So if you’ve got a long way to go before retirement, and you’re concerned about locking away your money for too long and want to be able to get at it if you need it, a Roth might be the way to go. To top of page

Start by looking at your income. There are income limits for Roth IRAs, so if your income is above those limits, then it’s a no-brainer: a traditional IRA is the only one for you.

But it can be difficult, if not impossible, to guess what tax bracket you will be in later in life, particularly if you’ve got a long way to go until you retire

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Tilly Porter

Tilly Porter

Tilly Porter is the creator of Sportsbook Investing, the premier website for making money betting online sports. He has successfully been beating sportsbooks for years using his proven system and proven sports betting odds based on lines, trends, angles, and years of experience. Learn about his system for FREE at http://www.runesofcreation.com
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