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Which IRA is Best: Traditional or Roth?

November 19th, 2010

Whether you’re 17 or 70, there’s nothing wrong with thinking about retirement and primary investment retirement vehicles. An individual retirement account (IRA) can make your retirement a lot more relaxing financially. IRAs offer a way to save money for retirees while earning major tax benefits in the process. They provide tax advantages while saving.

Perhaps the two most common IRAs are the traditional IRA and the Roth IRA. Both offer excellent opportunities when it comes to tax benefits. Both also have specific advantages, depending on the person and his or her financial situation.

The real difference between the two involves the option of paying taxes now versus paying taxes later. Lots of people want to pay taxes up front so they won’t have to worry about it in the future – and also not worry about which tax bracket they’ll be in upon retirement.

With traditional IRAs, tax-deductible contributions are available depending on a person’s level of income. With Roth IRAs, there are no tax-deductible contributions. With Roth IRAs, you can take money out at any given opportunity without a tax penalty. With traditional IRAs, withdraws can occur for individuals at age 59 ½ and can be considered mandatory at age 70 ½.

While some like traditional IRAs, others are more comfortable with Roth IRAs. It all depends on you.

There are plenty of similarities and differences between the two, and our investment advisors in Fort Worth TX will be more than happy to assist you with your questions about IRAs or investment retirement. Call us today, or contact us online for more information.