roth or traditional IRA?

[mtemm]

which is better? which one do you do?

 

[rchristiansen]

neither. We have a SEP.

 

[Golf4food]

Ask one of these guys/gals:

http://www.napfa.org/

 

[golfgal]

Both--both have their pluses and minuses--mainly for the Roth there are income restrictions for contributions (we were able to convert this past year under the conversion exemption last year). Not everyone CAN contribute to a ROTH.

The main consideration is do you think you will be in a higher tax bracket NOW or LATER (when you retire). Would you rather pay tax on your investment NOW or LATER? For us, with 3 kids, rental property, home mortgage, college expenses, our effective tax rate is very small-so it makes sense to contribute to a ROTH now. If your tax rate is very high-say married couple, renting, no deductions, it probably makes more sense to contribute to a traditional IRA but there are so many other variables that go into this decision too.

 

[Carly_Roach]

Our decision maker was whether or not the company contributed to the IRA. My last company did so I did a 401(k) there. My current company doesn't so I have a new Roth that I'm building.

 

[tvguy]

Both--both have their pluses and minuses--mainly for the Roth there are income restrictions for contributions (we were able to convert this past year under the conversion exemption last year). Not everyone CAN contribute to a ROTH.

The main consideration is do you think you will be in a higher tax bracket NOW or LATER (when you retire). Would you rather pay tax on your investment NOW or LATER? For us, with 3 kids, rental property, home mortgage, college expenses, our effective tax rate is very small-so it makes sense to contribute to a ROTH now. If your tax rate is very high-say married couple, renting, no deductions, it probably makes more sense to contribute to a traditional IRA but there are so many other variables that go into this decision too.

If it's a new IRA, I'd go ROTH. I had both my CPA and my Financial Planner go over my existing IRA......it was started back in 1979, and has had 2 employer 401k's rolled over into it as I left jobs, so it is my biggest retirement account. And I'm 53, and hope to retire in 10 to 13 years. Both said it made no sense to roll into a ROTH, the taxes would have wipe out my accounts.
The above post is a good example of why you need to check with a financial expert, because for most folks, they expect to have less income and a lower tax bracket AFTER they retire. Clearly, the above poster is in a different financial situation.

 

[dejr_8]

Both--both have their pluses and minuses--mainly for the Roth there are income restrictions for contributions (we were able to convert this past year under the conversion exemption last year). Not everyone CAN contribute to a ROTH.

The main consideration is do you think you will be in a higher tax bracket NOW or LATER (when you retire). Would you rather pay tax on your investment NOW or LATER? For us, with 3 kids, rental property, home mortgage, college expenses, our effective tax rate is very small-so it makes sense to contribute to a ROTH now. If your tax rate is very high-say married couple, renting, no deductions, it probably makes more sense to contribute to a traditional IRA but there are so many other variables that go into this decision too.

I was always under the impression that ROTH contributions were less restricted than traditional IRAs because you didn't receive any immediate tax break.

It appears the income limits are lower for a traditional as compared to Roth IRA (http://www.money-zine.com/Financial-Planning/Retirement/IRA-Contribution-Limits/)

 

[golfgal]

I was always under the impression that ROTH contributions were less restricted than traditional IRAs because you didn't receive any immediate tax break.

It appears the income limits are lower for a traditional as compared to Roth IRA (http://www.money-zine.com/Financial-Planning/Retirement/IRA-Contribution-Limits/)

You can always contribute to a traditional IRA, a ROTH you can NOT contribute to if you make over the AGI. Tax destructibility is something else.

 

[Art 1]

We do the traditional, need the tax break now.