Which is better, a ROTH IRA or a Traditional IRA? Which would you rather purchase and...

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Which is better, a ROTH IRA or a Traditional IRA? Which would you rather purchase and...

Which is better, a ROTH IRA or a Traditional IRA? Which would you rather purchase and why?

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Answer 1

Answer #1

Both ROTH IRA and Traditional IRA are tax advantaged retirement accounts.

The major difference is ROTH IRA is best if tax is believed to be higher at retirement than now, while Traditional IRA is best if tax is believed to be lower during retirement than now.

The tax advantage of a Traditional IRA is that your contributions are tax deductible. So during retirement the amount of tax deducted would be lower due to low taxes.

The tax advantage of a ROTH IRA is that your withdrawals in retirement are not taxed. So during retirement when the taxes are high you would be at advantage.

So the answer to the question that which one is best depends on the person to person as taxes in future are different for all.

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Answer 2

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Add Answer to: Which is better, a ROTH IRA or a Traditional IRA? Which would you rather purchase and...

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Which is better, a ROTH IRA or a Traditional IRA? Which would you rather purchase and...