Roth and Traditional IRAs
You’re ready to open an investment account, but don’t know which way you should go. Should you go the traditional IRA route or is the Roth IRA the right thing for you? Both have their advantage and disadvantages. Let’s take a look at some of the pros and cons for each IRA investment option:
An IRA, or Individual Retirement Account, is an excellent investment vehicle to prepare for a comfortable retirement. There are several advantages to choosing the traditional IRA route. For one, a traditional IRA allows you an upfront tax deduction. This can be particularly advantageous if savings at the time of investment are enough to decrease your taxable income to a lower tax bracket.
Your principal grows tax-free, but you pay income tax on the entire amount of your withdrawal. You also will face minimum withdrawal requirements.
A Roth IRA is attractive to investors for one main reason: when you are ready to withdraw that money in your retirement, you get it tax free. That’s not to say you are escaping Uncle Sam’s grasp, nobody does. The money you put into a Roth IRA is susceptible to income tax beforehand. But the good news is that it grows tax-free and is available tax-free… once you hit 59.5 years old. There are also no minimum withdrawal requirements. The one downside to a Roth IRA is that not everyone is eligible to open one.
So, those are the basics to consider in choosing a Roth or a Traditional IRA. Are you still unsure which route works best for your investment needs? Allow Healthy Financial to sit down with you to go over your unique needs and desires. Together we can develop a financial strategy that gives you the best chance to achieve your retirement goals.
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