Self-Directed Retirement Plans

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Traditiona IRA vs. Roth IRA

Traditional IRAs and Roth IRAs are both great investment vehicles and provide wonderful tax advantages. The question is often asked:  Which is better?  The answer is:  It depends.  Both plans allow you to strategically plan and save for retirement; however, a Traditional IRA might not be the best plan for everyone, and a Roth IRA might not be the best plan for everyone.  If you are in a high tax bracket now, and expect to be in a lower tax bracket in the future a Traditional IRA might be best.  If you are in a low tax bracket now, and expect to be in a high tax bracket in the future a Roth IRA might be best.  If used properly, the IRA type that you choose will help you save and best adjust your tax liability to a time in your life that makes the most sense.  Traditional IRAs are tax-deferred vehicles.  This means that the money is taxed as you pull it out of your plan.  Roth IRAs are post-tax retirement vehicles.  This means the contributions made to the Roth IRA have already been taxed and that qualified distributions from the plan are tax-free.  It is also important to understand that income limits determine the deductibility of contributions in a Traditional IRA and eligibility of contributions to a Roth IRA.

Traditional IRA Vs. Roth IRA Comparison Chart