Traditional IRA vs. Roth IRA. Which One is Better for You?
Here are the major differences:
Traditional:
Lowers your tax payment today
Must pay income taxes when you withdraw money during retirement (after age 59 1/2), known as a distribution
Must take distributions after 73 (known as Required Minimum Distribution RMD)
Roth:
Does NOT lower your tax payment today
NO income taxes when you take distributions after 59 1/2
This is a HUGE benefit for Roth IRA!
Not required to take distributions after 73 (this is because the IRS doesn't tax you, so they don't care whether or not you take distributions)
Which one is better for you?
If you are in a lower tax bracket, keep contributing to a Roth IRA
If you are in a high tax bracket NOW and you believe you will be in a lower tax bracket during your retirement, contribute to a Traditional IRA
Best place to invest your IRA:
Buy Index ETFs and let the stock market do the rest
Best Index ETFs are SPY, QQQ, VTI, and VOO
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