Choosing from between Traditional Ira Vs Roth Ira by Talking with Your Ira Planner About Benefits and Costs of each

Posted in Uncategorized on August 4th, 2009

IRA means Individual Retirement Account. Roth and traditional are the two variations. A traditional ira contribution is made with money you may be able to deduct on your tax return and any earnings grow tax-deferred until you withdraw them in retirement. A Roth IRA contribution is made with money you have already paid taxes on and your money may grow tax-free, with tax-free withdrawals in retirement, provided that certain conditions are met. The ira interest rates tend to be similar for both types of savings plans. You may go with fixed or variable. A variable rate may have better return depending on the market.

When choosing Roth Vs Traditional Ira, keep in mind that the traditional IRA provides pre-tax benefits and the Roth IRA offers nontaxable income on withdrawals. The decision is not easy because the tax situation during retirement is unpredictable. Several planners suggest both kinds while others prefer Roth because the majority of people retire in the higher tax bracket. It is a good idea to meet with a financial counselor to discuss your options.