Roth vs the Traditional IRA
According to the guidelines, your eligible for a Traditional IRA and a ROTH IRA. Which one should you choose?
If you do not need the tax break today, then choose the ROTH IRA. It has greater flexibility because:
1] It allows you to withdraw your contributions at any time, given certain exceptions, penalty and tax free.
2] There is no mandatory distribution at age 70 ½.
Choose the Traditional IRA if you need the tax break today and you expect to be in a lower tax bracket during retirement.
Please note that there is also a traditional nondeductible IRA, but you won’t get the tax benefits that would be available with Roth or traditional tax-deductible IRA. However, if your income, according to the tax tables , prohibit you from contributing to the other IRA’s, a traditional non-deductible IRA is still attractive because of the tax deferred growth.
No matter how you qualify, opening these tax deferred accounts will give you the power of compounded growth.