Traditional or Roth IRA: Which Is Better?
Traditional vs. Roth IRA: Which One Should You Get?
It's no secret that both traditional and Roth IRAs feature tax-sheltered growth of earnings, and both give you a wide range of investment choices, which is great! However, there are some important differences between them that you need to understand before you can choose which type of IRA makes the most sense for you.
When Does A Roth IRA Make More Sense?
A Roth IRA will probably be a more effective tool if you don't qualify for tax deductible contributions to a traditional IRA. Most professionals believe that a Roth IRA will still give you more bang for your buck in the long run, but it depends on your personal goals and circumstances. The biggest advanatage of having your money in a Roth IRA is your money has already been taxed, so it will be distributed tax free (AKA, when you retire, you won't have to pay any taxes on that money, so it's a win-win). However, keep in mind that not everyone can set up a Roth IRA.
When Does A Traditional IRA Make More Sense?
A traditional deductible IRA may be a better tool if you want to lower your yearly tax bill while you're still working (and probably in a higher tax bracket than you'll be in after you retire). However, it's important to keep in mind that although it may make more sense right now to not have your money be taxed, it will be taxed eventually.
Note: You can have both a traditional IRA and a Roth IRA, but your total annual contribution to all of the IRAs that you own cannot be more than $6,000 in 2022 ($7,000 if you're age 50 or older).
Still Not Sure Which Is Right For You?
Are you still not 100% sure which retirement savings plan is right for you? Don't worry! You don't need to figure it out alone. Connect with one of our CFS* financial advisors to get your no-cost financial review to make sure you are on track with your retirement! Our financial advisors will be able to help advise you on which retirement savings options will help you reach your financial goals.
Are You Retirement Ready?
Connect with a CFS* financial advisor, to get your free financial review.
Non-deposit investment products and services are offered through CUSO Financial Services, L.P. ("CFS"), aregistered broker-dealer Member FINRA/SIPC and SEC Registered Investment Advisor. Products offered through CFS: are not NCUA/NCUSIF or otherwise federally insured, are not guarantees or obligations of the creditunion, and may involve investment risk including possible loss of principal. Investment Representatives are registered through CFS. The Credit Union has contracted with CFS to make non-deposit investment productsand services available to credit union members. Fixed insurance products are offered through CFS Insurance & Technology Services, LLC.
This communication is strictly intended for individuals residing in the state(s) of NC. No offers may be made oraccepted from any resident outside the specific states referenced.
Prepared by Broadridge Advisor Solutions Copyright 2022.