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Which one should I choose: a Roth IRA or a Traditional IRA?


This is for educational purposes only. This is not financial advice or tax advice. If you have questions about your specific situation, feel free to reach out. Foundation Wealth Planning is a Fee-Only RIA located in Kansas. For more information, check out our blog! Hours: Mon - Thur: 9:00 AM to 3:00 PM / Fri: 9:00 AM to 12:00 PM Email: phil@foundationwealthplanning.com Phone: (785) 376-6334 Schedule an Appt: Website: Blog Article: Follow Us on Social Media Facebook: LinkedIn: ...(read more)



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When it comes to retirement savings, there are a variety of options available. Two popular choices are the Roth IRA and the Traditional IRA, but deciding which one is best for you can be overwhelming. In this article, we'll explore the differences between the two to help you make an informed decision. What is a Roth IRA? A Roth IRA is a retirement savings account that allows you to invest after-tax dollars that grow tax-free. You won't be taxed on any earnings or withdrawals, as long as you meet certain requirements. What is a Traditional IRA? A Traditional IRA is a retirement savings account that allows you to invest pre-tax dollars, which can lower your taxable income in the year you contribute. You'll be taxed on any earnings and withdrawals in retirement. The Key Differences The biggest difference between the two is how and when you pay taxes. With a Roth, you pay taxes upfront on your contributions. With a Traditional, you avoid paying taxes on contributions upfront, but you will eventually have to pay taxes on both contributions and earnings when you withdraw. This means that when you contribute to a Traditional IRA, you may be able to lower your taxable income for the year, but by contributing to a Roth IRA, your taxable income for the year will be unaffected. Another key difference is when you can withdraw your money penalty-free. With a Roth IRA, you can withdraw contributions at any time without penalty, although you'll have to pay taxes and penalties on any earnings you withdraw before age 59.5. With a Traditional IRA, the same rules apply, except you'll also owe taxes on your contributions when you withdraw them. Which one is right for you? The best option for you depends on your individual circumstances and financial goals. Here are some factors to consider: - Tax rates: If you expect your tax bracket to be lower in retirement than it is now, a Traditional IRA may be a good option to take advantage of the tax deduction upfront. However, if you expect your tax bracket to be higher in retirement, a Roth may be a better choice to avoid paying taxes on withdrawals. - Age: If you're young and have many years until retirement, a Roth IRA may be more beneficial since your contributions will have more time to grow tax-free. If you're approaching retirement age, a Traditional IRA may be a better choice if you need to lower your taxable income now. - Income: There are income limits for contributing to a Roth IRA. If you make too much money, you may not be eligible. A Traditional IRA doesn't have income limits, but if you're already maxing out other tax-advantaged accounts, a Roth IRA may be a good option to diversify your tax situation. Conclusion In summary, the decision to contribute to a Roth IRA or a Traditional IRA depends on your individual circumstances and financial goals. Consider your tax rates, age, and income when making your decision. Ultimately, both options offer a tax-advantaged way to save for retirement, so choosing one over the other isn't necessarily a bad decision. https://inflationprotection.org/which-one-should-i-choose-a-roth-ira-or-a-traditional-ira/?feed_id=105400&_unique_id=6480f58672bae #Inflation #Retirement #GoldIRA #Wealth #Investing #biblicalfinancekansas #catholicfinancekansas #catholicinvestingkansas #catholicplannerkansas #catholicvaluesinvestingkansas #FinancialPlanning #financialplanningkansas #financialplanningserviceskansas #hourlyfinancialadvisorkansas #hourlyfinancialplannerkansas #investmentmanagementkansas #mutualfundskansas #retirementsavingsconsultingkansas #RothIRA #traditionalIRA #wealthadvisor #wealthmanagement #wealthmanagementks #wealthplanning #TraditionalIRA #biblicalfinancekansas #catholicfinancekansas #catholicinvestingkansas #catholicplannerkansas #catholicvaluesinvestingkansas #FinancialPlanning #financialplanningkansas #financialplanningserviceskansas #hourlyfinancialadvisorkansas #hourlyfinancialplannerkansas #investmentmanagementkansas #mutualfundskansas #retirementsavingsconsultingkansas #RothIRA #traditionalIRA #wealthadvisor #wealthmanagement #wealthmanagementks #wealthplanning

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