I have a very low income currently and it will be like that for some time for sure. In addition I like the idea of diversification so that whatever happens with tax brackets in the future I won't be kicking myself one way or the other. Edit: Thanks everyone, I think I'll go Roth next year. This requires a lot of math, and your post has none. With a Roth IRA, you contribute funds on which you’ve already paid income taxes, commonly referred to … The taxes on a traditional are subject to more variation in the future, both up and down. You CAN have both, you just can only contribute a combined max. The 2021 combined annual contribution limit for Roth and traditional IRAs is $6,000 ($7,000 if you're age 50 or older)—unchanged from 2020. Estate taxes are levied on the value of an estate. If you think taxes will be higher later, a Roth lets you take the current lower tax rate, same if you believe you will be in a higher tax bracket later (Such as from real estate income or business income) you can pay the taxes at the lower bracket now and not at your new higher bracket later. If you are high income, prioritize Trad. As a general rule, I would say tIRA is best. If you are low income, prioritize Roth. If you make too much money to deduct traditional IRA contributions from your taxable income, a Roth IRA is the better option. Whether you choose a traditional IRA, a Roth IRA or both, your retirement will be richer for it. There’s no one-size fits all solution to this question. Traditional 401(k): Kate earns $100 which she contributes directly into her traditional 401(k) without paying any income taxes. (71k ish I think) there's no reason not to Roth. Then there are no additional taxes to be paid when the money is withdrawn later. If you can actually get the deduction. I'm using Roth IRA because I'm unable to deduct traditional contributions due to maxing a (traditional) 401k. There's a lot of uncertainty, also with filing status, but right now, my effective tax rate under current plan would be 11.3% in retirement, making the tIRA's 15% haircut the clear winner for now. Qualifying exceptions to the penalty tax. So I can't decide whether I should just continue pumping $5500 into my traditional IRA or should I start a Roth IRA or should I do a split because I honestly have no clue what my income will look like at retirement age cuz I'm 25 years old now and honestly can't decide what professional career path I even want. Related: How to save for retirement without a 401(k) video from Vanguard; Notes: It is almost never a good idea to make a non-deductible contribution to a traditional IRA without then doing a Roth conversion, as doing so would mean that your earnings would be taxed. I’m not looking for specific advice as to which type of fund to invest in within my IRA. Additionally, you're able to withdraw your contributions tax-free and penalty-free at any time, for any reason. Am I missing something here? (I keep about 3 months expenses in savings. If you're under it's more complicated and depends on your tax situation. account is it a 41 K K or or a a a Roth Roth Roth IRA, IRA, IRA, which which which? But wouldn’t you make too much for Roth? For many people they will be in a lower tax bracket when they retire so the money they take out of a traditional will be taxed lower in retirement then it would be going into a roth. Thank you for your comment. ;). (If your over Roth limit you do a back door Roth.). The two most common vehicles, outside of employer-sponsored programs, are Roth IRAs and Traditional IRAs. Whether you take the taxes out at the front or at the end don't matter as long as the tax rate is the same, even after N years. 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