What makes a Roth IRA better than other IRAs? Which IRA is right for me?
What makes a Roth IRA better than other IRAs?
A Roth IRA is not necessarily better, but there’s definitely a difference between a Roth IRA and an IRA. With a Roth, the money you put into the account will grow tax-free. You contribute after-tax dollars, and the earnings on your contributions can be withdrawn tax-free. On the contrary, in a regular IRA, you can put in a dollar and it’ll grow tax-deferred. When you pull the money out, it is then subject to taxes according to your income tax rate.
Which IRA is right for me?
Some people would say that a Roth IRA would be a better choice because your money grows tax-free. So if you’re under 40, that’s a great option. If you can qualify for a Roth IRA individually, you should do that in addition to your 401k. If you don’t qualify because you made too much money in 2023. Then, you might consider a “backdoor” Roth. This would consist of contributing money to an IRA, not deducting it, and then converting it into a Roth after the deduction has been made. Ultimately, the best retirement account really depends on your situation. In reality, any time you can save for the future is always a good choice.
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Casey Smith
President, Wiser Wealth Management
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