Return to Blog

Which would be better – a traditional IRA or a Roth IRA?

If you do not need to save on taxes now, a Roth IRA is your best option.  The reason is the taxation of earnings.  With a traditional IRA, you save on taxes now on the amount you contribute.  But you pay taxes when you take the money out on both the original contributions and the earnings it made over time.


With a Roth IRA, you do not save on taxes on the amount you contribute, but you do not pay taxes on the amount you take out on both the contributions and the earnings.  This means that essentially, the earnings in a Roth are tax free.  Tax-free!  Name another instance (available to most people) where the IRS allows that.  If you have a long time horizon – let’s say you’re in your 20s – the benefit of tax free earnings is humongous.


Both options have certain stipulations.  In both options, you cannot take money out without penalty until you have reached age 59 ½.  With the Roth, you also cannot take money out until the account has been in existence for five years.


Some argue that the traditional is best if you believe you will have a lower tax rate during retirement than you do now, but this really does not take into account the taxation difference on earnings.  An instance where indeed a traditional IRA is best is when you have less than five years to go until retirement, and will need to dip into the money right away.  Otherwise, a Roth will be more advantageous.


Wiser Wealth Management, Inc. is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.

Happy Birthday to Kylie, our Marketing Assistant! Kylie works hard behind the scenes on our website, podcast, social media, and so much more.

Meet Daphne, our Financial Planning Intern. She is studying Finance at The University of Georgia. We are excited she's joined us for the summer!

Your Medicare premium is affected based on which tax bracket you fall within after age 63. IRMAA is your income-related monthly adjustment amount. Watch today's video to learn more about how IRMAA works. #irmaa #medicare

The big question is, will we have a recession in 2022? Watch this video to find out! #recession2022 #recession

Happy birthday to LJ our Video Production Manager! LJ works behind the scenes producing all of our podcasts and videos that we post every week. 🎉



Client Access

Firm Information

Schedule a Meeting
678-905-4450[email protected]
Google Rating
Based on 71 reviews