Comments on: Comparing Roth IRA Versus Traditional IRA

By: Ryan

Ryan — Thu, 19 Jan 2012 22:04:54 +0000

Victoria, if your AGI (adjusted gross income) exceeds the income limits, then no, you would no longer be able to contribute in that tax year. However, you would still be able to keep the money in your current Roth IRA. It’s also important to note that your AGI is calculated after your tax deductions, so if you contribute to a 401k plan, contribute to charity, have a mortgage deduction, or other tax deductions, you may fall within the limits to continue contributing to a Roth IRA.

By: Victoria

Victoria — Thu, 19 Jan 2012 20:29:43 +0000

I am planning on opening a Roth IRA. I am 32 years old and currently making $48,000. If in the near future my salary is above the $95K, will I not be able to contribute anymore since my income is above the limitations? Please explain. Thank you!

By: John

John — Thu, 01 Sep 2011 21:57:19 +0000

I don’t understand why a young investor would focus on current tax brackets vs. future tax brackets when deciding between a Traditional or Roth IRA.

Assume a 30 year old in a 25% tax bracket was going to invest $5000 in an IRA and leave it until they were 60. If they chose a Traditional IRA, they would save $1250 upfront. If they chose a Roth, they would have paid $1,667 in tax before having $5000 to invest.

Assume the $5,000 accrues 8% interest annually. After 30 years, you would have $50,313. Even if you were in a 10% tax bracket when you were withdrawing the funds, with a Traditional IRA you’d be paying $5,000+ in tax. With a Roth, none of the gains would be taxed, and you’d have only paid the initial $1,667 in total.

Am I missing something? Obviously as you get older it becomes a different story, as the principal will not have as long to accrue interest. But for a young investor who is thinking long term, I can’t see why you wouldn’t choose a Roth IRA. Thanks!

By: NeeNee M

NeeNee M — Thu, 14 Apr 2011 02:10:14 +0000

Ryan,
At age 61 and income of about $80,000/yr (joint), would it be better for us to have a Roth IRA or a Traditional IRA in addition to our savings and other investments? Even though our taxes are about 25%, the future looks like taxes will be even higher as we try to recover as a nation economically. Any suggestion is appreciated. Also, can we do a 401K with the company (we own our own business) matching at this late date and have it be an advantage?

By: Daddy Paul

Daddy Paul — Fri, 18 Mar 2011 23:44:05 +0000

I have changed my mind on IRA’s. I was a big fan of Roths and am now leaning back to traditional IRA’s. I think the tax hikes of the future will come in the form of fees not income taxes.

By: Ryan

Ryan — Thu, 17 Feb 2011 16:54:33 +0000

Joe, the Roth can be a great deal for people of any age – but the reason many people recommend Roth IRAs for younger people is because they are generally in a lower tax bracket now, which means they won’t have to pay as much tax to take advantage of it (and their tax savings wouldn’t be as good with a Traditional IRA), and people are generally in higher tax brackets when they are older, as their earning power increases, meaning they pay more taxes to take advantage of a Roth IRA. That said, I can’t imagine tax brackets in the next 10, 20, or 30 years will be much lower than they are now, and if that is the case, a Roth IRA is probably best for anyone who is eligible to contribute to one.

By: joe

joe — Thu, 17 Feb 2011 08:36:08 +0000

I don’t understand why people say young people Roth. What is the difference between young and old?

By: Ryan

Ryan — Wed, 07 Jul 2010 15:19:17 +0000

Greg, you should sill be able to invest in a Roth IRA, so long as you meet the income requirements, and a Roth IRA is often a good investment option because of the tax benefits it offers.. Here is some information about where to open a Roth IRA.