{"id":26468,"date":"2022-09-29T09:24:29","date_gmt":"2022-09-29T13:24:29","guid":{"rendered":"https:\/\/www.moneysmartguides.com\/?p=26468"},"modified":"2022-09-29T09:44:05","modified_gmt":"2022-09-29T13:44:05","slug":"roth-ira-vs-traditional-ira","status":"publish","type":"post","link":"https:\/\/www.moneysmartguides.com\/roth-ira-vs-traditional-ira","title":{"rendered":"Roth IRA vs. Traditional IRA: Which Is Right for You?"},"content":{"rendered":"<p>It is never too early to start saving to achieve your retirement dream. <\/p>\n\n\n\n<p>One of the best ways to do that is by opening an Individual Retirement Account (IRA). <\/p>\n\n\n\n<p>An IRA is a savings account with unique tax benefits, which can help you save more money for your retirement.<\/p>\n\n\n\n<p>IRAs account for over<a href=\"https:\/\/www.ici.org\/system\/files\/attachments\/ten_facts_iras.pdf\" data-lasso-id=\"46373\" target=\"_blank\" rel=\"noopener\"> 34% of retirement assets<\/a> in the U.S. <\/p>\n\n\n\n<p>There are two main types of IRAs: Roth IRAs and Traditional IRAs.<\/p>\n\n\n\n<p>We&#8217;ll review the key differences between Roth and Traditional IRAs to help you make an informed decision about your<a href=\"https:\/\/wealthofgeeks.com\/retirement-savings\/\" data-lasso-id=\"46374\" target=\"_blank\" rel=\"noopener\"> retirement savings<\/a>.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_63 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<p class=\"ez-toc-title\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-662607fef3b2d\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"ez-toc-cssicon\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #000000;color:#000000\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #000000;color:#000000\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-662607fef3b2d\" checked aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/www.moneysmartguides.com\/roth-ira-vs-traditional-ira\/#Roth_IRA_vs_Traditional_IRA_%E2%80%93_Whats_The_Difference\" title=\"Roth IRA vs. Traditional IRA &#8211; What&#8217;s The Difference?\">Roth IRA vs. Traditional IRA &#8211; What&#8217;s The Difference?<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/www.moneysmartguides.com\/roth-ira-vs-traditional-ira\/#What_Is_A_Traditional_IRA\" title=\"What Is A Traditional IRA\">What Is A Traditional IRA<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/www.moneysmartguides.com\/roth-ira-vs-traditional-ira\/#What_Is_A_Roth_IRA\" title=\"What Is A Roth IRA\">What Is A Roth IRA<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/www.moneysmartguides.com\/roth-ira-vs-traditional-ira\/#Comparison_Of_Tax_Consequences\" title=\"Comparison Of Tax Consequences\">Comparison Of Tax Consequences<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/www.moneysmartguides.com\/roth-ira-vs-traditional-ira\/#What_Are_The_Contribution_And_Tax_Deduction_Limits\" title=\"What Are The Contribution And Tax Deduction Limits\">What Are The Contribution And Tax Deduction Limits<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/www.moneysmartguides.com\/roth-ira-vs-traditional-ira\/#Are_There_Any_Required_Minimum_Distributions_I_Must_Take_From_IRA_Accounts_After_Retirement\" title=\"Are There Any Required Minimum Distributions I Must Take From IRA Accounts After Retirement\">Are There Any Required Minimum Distributions I Must Take From IRA Accounts After Retirement<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/www.moneysmartguides.com\/roth-ira-vs-traditional-ira\/#Can_I_Avoid_Paying_Tax_Penalties_For_Early_Withdrawal\" title=\"Can I Avoid Paying Tax Penalties For Early Withdrawal\">Can I Avoid Paying Tax Penalties For Early Withdrawal<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/www.moneysmartguides.com\/roth-ira-vs-traditional-ira\/#Should_I_Invest_In_A_Roth_IRA_Or_Traditional_IRA\" title=\"Should I Invest In A Roth IRA Or Traditional IRA\">Should I Invest In A Roth IRA Or Traditional IRA<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/www.moneysmartguides.com\/roth-ira-vs-traditional-ira\/#Traditional_IRA_Allowable_Deduction_Scenarios\" title=\"Traditional IRA Allowable Deduction Scenarios\">Traditional IRA Allowable Deduction Scenarios<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/www.moneysmartguides.com\/roth-ira-vs-traditional-ira\/#Roth_IRA_Allowable_Contribution_Limit_Based_On_Income\" title=\"Roth IRA Allowable Contribution Limit Based On Income\">Roth IRA Allowable Contribution Limit Based On Income<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/www.moneysmartguides.com\/roth-ira-vs-traditional-ira\/#Convert_A_Traditional_IRA_To_A_Roth_IRA\" title=\"Convert A Traditional IRA To A Roth IRA\">Convert A Traditional IRA To A Roth IRA<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/www.moneysmartguides.com\/roth-ira-vs-traditional-ira\/#Final_Thoughts\" title=\"Final Thoughts\">Final Thoughts<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Roth_IRA_vs_Traditional_IRA_%E2%80%93_Whats_The_Difference\"><\/span>Roth IRA vs. Traditional IRA &#8211; What&#8217;s The Difference?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_Is_A_Traditional_IRA\"><\/span>What Is A Traditional IRA<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<figure class=\"wp-block-image size-full aligncenter\"><img decoding=\"async\" width=\"750\" height=\"420\" src=\"https:\/\/www.moneysmartguides.com\/wp-content\/uploads\/2018\/01\/eggs-in-one-basket.jpg\" alt=\"nest egg\" class=\"wp-image-15744\" srcset=\"https:\/\/www.moneysmartguides.com\/wp-content\/uploads\/2018\/01\/eggs-in-one-basket.jpg 750w, https:\/\/www.moneysmartguides.com\/wp-content\/uploads\/2018\/01\/eggs-in-one-basket-300x168.jpg 300w\" sizes=\"(max-width: 750px) 100vw, 750px\" \/><\/figure>\n\n\n\n<p>Established in 1974, a Traditional IRA is an individual retirement account created to incentivize<a href=\"https:\/\/wealthofgeeks.com\/americans-not-saving-for-retirement\/\" data-lasso-id=\"46375\" target=\"_blank\" rel=\"noopener\"> Americans to save for retirement<\/a>. <\/p>\n\n\n\n<p>It offers tax-deferred growth and tax-deductible contributions, meaning you can deduct your contributions from your taxes in the year you make them. <\/p>\n\n\n\n<p>Contributions to a Traditional IRA lower your overall taxable income and, therefore, your tax bill.<\/p>\n\n\n\n<p>IRAs are more than just a savings account, giving you the option to invest in mutual funds, individual stocks, and even<a href=\"https:\/\/ashandpri.com\/best-gold-ira-companies\" data-lasso-id=\"46376\" target=\"_blank\" rel=\"noopener\"> precious metals<\/a> and grow your money tax-deferred. <\/p>\n\n\n\n<p>You won&#8217;t have to pay taxes on the funds until you withdraw them in retirement.<\/p>\n\n\n\n<p>Traditional IRAs are the most common type of retirement savings account. <\/p>\n\n\n\n<p>As of mid-2020, nearly<a href=\"https:\/\/www.ici.org\/doc-server\/pdf%3Aper27-01.pdf\" data-lasso-id=\"46377\" target=\"_blank\" rel=\"noopener\"> 29% of U.S. households<\/a> held a Traditional IRA.<\/p>\n\n\n\n<ul><li><strong>Read now: <\/strong><a href=\"https:\/\/www.moneysmartguides.com\/how-much-money-do-you-need-for-retirement\" data-lasso-id=\"46378\">Find out how much money you need for retirement<\/a><\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_Is_A_Roth_IRA\"><\/span>What Is A Roth IRA<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Introduced in 1997 as part of the Taxpayer Relief Act, a Roth IRA is an individual<a href=\"https:\/\/wealthofgeeks.com\/the-4-percent-rule\/\" data-lasso-id=\"46379\" target=\"_blank\" rel=\"noopener\"> retirement account offering tax-free growth and retirement withdrawals<\/a>. <\/p>\n\n\n\n<p>Contributions to a Roth IRA are made with after-tax dollars, meaning you have already paid taxes on the money you contribute.<\/p>\n\n\n\n<p>Over 26 million households owned a Roth IRA in 2020, which represents about<a href=\"https:\/\/www.ici.org\/doc-server\/pdf%3Aper27-01.pdf\" data-lasso-id=\"46380\" target=\"_blank\" rel=\"noopener\"> 20% of IRA holders<\/a> in America.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Comparison_Of_Tax_Consequences\"><\/span>Comparison Of Tax Consequences<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p><strong>For Example, if Jim Contributes Money at Age 30 and Retires at 65, Several Tax Scenarios Will Apply.<\/strong><strong><\/strong><\/p>\n\n\n\n<figure class=\"wp-block-table is-style-stripes\"><table><tbody><tr><td>&nbsp;<\/td><td class=\"has-text-align-center\" data-align=\"center\"><strong>Deposit At Age 30<\/strong><\/td><td class=\"has-text-align-center\" data-align=\"center\"><strong>At Age 34<\/strong><\/td><td class=\"has-text-align-center\" data-align=\"center\"><strong>At Age 50<\/strong><\/td><td class=\"has-text-align-center\" data-align=\"center\"><strong>At Age 65<\/strong><\/td><\/tr><tr><td><strong>Traditional IRA<\/strong><\/td><td class=\"has-text-align-center\" data-align=\"center\">Tax-free contribution (Jim subtracts the amount from income).<\/td><td class=\"has-text-align-center\" data-align=\"center\">Jim will pay tax on withdrawals according to his income tax bracket plus pay a 10% additional tax<a href=\"https:\/\/www.irs.gov\/newsroom\/what-if-i-withdraw-money-from-my-ira\" data-lasso-id=\"46381\" target=\"_blank\" rel=\"noopener\"> penalty<\/a> when the withdrawal is before age 59 and a half.<\/td><td class=\"has-text-align-center\" data-align=\"center\">Jim will pay tax on withdrawals according to his income tax bracket plus pay a 10% additional tax<a href=\"https:\/\/www.irs.gov\/newsroom\/what-if-i-withdraw-money-from-my-ira\" data-lasso-id=\"46382\" target=\"_blank\" rel=\"noopener\"> penalty<\/a> when the withdrawal is before age 59 and a half.<\/td><td class=\"has-text-align-center\" data-align=\"center\">Jim will pay tax on withdrawals according to his income tax bracket.<\/td><\/tr><tr><td><strong>Roth IRA<\/strong><\/td><td class=\"has-text-align-center\" data-align=\"center\">Jim contributes after-tax income (Tax paid per current income tax bracket).<\/td><td class=\"has-text-align-center\" data-align=\"center\">Jim can withdraw his original contribution tax-free, but any earnings\/growth amounts withdrawn before five tax years of the first contribution to a Roth IRA are taxed as per his income tax bracket. There may be a 10% additional tax penalty as well.<\/td><td class=\"has-text-align-center\" data-align=\"center\">Jim can withdraw his original contribution and any growth amount tax-free.<\/td><td class=\"has-text-align-center\" data-align=\"center\">Jim can withdraw his original contribution and any growth amount tax-free.<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p>In general, Roth IRA gives you the flexibility to withdraw your<a href=\"https:\/\/wealthofgeeks.com\/everything-you-should-know-about-series-i-bonds\/\" data-lasso-id=\"46383\" target=\"_blank\" rel=\"noopener\"> savings<\/a> at any time. <\/p>\n\n\n\n<p>Traditional IRAs allow you the benefit of a tax deduction in the current (contribution) year.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_Are_The_Contribution_And_Tax_Deduction_Limits\"><\/span>What Are The Contribution And Tax Deduction Limits<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>You can<a href=\"https:\/\/ashandpri.com\/best-crypto-ira\" data-lasso-id=\"46384\" target=\"_blank\" rel=\"noopener\"> contribute to an IRA<\/a> if you have taxable income. <\/p>\n\n\n\n<p>The Internal Revenue Service (IRS) has set some<a href=\"https:\/\/www.irs.gov\/retirement-plans\/plan-participant-employee\/retirement-topics-ira-contribution-limits\" data-lasso-id=\"46385\" target=\"_blank\" rel=\"noopener\"> limits<\/a> on the amount of money you can invest in IRAs. <\/p>\n\n\n\n<p>For 2022, this limit is $6,000 and has been unchanged since 2019. <\/p>\n\n\n\n<p>If you are over 50, you can contribute up to $7,000.<\/p>\n\n\n\n<p>It is crucial to keep in mind that this limit is cumulative for all IRAs. <\/p>\n\n\n\n<p>While you can contribute to a Traditional and a Roth IRA in the same year, the total amount contributed to all your IRAs can not exceed the $6,000 limit in 2022.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Are_There_Any_Required_Minimum_Distributions_I_Must_Take_From_IRA_Accounts_After_Retirement\"><\/span>Are There Any Required Minimum Distributions I Must Take From IRA Accounts After Retirement<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Let&#8217;s go back to Jim&#8217;s example once again. <\/p>\n\n\n\n<p>At age 72, Jim must start taking distributions from his Traditional IRA holdings as per amounts mandated by the IRS, based on Jim&#8217;s life expectancy and balance remaining.<\/p>\n\n\n\n<p>Jim has no obligation to distribute his Roth IRA holdings. <\/p>\n\n\n\n<p>He can continue to<a href=\"https:\/\/ashandpri.com\/ai-trading-software\" data-lasso-id=\"46386\" target=\"_blank\" rel=\"noopener\"> choose the best investments<\/a> to grow his money tax-free.<\/p>\n\n\n\n<figure class=\"wp-block-table is-style-stripes\"><table><tbody><tr><td>&nbsp;<\/td><td class=\"has-text-align-center\" data-align=\"center\"><strong>At Age 72:<\/strong><\/td><\/tr><tr><td><strong>Traditional IRA<\/strong><\/td><td class=\"has-text-align-center\" data-align=\"center\">Must start taking a minimum amount of withdrawals and pay tax as per income.<\/td><\/tr><tr><td><strong>Roth IRA<\/strong><\/td><td class=\"has-text-align-center\" data-align=\"center\">Tax-free withdrawal of original contribution and any growth amount. No mandatory withdrawals.<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Can_I_Avoid_Paying_Tax_Penalties_For_Early_Withdrawal\"><\/span>Can I Avoid Paying Tax Penalties For Early Withdrawal<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>The IRS has introduced exception scenarios to avoid paying the 10% penalty tax for early withdrawal from Traditional and Roth IRAs. <\/p>\n\n\n\n<p>Some of these qualifying scenarios are described below. Consult the<a href=\"https:\/\/www.irs.gov\/publications\/p590b#en_US_2021_publink100090441\" data-lasso-id=\"46387\" target=\"_blank\" rel=\"noopener\"> IRS website<\/a> for more details.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Should_I_Invest_In_A_Roth_IRA_Or_Traditional_IRA\"><\/span>Should I Invest In A Roth IRA Or Traditional IRA<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>This decision comes down to personal preference, a fair guess of what your retirement income will look like, and IRS rules.<\/p>\n\n\n\n<ul class=\"has-background\" style=\"background-color:#d8ecf7\"><li>If you believe you will be in a lower income tax bracket in retirement, it is a good idea to contribute pre-tax income to a Traditional IRA. You&#8217;ll pay income tax on withdrawals but will pay a lower tax rate versus your current rate.<\/li><li>On the other hand, if you think you&#8217;ll start withdrawing funds at a higher income level at retirement than your current income, then contribute to a Roth IRA with after-tax income at your current low rate. This way, future withdrawals will not add to your income and boost your tax rate.<\/li><li>Another approach is splitting your contributions between account types to hedge your risk.<\/li><li>Do you need immediate tax relief? If you underestimated your income in the current year or expect a significant windfall, taking the immediate tax deduction with a Traditional IRA contribution may be beneficial.<\/li><\/ul>\n\n\n\n<p>Finally, IRS rules stipulate income levels over which you can not qualify to contribute to a Roth IRA. <\/p>\n\n\n\n<p>Income levels also govern whether you can deduct Traditional IRA contributions from your income. <\/p>\n\n\n\n<p>These rules laid out below may decide for you.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Traditional_IRA_Allowable_Deduction_Scenarios\"><\/span>Traditional IRA Allowable Deduction Scenarios<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>If a retirement plan at work does not cover you and your spouse, you can deduct the total amount of your contribution to a Traditional IRA.<\/p>\n\n\n\n<p>Specific<a href=\"https:\/\/www.irs.gov\/retirement-plans\/plan-participant-employee\/2022-ira-contribution-and-deduction-limits-effect-of-modified-agi-on-deductible-contributions-if-you-are-covered-by-a-retirement-plan-at-work\" data-lasso-id=\"46388\" target=\"_blank\" rel=\"noopener\"> income levels<\/a> do not qualify for a deduction if a retirement plan at work covers you or your spouse. <\/p>\n\n\n\n<p>For example, you cannot deduct any amount if married and make over $129,000 a year. <\/p>\n\n\n\n<p>On the other hand, if you make less than $109,000, you can take a full deduction. <\/p>\n\n\n\n<p>Refer to<a href=\"https:\/\/www.irs.gov\/retirement-plans\/ira-deduction-limits\" data-lasso-id=\"46389\" target=\"_blank\" rel=\"noopener\"> this page<\/a> on the IRS website for a complete list of income level-related rules.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Roth_IRA_Allowable_Contribution_Limit_Based_On_Income\"><\/span>Roth IRA Allowable Contribution Limit Based On Income<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Similar to income-based deduction limits for a Traditional IRA, your income determines whether you can contribute to a Roth IRA.<\/p>\n\n\n\n<p>For example, if you are married and make more than $214,000 a year, you can not contribute to a Roth IRA. <\/p>\n\n\n\n<p>You can contribute up to the limit if you make less than $204,000.<\/p>\n\n\n\n<p>If you are single and your income is less than $129,000, you can contribute up to the limit. <\/p>\n\n\n\n<p>On the other hand, if you make more than $144,000, you can not contribute to a Roth IRA.<\/p>\n\n\n\n<p>Refer to the<a href=\"https:\/\/www.irs.gov\/retirement-plans\/plan-participant-employee\/amount-of-roth-ira-contributions-that-you-can-make-for-2022\" data-lasso-id=\"46390\" target=\"_blank\" rel=\"noopener\"> IRS website<\/a> for a complete list of qualifying income levels for a Roth IRA.<\/p>\n\n\n\n<ul><li><strong>Read now:<\/strong> <a href=\"https:\/\/www.moneysmartguides.com\/how-to-contribute-to-a-roth-ira-when-you-make-too-much-money\" data-lasso-id=\"46391\">Learn how to contribute to a Roth IRA even if you make too much money<\/a><\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Convert_A_Traditional_IRA_To_A_Roth_IRA\"><\/span>Convert A Traditional IRA To A Roth IRA<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>You may be able to convert your Traditional IRA to a Roth IRA. <\/p>\n\n\n\n<p>Converting to a Roth IRA can be a good option if you expect to be in a higher tax bracket when you retire or if you want the flexibility of having both taxable and tax-free income in retirement.<\/p>\n\n\n\n<p>To convert your Traditional IRA to a Roth IRA, you must pay taxes on the money you convert. <\/p>\n\n\n\n<p>The converted amount gets added to your taxable income for the year, and you will owe taxes at your marginal tax rate.<\/p>\n\n\n\n<p>Before converting your Traditional IRA to a Roth IRA, you must speak with a financial advisor to see if this is the right move. They can help you weigh the pros and cons of conversion and help you decide if it&#8217;s right for your financial situation.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Final_Thoughts\"><\/span>Final Thoughts<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Deciding between a Roth IRA and Traditional IRA ultimately depends on your financial situation and retirement goals. <\/p>\n\n\n\n<p>Both types of accounts have their benefits, so weighing the pros and cons before deciding which one is right for you is essential.<\/p>\n\n\n\n<p>If you&#8217;re still unsure which type of account is right for you, speak with a financial advisor who can help you make an informed decision about your retirement savings.<\/p>\n\n\n\n<ul><li><strong>Read now: <\/strong><a href=\"https:\/\/www.moneysmartguides.com\/3-best-retirement-calculators-achieve-dreams\" data-lasso-id=\"46392\">Use these retirement calculators to see if you are on track<\/a><\/li><li><strong>Read now: <\/strong><a href=\"https:\/\/www.moneysmartguides.com\/ultimate-guide-retiring-early\" data-lasso-id=\"46393\">Discover the ultimate guide to retiring early<\/a><\/li><li><strong>Read now: <\/strong><a href=\"https:\/\/www.moneysmartguides.com\/retirement-accounts\" data-lasso-id=\"46394\">Here is a run down of the most popular retirement accounts<\/a><\/li><\/ul>\n\n\n\n<p>This article originally appeared on<a href=\"https:\/\/wealthofgeeks.com\/roth-ira-vs-traditional-ira\/\" data-lasso-id=\"46395\" target=\"_blank\" rel=\"noopener\"> Wealth of Geeks<\/a>.<\/p>","protected":false},"excerpt":{"rendered":"<p>It is never too early to start saving to achieve your retirement dream. One of the best ways to do that is by opening an Individual Retirement Account (IRA). An IRA is a savings account with unique tax benefits, which can help you save more money for your retirement. IRAs account for over 34% of retirement assets in the U.S. There are two main types of IRAs: Roth IRAs and Traditional IRAs. We&#8217;ll review the [&hellip;]<\/p>\n","protected":false},"author":282,"featured_media":15744,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_uag_custom_page_level_css":"","site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""}}},"categories":[66],"tags":[],"disclaimer":[],"uagb_featured_image_src":{"full":["https:\/\/www.moneysmartguides.com\/wp-content\/uploads\/2018\/01\/eggs-in-one-basket.jpg",750,420,false],"thumbnail":["https:\/\/www.moneysmartguides.com\/wp-content\/uploads\/2018\/01\/eggs-in-one-basket-150x150.jpg",150,150,true],"medium":["https:\/\/www.moneysmartguides.com\/wp-content\/uploads\/2018\/01\/eggs-in-one-basket-300x168.jpg",300,168,true],"medium_large":["https:\/\/www.moneysmartguides.com\/wp-content\/uploads\/2018\/01\/eggs-in-one-basket.jpg",750,420,false],"large":["https:\/\/www.moneysmartguides.com\/wp-content\/uploads\/2018\/01\/eggs-in-one-basket.jpg",750,420,false],"1536x1536":["https:\/\/www.moneysmartguides.com\/wp-content\/uploads\/2018\/01\/eggs-in-one-basket.jpg",750,420,false],"2048x2048":["https:\/\/www.moneysmartguides.com\/wp-content\/uploads\/2018\/01\/eggs-in-one-basket.jpg",750,420,false],"wp_review_large":["https:\/\/www.moneysmartguides.com\/wp-content\/uploads\/2018\/01\/eggs-in-one-basket-320x200.jpg",320,200,true],"wp_review_small":["https:\/\/www.moneysmartguides.com\/wp-content\/uploads\/2018\/01\/eggs-in-one-basket-65x65.jpg",65,65,true],"web-stories-poster-portrait":["https:\/\/www.moneysmartguides.com\/wp-content\/uploads\/2018\/01\/eggs-in-one-basket.jpg",640,358,false],"web-stories-publisher-logo":["https:\/\/www.moneysmartguides.com\/wp-content\/uploads\/2018\/01\/eggs-in-one-basket.jpg",96,54,false],"web-stories-thumbnail":["https:\/\/www.moneysmartguides.com\/wp-content\/uploads\/2018\/01\/eggs-in-one-basket.jpg",150,84,false]},"uagb_author_info":{"display_name":"Ash &#38; Pri","author_link":"https:\/\/www.moneysmartguides.com\/author\/ashpri"},"uagb_comment_info":0,"uagb_excerpt":"It is never too early to start saving to achieve your retirement dream. One of the best ways to do that is by opening an Individual Retirement Account (IRA). An IRA is a savings account with unique tax benefits, which can help you save more money for your retirement. IRAs account for over 34% of&hellip;","_links":{"self":[{"href":"https:\/\/www.moneysmartguides.com\/wp-json\/wp\/v2\/posts\/26468"}],"collection":[{"href":"https:\/\/www.moneysmartguides.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.moneysmartguides.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.moneysmartguides.com\/wp-json\/wp\/v2\/users\/282"}],"replies":[{"embeddable":true,"href":"https:\/\/www.moneysmartguides.com\/wp-json\/wp\/v2\/comments?post=26468"}],"version-history":[{"count":0,"href":"https:\/\/www.moneysmartguides.com\/wp-json\/wp\/v2\/posts\/26468\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.moneysmartguides.com\/wp-json\/wp\/v2\/media\/15744"}],"wp:attachment":[{"href":"https:\/\/www.moneysmartguides.com\/wp-json\/wp\/v2\/media?parent=26468"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.moneysmartguides.com\/wp-json\/wp\/v2\/categories?post=26468"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.moneysmartguides.com\/wp-json\/wp\/v2\/tags?post=26468"},{"taxonomy":"disclaimer","embeddable":true,"href":"https:\/\/www.moneysmartguides.com\/wp-json\/wp\/v2\/disclaimer?post=26468"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}