After reading countless articles about the subject, still not too sure which would be better for me. I'm 53.
Any input helps. Thanks
Any input helps. Thanks
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Traditional or Roth IRA?
- Thread starter Eggmanmja01
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There's no definitive answer. It all depends on your current tax situation and whether or not you feel your retirement tax situation will be better or worse than current.
Do they both have company match? If only one has a match, pick that one. Can't beat free money.
Do you want to pay your taxes in today's dollars or dollars affected by inflation 14 years from now? 401K gives you a tax advantage today but you have to pay tax when you finally pull it out. Roth, you pay tax today and no tax in the future.
I'm a big fan of Erin Talks Money channel on the tube.
Good luck on your decision!
Do you want to pay your taxes in today's dollars or dollars affected by inflation 14 years from now? 401K gives you a tax advantage today but you have to pay tax when you finally pull it out. Roth, you pay tax today and no tax in the future.
I'm a big fan of Erin Talks Money channel on the tube.
Good luck on your decision!
Have both. Max out the Roth amd then put the rest in traditional. But watch it, there are income limits to Roth IRA!
I appreciate the input. I have a good amount in my FERS TSP savings account with a combination of the different funds. I have extra money on hand to open a second account. Since I am over 50, I know I can contribute 8k.
Put as much in Roth as you can. I'm getting ready to do IRA to Roth conversions. Getting ready to pay big taxes for the next 5 years doing the conversion.
I vote ROTH. Reason being is over the years, the interest generated will be much higher than the money you put in. Look at your Annual TSP statements and find your Lifetime information somewhere along the bottom. You will see that the money you've put in over the lifetime of your Federal Service is a much smaller amount than the interest gained. So long as you're not keeping all your money in G Fund. Example, when I was around the $200K mark, my lifetime investment was about $60K. $140K was interest earned. I'd rather pay taxes on $60K than the whole thing.
Also, go to Fedsmith.com and sign up for the weekly TSP summary. This is a chart they'll send to your email, it literally takes me seconds to view and see what I need to see. You can use your personal email, doesn't have to be your .gov email. Make sure it doesn't go to your junkmail if you don't see it within a couple of weeks. I use this email to track the funds and readjust my portfolio as I see fit.
Also, go to Fedsmith.com and sign up for the weekly TSP summary. This is a chart they'll send to your email, it literally takes me seconds to view and see what I need to see. You can use your personal email, doesn't have to be your .gov email. Make sure it doesn't go to your junkmail if you don't see it within a couple of weeks. I use this email to track the funds and readjust my portfolio as I see fit.
If you have no deductions then I’d say traditional IRA, reason being you can generally pay for one if you take one out for you and your wife. You can pay for one with the tax deduction by getting a return. Check with your tax person to run the figures for you first. Speaking from experience, when you retire then your income is much lower so less taxes will be taken out when you withdraw.
