Know the Facts About Your Retirement Savings

When deciding on where to invest your retirement savings, it's important to know the facts about these two retirement accounts.  

Both Traditional IRAs and Roth IRAs allow for annual contributions up to $6,000. Those who are 50 and older may make additional catch-up contributions up to $1,000 per year. 

While Traditional IRAs and Roth IRAs share many similarities, understanding their differences will help determine the best fit for your long-term financial goals. Below, describes a few key distinctions.

• A key difference between Roth and traditional IRAs lies in the timing of their tax advantages: With traditional IRAs, you deduct contributions now and pay taxes on withdrawals later; with Roth IRAs, you pay taxes on contributions now and get tax-free withdrawals later.

• Traditional IRAs function like personalized pensions: In return for considerable tax breaks, they restrict and dictate access to funds.

• Roth IRAs function more like regular investment accounts, only with tax benefits: They have fewer restrictions, but fewer breaks as well.

• Whether you think your annual income and tax bracket will be lower or higher in retirement is a key factor in determining which IRA to choose.

Ask your financial professional for more information on these key differences and to discuss how to choose what is right for you. 

Related Articles: 

https://www.rothira.com/traditional-ira-vs-roth-ira

https://www.investopedia.com/articles/retirement/03/012203.asp