by Donn J. Sinclair, MBA June 24, 2022
Which is best for you ? Maybe both should be part of your 2022 retirement savings plans. In 2022 you may be eligible to contribute up to $6,000 for those under age 50. Those age 50 and older may be eligible to contribute up to $7,000. You may want to split your maximum contribution between your Traditional IRA and your Roth IRA !
With Traditional IRAs and other pre-tax retirement plans the contributions may be tax deductible in 2022. Your earnings grow tax-deferred until you withdraw them. Normally it should be best to withdraw Traditional IRA funds in retirement when you normally have less income, and therefore pay less in taxes.
Roth IRA and other post-tax retirement plans you pay the taxes on the contributions, and your earnings should grow tax-exempt or tax-free. Those post-tax accounts that feature tax-exempt withdrawals after age 59.5 are excellent complements to your pre-tax Traditional IRA savings.