Traditional verses Roth

All IRAs are designed to help people save for retirement and can be used to purchase other investment products, such as stocks, bonds, and CDs, but the differences between the options can be significant. Contributions to a traditional IRA can be tax deductible, depending on one’s income level, whereas contributions to a Roth IRA are not tax deductible. So why are Roth IRAs still popular?

First, withdrawals for a traditional IRA begin at age 59½ and are mandatory by age 70½. With a Roth IRA, you can withdraw at any age. Second, taxes are almost always paid on earnings when withdrawing funds from a traditional IRA—there may be some exceptions, while withdrawals on Roth IRAs are completely tax-free, if rules and regulations are followed. Finally, all funds withdrawn from a traditional IRA before age 59 ½ are subject to a 10% penalty, with some exceptions. Principle contributions to a Roth IRA can be withdrawn at any time without penalty, subject to some restrictions.

Contact our Member Care Centeror come into one of our branches to learn more about which investment option is right for you.