Decide which Individual Retirement Account (IRA) is best for your financial future by comparing their after-tax growth.
2024 Limit: $7,000 ($8,000 if 50+)
The general rule: If you expect to be in a lower tax bracket in retirement, Traditional is better. If higher, Roth is better.
Net After-Tax Wealth
$369,514
100% Tax-Free Withdrawals
$402,675
Taxed as Income in Future
No RMDs with Roth
Roth IRAs do not require withdrawals during your lifetime.
Both accounts offer massive tax advantages, but they differ in when you get the tax break.
Contributions to a Traditional IRA are often tax-deductible in the year you make them. This lowers your taxable income today. However, your money is taxed as ordinary income when you withdraw it in retirement.
You contribute to a Roth IRA with after-tax dollars (no immediate deduction). The trade-off is that all qualified withdrawals in retirement—including all the growth and dividends—are 100% tax-free.
The choice usually depends on your tax rate:
The 2024 contribution limit for both accounts combined is $7,000. If you are 50 or older, you can contribute up to $8,000 (including a $1,000 catch-up contribution).
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