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by Pastaman on June 5th, 2003

Pastaman

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Which is better, an IRA or a Roth IRA?

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  • by Yoyo Head on March 13th, 2004

    Yoyo Head

    Neither the Traditional IRA nor the ROTH can be said to be better in general. They are different ways to go about retirement investing in a tax-advantaged way. The question of which is better depends on you and the particulars of your financial situation.

    If you participate in a 401(k) or 403(b) at your job, you are not allowed to deduct IRA contributions from your taxable income. If your contributions are not deductible, then a ROTH is the way to go because with a ROTH you don't deduct the contributions anyway. A ROTH has other advantages, like growing totally tax free, whereas with a Traditional IRA the earnings grow tax deferred, not tax free.

    Also with a ROTH it is easier to take money out early if you need to, although in my opinion you should never withdraw from or borrow against a retirement account unless it's a case of life or death, or maybe homelessness.

    This is a complicated issue so check with an expert who knows not only about IRAs, but who also knows you, and in whom you have confidence. If you don't know a person like that, find one.
    Good luck.

    Comments

    • All true. For the comparaive tax advantages, see my answer below...

      Jackson Miller

      by Jackson Miller on April 25th, 2004

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