Traditional IRA vs. Roth IRA: Which One Should You Choose?

Our previous article was about how planning for retirement isn’t just about the future—it’s about making smart financial decisions right now that can lower your tax bill, build long-term security, and give you peace of mind.

Today, we’ll help you understand the difference between two of the most popular retirement savings tools: the Traditional IRA and the Roth IRA.

Both offer tax advantages—but they work in very different ways. Choosing the right one for you depends on your income, current tax bracket, and retirement goals.

💼 Traditional IRA vs Roth IRA: Side-by-Side

Pros & Cons

Traditional IRA

Pros:

• Reduces your taxable income now
• No income limits for contributions
• Ideal if you expect to be in a lower tax bracket in retirement

Cons:

• Withdrawals taxed in retirement
• RMDs required at age 73
• Early withdrawals may trigger penalties

Roth IRA

Pros:

• Withdrawals in retirement are tax-free
• No RMDs
• Contributions can be accessed anytime without penalty

Cons:

• Contributions are made with after-tax dollars
• Income limits restrict eligibility
• Immediate tax savings not available

🔍 Who Benefits Most?

Traditional IRA may be a better choice if:

• You earn a high income now and want a tax break
• You expect to be in a lower tax bracket in retirement
• You want to reduce your taxable income this year

Roth IRA may be a better choice if:

• You’re younger or in a lower tax bracket now
• You expect to pay higher taxes in retirement
• You want flexibility and tax-free income in the future

🔄 What About Roth Conversions?

Already contributing to a Traditional IRA? You might be able to convert it to a Roth IRA—a move that makes sense for many people, especially during low-income years. But be careful: Roth conversions are taxable events, so timing and strategy are everything.

Let us help you navigate this smartly.

Let’s Maximize Your Retirement Strategy

Choosing the right retirement account isn’t always simple—but that’s where we come in.

At Velin & Associates, Inc., we help individuals and business owners choose and manage retirement accounts that work for their goals—while optimizing their tax outcomes.

📞 323-902-1000
📧 dmitriy@losangelescpa.org
🌐 www.losangelescpa.org