What are the tax benefits of different IRA’s?
jennifer asked:
I am just starting out in my career (26 years old). My company does not offer any retirement or 401k plans. I just did my taxes and realized I can get an extra $925 back on my refund if I contribute $3500 to a traditional IRA. I have decided I can afford to and should make this size contribution for last year to some sort of IRA. Should I contribute to the ROTH IRA and get the tax benefit when I retire or the traditional IRA and get the benefit now?
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I am just starting out in my career (26 years old). My company does not offer any retirement or 401k plans. I just did my taxes and realized I can get an extra $925 back on my refund if I contribute $3500 to a traditional IRA. I have decided I can afford to and should make this size contribution for last year to some sort of IRA. Should I contribute to the ROTH IRA and get the tax benefit when I retire or the traditional IRA and get the benefit now?
March 30th, 2009 at 6:00 pm
It was explained to me that in the end the Roth is better you won’t be taxed when you withdraw at retirement which will be worth a lot more than the benefit you get now for a tradional. Of course you have to do what works best for you and your financial situation. I would get started right away with which ever you do, it truly is never too early to start saving for retirement especially with SS up in the air.