You got a raise, paid off debt, and built an emergency reserve. Now you want to start saving for retirement, but you are not sure if you should use an IRA or a ROTH IRA. It really comes down to timing, eligibility, and your goals.


The more time you have before the utilization of the funds, the more beneficial a ROTH becomes. A ROTH’s ability to grow tax deferred and come out tax free can create a great tax benefit in retirement after years and years of compounding growth.

When nearing retirement ROTH contributions lose effectiveness with no deductibility and accumulation loses its effectiveness. A traditional IRA becomes more effective in near term scenarios when deductibility is available.


Your income and eligibility in an employer sponsored plan impact the availability of ROTH and the deductibility of Traditional IRA’s. These factors could make the decision for you as it could narrow choices.


Another consideration may be employer sponsored options. Very frequently employer plans do not offer a ROTH option. Contributing to a ROTH IRA can provide you a good tax diversification option within your retirement.

Definitely consult a qualified advisor to help make the decision as your income and eligibility in an employer sponsored plan can impact your benefits and ability to utilize these vehicles.

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Always remember that while this is an investor education piece, this does not trigger or relate to trading activity on your account with Financial Future Services. This article is for informational purposes only and not intended as a recommendation. Each investors circumstances are different and a full review of you situation is necessary for a recommendation.

Any and all third-party posts or responses to this blog do not reflect the views of the firm and have not been reviewed by the firm for completeness or accuracy.

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