Ask Jean: How Do A Regular IRA And A Roth IRA Differ When It Comes To Taxes?

Saving money on ask jean regular ira does not have to be complicated. We rounded up the essentials so you can spend less and skip the guesswork.

Key Takeaways

• A reader asks HerMoney CEO Jean Chatzky: "How do a regular IRA and a Roth IRA differ when it comes to taxes?" Q: Today’s question comes from...
• She writes: I’d like to set up an IRA for myself.
• How do a regular IRA and a Roth IRA differ when it comes to taxes?

A reader asks HerMoney CEO Jean Chatzky: "How do a regular IRA and a Roth IRA differ when it comes to taxes?"

Q: Today’s question comes from Jen. She writes: I’d like to set up an IRA for myself. How do a regular IRA and a Roth IRA differ when it comes to taxes? Is one better than the other?

A: Excellent move, Jen! As you noted, the biggest difference between the traditional and Roth IRA is the tax break. A traditional IRA gives you a tax deduction now, while Roth IRAs don’t - but Roth withdrawals are tax-free later, and traditional IRA withdrawals are not.

You could make a decision about which IRA is best for you based on that single piece of information. For example, if you know you’ll be in a higher tax bracket in retirement than you are now, the Roth’s tax-free withdrawals are more valuable to you. If you’re in a high tax bracket right now or predict your tax rate will be lower in retirement, a traditional IRA is a good choice.

No crystal ball for your future taxes? No worries - here are other key differences that could help you decide. Once you pick your IRA type, it’s time to choose where to open it. Start exploring your options here.

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Final Thoughts

The bottom line: a little research on ask jean regular ira goes a long way. Compare your options, watch for seasonal offers, and never pay full price when a better deal is one click away.

Originally published at savingswitch.com.