#013 - Traditional vs. Roth

In this episode Rachael and Matt discuss the traditional versus Roth debate when it comes to retirement contributions. They emphasized the importance of considering individual variables such as tax brackets, income changes, spending habits, and future tax implications. They also highlighted the value of timing strategies and Roth conversions in optimizing tax savings.

Key Points Discussed:

1. Traditional IRAs provide a tax deduction in the current year, grow tax-deferred, and are taxed upon withdrawal in retirement.
2. Roth IRAs require you to pay taxes in the current year, but offer tax-free growth and tax-free withdrawals in retirement.
3. The goal is to pay the least amount of tax, taking advantage of lower tax brackets.
4. If your tax rate stays the same, there is no difference between traditional and Roth.
5. Consider variables such as changes in tax laws, marital status, state income tax, spending habits, retirement age, and sources of retirement income.
6. A rule of thumb is to contribute to Roth if you are in the 10-12% tax bracket, traditional or Roth in the 22-24% bracket, and traditional if you are in the 32% bracket or higher.
7. Customize your approach based on your career stage, spending habits, and potential for future income changes.
8. Pay attention to big swings in income and consider timing strategies for traditional or Roth contributions.
9. Consider the impact of RMDs, Medicare premiums, and Social Security taxation in retirement.
10. Many individuals are forced into a mix of traditional and Roth due to income limitations and employer plans.
11. Roth conversions in retirement can be beneficial, especially for high earners or those with large brokerage accounts.
12. It's important to customize your strategy based on your individual situation and seek professional advice.

Connect with us:

Rachael

X/Twitter - @camp_wealth

rachaelcampwealth.com

Matt

X/Twitter - @matthew_garasic

unrivaledwm.com

Disclaimer: This podcast provides general information and discussion about finance, investing, and related subjects. The content provided in this podcast is not intended as investment advice and should not be taken as such. Always seek the advice of a professional or conduct your own research before making financial decisions.

Rachael Camp offers advisory Services are offered through Creative Financial Designs, Inc., a Registered Investment Adviser, and Securities are offered through cfd Investments, Inc., a Registered Broker/Dealer, Member FINRA & SIPC, 2704 S. Goyer Rd., Kokomo, IN 46902. 765-453-9600.

Neither Camp Wealth or Unrivaled Wealth Management are affiliated with the CFD companies or each other.