[USER]

Hi!
Can someone explain when a Roth is beneficial for retirement?

From my understanding it is a no brainer, but my husband says a Roth is not as good as a traditional IRA.

I wanted to transfer some of my funds to a Roth from my IRA.

[Jason]

My take: Personal finance is 10% math, 90% psychology.
From a pure math perspective, a Roth (no tax deduction for contributions, but no taxes on withdrawals after age 59 1/2) wins when your marginal tax rate on withdrawals during retirement is lower than your tax rate when you made the contribution.

Note that, in certain circumstances, the 59 1/2 rule may have exceptions.

From a psychology perspective, a Roth can win because you pay the tax upfront, which eliminates one more hurdle to calculating your available post-tax income.

For me (low tax rate early in my career, high now, slightly lower in retirement), I combined the two above by doing Roth in early years (LOTS of tax free growth, relatively low tax burden) and traditional in later years.

When I hit retirement, if my withdrawals (and tax rate) are lower, I will withdraw from the traditional and pay the modest taxes.

If my withdrawals will be larger, I will withdraw from the Roth and know that I don’t have to pay taxes (since I already did).

[Ernest]

It’s reliant on a pretty straightforward question that you have to ask yourself: do you expect your income taxes to be higher in retirement or now?

If higher now then do traditional, if higher in retirement do the Roth.

And FWIW there’s nothing wrong with hedging your bets and splitting your contributions in two.

I know my retirement platform makes it pretty easy to do and there are no match ramifications.

You could look into that.

[John]

You both need to learn the benefits of both before you use them

[Steve]

When you retire early and need ACA, from 59.5 to 65 you can have your Roth fully invested into high income funds and have all your income tax-free while you convert your retirement accounts to Roth at a low tax bracket to feed any NAV decline until you decide to start SS.

Your Roth is a big part of your bridge from 59.5 until your RMDs kick in.

[Michael]

Roth grow like non-Roth, but No taxes are taken out when you take out The money – it was taxed when you added funds to The Roth

[Diane]

A Roth can be good in a lot of ways, but you should read up on it and decide if it’s better for you.

And once money is in a traditional IRA, you don’t just transfer it to another type of account, you would do a conversion.

If you want a Roth, you could start a new account alongside your traditional IRA.

[Ben]

Both have their pros and cons. Gotta look at your whole picture (both now and future expectations) to decide what is better for you.

Like most things finance, roth vs traditonal is a “it depends” conversation.

[Shawn]

You could analyze this a million ways. Splitting the money is a valid decision.

You can absolutely do some of each.

Both options have their advantages in certain situations.

Being able to withdraw from either makes a ton of sense in retirement.

[Robert]

Tons of info on the net on this, in addition to some great YouTube videos.

[Author]

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