Retirement | First Published March 22, 2020

Financial Decoder: Season 4 Episode 4

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Should You Open a Roth IRA or Traditional IRA?

When choosing between a Roth or traditional IRA, it comes down to whether or not you think it’s smarter to pay now or pay later, given your particular situation.

Almost everyone has the goal of saving for retirement. But before you can do so, you face one of the most fundamental questions about investing: Which type of account should you choose? If you’re lucky enough to have a workplace retirement plan, that’s often a great place to start. But if you don’t—or even if you do and want to save more, or just want additional options—the individual retirement account, or IRA, is a popular choice for its tax-friendly features. However, choosing between a traditional IRA and a Roth IRA requires some difficult forecasting.

On this episode, Mark Riepe is joined by Hayden Adams, CPA, CFP®, director of tax and financial planning at the Schwab Center for Financial Research, to unpack the complexities underpinning the Roth-vs.-traditional decision.

  • Account choice isn’t a conundrum only when you’re accumulating assets. Listen to the episode “How Can You Pay Yourself in Retirement” to hear more about how to coordinate withdrawals across multiple accounts.
  • Remember that tax laws are always subject to change. You can check out the IRS Newsroom page regularly for updates.

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Financial Decoder is an original podcast from Charles Schwab.

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