To Convert or Not?
Roth IRA vs. Traditional IRA: Which Is Right for You?
Choosing between a Roth IRA and a Traditional IRA is one of the most important retirement decisions you'll make.
Here's what you need to know.
Key Differences
Roth IRA:
+ Pay taxes now, withdraw tax-free later
+ There are income limits, but a possible backdoor option exists
+ Required Minimum Distributions (RMDs) are not required
+ Contributions are accessible at any time
Traditional IRA:
+ Get tax deduction now, pay taxes later
- The ability to make tax-deductible contributions phases out at higher income levels
- RMDs are required at a specific age (timing varies depending on date of birth)
- Early withdrawals incur a penalty and are taxed when made before a specified age
Which Should You Choose?
It depends…but in general:
Pick Roth if you expect higher taxes in retirement or want tax-free growth
Pick Traditional if you want immediate tax savings and expect lower future taxes
Roth Conversion Strategies
Converting a Traditional IRA to Roth makes sense when:
✅ In a low tax bracket (retirement gap years, career break)
✅ After market declines (convert when values are down)
✅ Before RMD age (avoid mandatory RMDs)
✅ Estate Planning – Roth IRAs have no RMDs, making them ideal for heirs
Smart Conversion Tips:
Do partial conversions over several years
Stay within your current tax bracket
Consider strategies to lessen the tax hit (consult your Chalk Money Financial Planner)
The Bottom Line
Roth IRAs offer tax-free growth and withdrawals, while Traditional IRAs provide upfront tax breaks. Younger investors often benefit the most from Roth accounts, while those nearing retirement should carefully evaluate their tax situation.
Need help deciding? Your Chalk Money Financial Planner can run personalized projections.
Advisory Services are offered through Chalk Money, LLC, a DBA of Forefront Advisor Network. The foregoing content reflects the opinions of Jay Kadlec and is subject to change at any time without notice. Content provided herein is for informational purposes only and should not be used or construed as investment advice or a recommendation regarding the purchase or sale of any security. There is no guarantee that the statements, opinions, or forecasts provided herein will prove to be correct. All information or ideas provided should be discussed in detail with an advisor, accountant, or legal counsel before implementation. Securities investing involves risk, including the potential for loss of principal. There is no assurance that any investment plan or strategy will be successful.
