Cortburg Speaks Retirement

Traditional IRA vs. Roth IRA: Which One Is Right for You? | Retirement Planning Explained

• Miguel Gonzalez, MBA, AIF®, CPFA®, CRC® • Season 2024 • Episode 242

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Understanding the difference between a Traditional IRA and a Roth IRA is key to building a tax-efficient retirement plan. In this episode, Miguel Gonzalez, CRC®, breaks down the key features, tax implications, and how to choose the right account based on your goals.

Cortburg Retirement Advisors is a boutique financial planning firm committed to helping you grow, protect, and preserve your assets from your first job to retirement. We specialize in wealth management, estate and tax planning, group retirement, employee benefits, insurance, and retirement planning to navigate any economic climate.

Miguel Gonzalez, a Retirement Specialist with 20+ years of experience, offers expertise in retirement income planning, investment management, and retirement plan design. With an MBA from Columbia Business School, and professional experience with JP Morgan Chase, Merrill Lynch, and more, Miguel is a trusted advisor for his clients.

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Welcome to Cortburg Speaks Retirement Podcast
with Miguel Gonzalez, MBA, AIF®, CPFA®, CRC®

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Welcome to Cortburg Speaks Retirement

An audio podcast about investing in the stock market, financial planning, money management and retirement planning.  Each Wednesday, we help investors at all stages of life learn how to potentially grow and preserve their money from first job through retirement.

Now here is your host, Miguel Gonzalez.

Good morning and welcome to the CORTBURG SPEAKS RETIREMENT audio podcast.   

On this week’s audio podcast, let’s dive into one of the most common questions I hear:
 What’s the difference between a Roth IRA and a Traditional IRA—and which one is right for me?

Both are individual retirement accounts that help you save for the future, but they differ in how—and when—you get tax benefits.

Let’s take a closer look.

1. Contributions: Before-Tax vs. After-Tax

A Traditional IRA allows you to make pre-tax contributions if you qualify. This means your contributions may be tax-deductible, reducing your taxable income in the year you contribute. You then pay taxes later when you withdraw the money in retirement.

A Roth IRA, on the other hand, is funded with after-tax dollars. You don’t get a deduction today, but your money grows tax-free—and qualified withdrawals in retirement are also tax-free.

 

2. Withdrawals in Retirement

With a Traditional IRA, withdrawals are treated as ordinary income and taxed at your future tax rate. This could be helpful if you expect to be in a lower tax bracket in retirement.

With a Roth IRA, qualified withdrawals are completely tax-free, including both your contributions and earnings. This is a powerful tool if you expect your taxes to go up in the future—or want to avoid surprises in retirement.

 

3. Required Minimum Distributions (RMDs)

Traditional IRAs are subject to required minimum distributions starting at age 73. You’re legally required to start taking money out—even if you don’t need it—potentially increasing your taxable income.

Roth IRAs, however, do not require RMDs during your lifetime, making them a popular choice for those who want to let their money grow longer or pass assets to heirs tax-free.

 

4. Income Limits

Anyone can contribute to a Traditional IRA, but whether your contribution is tax-deductible depends on your income and whether you or your spouse is covered by a retirement plan at work.

For Roth IRAs, eligibility to contribute phases out at higher income levels. For 2025, if your modified adjusted gross income is above a certain threshold, you may not be able to contribute directly.

 

5. Choosing the Right One for You

So which IRA is better?

  • Choose a Traditional IRA if you want to reduce your taxes now and expect to be in a lower bracket later.
  • Choose a Roth IRA if you expect to be in a higher tax bracket in retirement—or value the flexibility of tax-free withdrawals.

In many cases, people benefit from having both. Diversifying your tax treatment can provide more flexibility in retirement income planning.

 

In Closing

Both Traditional and Roth IRAs offer powerful advantages for retirement savers. The best choice depends on your current tax situation, your income, and your long-term goals. A financial professional can help you evaluate your options and build a strategy that fits your unique situation.

Make sure to visit our website, www.CortburgRetirement.com. Our site is filled with educational videos, eBooks, publications, and financial calculators designed to help you learn more about your finances.  As you search our site, send us a note regarding any questions you may have about any particular investment concepts or products. We will get back to you quickly with a thoughtful answer.

This is Miguel Gonzalez, Certified Retirement Counselor (CRC) and Managing Partner, with Cortburg Retirement Advisors signing off for this week’s educational podcast.  

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Miguel Gonzalez, MBA, AIF®, CPFA®, PPC®, CRC®

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