This vs That ⚡ Traditional vs Roth Retirement Accounts

By TRG Advisors on April 6, 2021

If a Retirement Account is right for you, which one should you choose — a Traditional or a Roth? You would think the answer is simple.

 

The key difference between Traditional and Roth Retirement Accounts lies in the timing of their tax advantages. In both a Traditional and Roth, the money you contribute has the potential to grow tax-deferred.

However, there are several big differences between the two that may affect which one you decide to use. Investors should review objectives and marginal income tax bracket to evaluate whether to contribute to a Traditional Retirement Account, a Roth Retirement Account, or a combination of both.

Tax Break Now

Contributions go into the account pre-tax, and you may be eligible for a tax deduction. However, distributions of both principal and growth are taxable upon withdrawal.

Tax Break Later

Contributions go into the account after-tax, so you do pay taxes on the money you put in.  However, distributions of both principal and growth are tax-free upon withdrawal.

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The Rand Group is a group comprised of investment professionals registered with Hightower Advisors, LLC, an SEC registered investment adviser. Some investment professionals may also be registered with Hightower Securities, LLC (member FINRA and SIPC). Advisory services are offered through Hightower Advisors, LLC. Securities are offered through Hightower Securities, LLC.

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