Which IRA should I choose?

Which type of IRA is better for me? This is a common question asked by individuals preparing for retirement. Salt Lake City, Utah, Estate planning attorney Jeff Butler provides the following FAQ about IRAs.

Question: What are the 3 most common IRAs?

Answer: Traditional IRA, Roth IRA, and Rollover IRA.

Question: Which IRA is better for me?

Answer: That’s a difficult question to answer because every individual’s needs are different. Let me explain:

  1. Traditional IRAs are the most common IRAs. An individual may contribute $5,000 annually into a traditional IRA. Individuals over 50-years old may contribute $6,000 annually. One tax advantage of the Traditional IRA is that the contribution is deductible the year the money is contributed.
  2. Roth IRAs are relatively new–they were created in 1997. Unlike a Traditional IRA where the contribution is deductible the year, it is contributed, an individual contributing to a Roth IRA does not get a tax deduction when the money is contributed, but the income is withdrawn tax-free.
  3. Rollover IRAs are simply the act of rolling over an employer-sponsored retirement plan into an IRA.

Question: If I want to learn more about IRAs, what should I do next?

Answer: Contact Salt Lake City, UT, estate planning attorney Jeff Butler.