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The Penny Hoarder - Roth IRA vs. Traditional

Matt Hylland was recently interviewed for an article that was published on The Penny Hoarder Website titled, “Roth vs. Traditional IRAs: Here Are the Differences (and Why We Love Both)”.

So what choice is best for you? A Roth IRA, or a Traditional IRA?

The answer may be both!

“Since distributions from a Roth IRA are not counted as taxable income, if you have both a Roth IRA and traditional IRA — or 401(k) — during retirement, you can take distributions from a traditional IRA or 401(k) to fill up low-income tax brackets, and then take distributions from your Roth to avoid being taxed at higher tax bracket,” said Matt Hylland, registered investment adviser at Hylland Capital Management.

In the end, the question might not be which IRA should you invest in; it might be which order.

“For those still accumulating assets, I think it makes sense to build up assets in both a Roth IRA and a traditional IRA or 401(k),” Hylland said. “For most, that means prioritizing Roth IRA contributions after maximizing your 401(k) match, if applicable.”  

Just because one is right for you right now, that doesn’t mean it’ll always be the right choice. That’s why it’s important to do a checkup on your income and timeline for retirement at the beginning of every tax year.

The entire article can be found here: https://www.thepennyhoarder.com/smart-money/retirement/roth-vs-traditional-ira/

For further reading, you may also enjoy our blog post here: “How Not Saving in an IRA This Year Could Cost You $42,000

Matt Hylland