Taxpayers often ask, “Should I contribute to my traditional IRA or my Roth IRA?”

This is really a question of when should I pay the tax, now or later? Contributions to a traditional IRA are deducted from income. Contributions to a Roth IRA do not affect an income tax filing. In other words, tax is paid during the year of the Roth contribution.

Two questions rise. What will one’s income be at retirement – lower or higher than now? What will income tax rates be at retirement – lower or higher than now?

While each taxpayer’s scenario is different, it’s interesting that guidance is commonly to contribute to a Roth. These are amazing vehicles. Looking ahead any great distance, one can easily conceive higher tax rates. All things considered, it’s often not all that bad to just pay now.

With over 20 years of experience in public accounting, Amanda Bechen CPA owns Bechen & Company PC located in Wagner, SD, and can be contacted at 605-384-4200 or www.bechenco.com.