Almost everyone has the goal of saving for retirement. But before you can do so, you face one of the most fundamental questions about investing: Which type of account should you choose? If you’re lucky enough to have a workplace retirement plan, that’s often a great place to start. But if you don’t—or even if you do and want to save more, or just want additional options—the individual retirement account, or IRA, is a popular choice for its tax-friendly features. However, choosing between a traditional IRA ( and a Roth IRA ( requires some difficult forecasting.
On this episode, Mark Riepe ( is joined by Hayden Adams ( , CPA, CFP®, director of tax and financial planning at the Schwab Center for Financial Research, to unpack the complexities underpinning the Roth-vs.-traditional decision.
• Account choice isn’t a conundrum only when you’re accumulating assets. Listen to the episode “How Can You Pay Yourself in Retirement” ( to hear more about how to coordinate withdrawals across multiple accounts.
• Remember that tax laws are always subject to change. You can check out the IRS Newsroom page ( regularly for updates.
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Important Disclosures:
The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision.
All expressions of opinion are subject to change without notice in reaction to shifting market conditions.
Diversification and rebalancing a portfolio cannot assure a profit or protect against a loss in any given market environment. Rebalancing may cause investors to incur transaction costs and, when rebalancing a non-retirement account, taxable events may be created that may affect your tax liability.
This information does not constitute and is not intended to be a substitute for specific individualized tax, legal, or investment planning advice. Where specific advice is necessary or appropriate, Schwab recommends consultation with a qualified tax advisor, CPA, financial planner, or investment manager.
Investing involves risk including loss of principal.
Roth IRA conversions require a 5-year holding period before earnings can be withdrawn tax free and subsequent conversions will require their own 5-year holding period. In addition, earnings distributions prior to age 59 1/2 are subject to an early withdrawal penalty.
Any corporate name mentioned is for illustrative purposes only and is not a recommendation, endorsement, offer to sell, or a solicitation of an offer to buy any security.
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