Ask Terry Questions Roth IRA versus deferred comp

Roth IRA versus deferred comp

By Terry Savage on October 06, 2015 | Financial Planning / Retirement

Hi Terry I will have all my debt except for my mortgage paid off in one year at that time I plan on putting 15% of my gross income into retirement I am 55 and have 50,000 in retirement deferred compensation when I am out of debt do I put the 15% and Roth IRA or Max out my deferred comp thank you

Terry Says:  I’m assuming this is truly a deferred comp plan — and not a 40l(k) where you could get a matching contribution from your employer?  In that case, I would go for the Roth.  It’s good to have some after-tax savings — and all the growth will come out of the Roth tax-free if the government keeps its promise!  And you will never be required to withdraw from the Roth, which could be helpful down the road in building savings for your later retirement years.  Of course, you can only put away $5500 in the Roth –and must qualify based on income (single making less than $131,000, joint return with less than $193,000).  If you don’t qualify for the Roth, it still might be worthwhile to have some liquid, after-tax money because who knows how high your tax bracket will be in the future.

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