Ask Terry Questions Roth versus traditional IRAs for “older” people!

Roth versus traditional IRAs for “older” people!

By Terry Savage on January 25, 2015 | Financial Planning / Retirement

My wife is eager to put money from our savings into Roth IRAs. Given that I am 67, retired, and my wife plans to retire within 5 years, is Roth the way to go? All my reading about Roth IRAs seems to be touting their advantages to the younger investors. Your thoughts would be appreciated. Thank you.

Terry Says: Well, that’s correct:  the big advantage to a Roth IRA for a young person is all those years of tax-free growth.  The advantage to older people is that if you do not NEED the money, you are not required to make withdrawals on a Minimum Required Withdrawal basis, as you are with other retirement accounts.  (That’s because you contribute to a Roth with after-tax money.)  If your wife is still working, and she qualifies to make a Roth contribution based on income (less than $181,000 modified adjusted gross income for a married couple filing jointly in 2014) and if you don’t need the deduction from current taxes, then there is no reason she shouldn’t contribute to a Roth for herself.  If she needs the money later, she can always take it out.  Any earnings come out tax-free after the account is held for at least 5 years.

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