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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Ditchdigger who wrote (50170)	11/26/2012 7:49:12 AM
From: jhalperin1	Read Replies (1) \| Respond to of 78748

Traditional IRA contributions only make sense if one's current marginal tax rate is much higher than projected future rate. For instance, a working 58 year old in the highest combined Fed and State marginal rate, say 40%, plans on retiring at age 65 at which time he'd live off SS and pension income which would be taxed at 20%. Roth is the way to go if tax rates are projected to be static or even higher in the future. Keep in mind though that an annual Roth contribution must be held for 5 years (withdrawals are treated as first in - first out). If not, withdrawals are taxable. I'd double check if your State actually taxes Roth withdrawals as it doesn't make sense since the contributions are non-deductible. Hope this helps.