Should I convert my Traditional IRA to Roth?

Consider converting in low-income years (e.g., early retirement, sabbatical). You pay tax on the converted amount now in exchange for tax-free growth. Run the numbers for your situation.

Can I contribute to both Traditional and Roth IRA?

You can have both, but the annual limit is shared. $7,000 total in 2024, whether you put it all in one or split between them.

What if I'm not sure about my future tax bracket?

Tax diversification helps. Split contributions between Traditional and Roth. In retirement, you can choose which to withdraw from to optimize taxes.

Traditional IRA vs. Roth IRA: Which is Better? | Investors Lab

Traditional IRA

Contributions: Often tax-deductible (reduces taxable income now).
Withdrawals: Taxed as ordinary income in retirement.
RMDs: Required minimum distributions start at 73.
Best when: You're in a high tax bracket now and expect lower in retirement.

Roth IRA

Contributions: After-tax (no deduction now).
Withdrawals: Tax-free in retirement.
RMDs: None during your lifetime.
Best when: You're in a low bracket now or expect higher taxes in retirement.

Key Considerations

Tax bracket now vs. later: If you're in the 22% bracket now and expect 12% in retirement, Traditional may save you taxes. If you expect to be in a higher bracket later, Roth wins.

Young investors: Often in lower brackets. Roth can be attractive—decades of tax-free growth.

Diversification: Having both pre-tax and Roth gives flexibility. You can choose which to withdraw from based on tax situation each year.

Income Limits

Traditional IRA deduction: Phase-out if you're covered by a retirement plan at work and income is high.
Roth IRA: Phase-out around $146k single / $230k married. Backdoor Roth avoids the limit.