IRA's

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The biggest difference between a Roth and a traditional IRA is how and when you get a tax break: The tax advantage of a traditional IRA is that your contributions are tax-deductible in the year they are made. The tax advantage of a Roth IRA is that your withdrawals in retirement are not taxed.

Thus most advice on the Roth IRA versus traditional IRA topic begins with a question: Do you think your tax rate will be higher or lower in the future?  If you can answer that question definitively, you can theoretically choose the type of IRA that will give you the biggest tax savings: If you expect your tax rate to be higher in retirement, choose a Roth IRA and its delayed tax benefit. If you expect lower rates in retirement, choose a traditional IRA and its upfront tax advantage.

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Roth IRA contribution limits for 2019

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You can contribute to a traditional and a Roth IRA during the same year, as long as the total amount does not exceed the maximum allowable contribution limit.

 

Filing status                                      Modified AGI                                  Maximum contribution

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Married filing jointly or qualifying widow(er)        Less than $193,000                       $6,000 ($7,000 if over 50)

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Single, head of household or married filing separately      Less than $122,000                       $6,000 ($7,000 if over 50)

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