One of the key choices you’ll need to make in retirement planning is between tax-free and tax-deferred growth. In the realm of individual retirement plans, this decision is often framed as traditional IRA vs Roth IRA.

In this video, our Director of Professional Development, John Paul Ruiz, will walk you through the contribution requirements of each account and highlight the key advantages and considerations when comparing traditional IRAs and Roth IRAs

Timestamps:
0:00 | Intro
0:20 | The Benefits of Tax-Advantaged Growth
0:57 | Tax-Deferred Accounts (Traditional IRA, SEP and SIMPLE Plans)
1:56 | Traditional IRA Contribution Requirements
2:18 | Tax-Free Accounts (Roth IRA)
3:02 | Roth IRA Contribution Requirements
3:20 | Unique Benefits of a Roth IRA
4:29 | Discover which growth strategy suits your financial goals
5:02 | Check out our links in the description below!

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Disclaimer: All IRA investments have risk and investment decisions should be made with the help of an experienced professional or financial advisor. IRA custodians can provide personalized service, but they cannot provide investment advice.

The Entrust Group is the leading self-directed IRA administrator and an acknowledged authority in the field of alternative investments.
Learn more about The Entrust Group at

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When it comes to investing for your future, there are a multitude of options available to help you grow your wealth. One key decision that you will need to make is whether to invest in tax-free or tax-deferred accounts. Each strategy has its own benefits and drawbacks, and it is important to understand these differences in order to make the best decision for your financial future.

Tax-free accounts, such as Roth IRAs and Roth 401(k)s, allow you to invest money that has already been taxed, so that when you withdraw the funds in retirement, you will not owe any taxes on the earnings. This can be a huge benefit, as it allows your money to grow tax-free over time, potentially resulting in a larger nest egg for your retirement years. Additionally, tax-free accounts can provide you with more flexibility in retirement, as you can withdraw your contributions (but not necessarily your earnings) at any time without penalty.

On the other hand, tax-deferred accounts, like traditional IRAs and 401(k)s, allow you to invest pre-tax dollars, which can lower your taxable income in the year that you contribute. While this can be beneficial in the short term, as it reduces your tax bill, you will be required to pay taxes on your contributions and earnings when you withdraw the funds in retirement. This can potentially result in a higher tax bill in the future, especially if your tax rate is higher in retirement than it is currently.

Ultimately, the decision between tax-free and tax-deferred accounts will depend on your individual financial situation and goals. If you expect to be in a higher tax bracket in retirement or if you want the flexibility to access your money without penalties, a tax-free account may be the better option for you. However, if you are looking to reduce your current tax bill and are comfortable with potentially paying taxes on your withdrawals in retirement, a tax-deferred account may be more suitable.

It is worth noting that a balanced approach, utilizing both tax-free and tax-deferred accounts, can provide you with flexibility and tax diversification in retirement. By diversifying your retirement accounts, you can better manage your tax liability and create a more stable income stream in retirement.

In conclusion, choosing between tax-free and tax-deferred accounts is an important decision that should not be taken lightly. It is essential to consider your current financial situation, future tax implications, and long-term goals in order to make the best decision for your financial future. Consulting with a financial advisor can also help you navigate the complexities of tax-efficient investing and create a personalized growth strategy that aligns with your unique needs and objectives.