IRAs and ROTHs may appear to be similar on the surface of things, but when it comes to investing as a Business Owner, there are differences that you will need to consider depending on your goals. In this video, I cover the differences between IRAs and ROTHs, and explain why one might suit your requirements as a business owner more than the other.

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COVERED TOPICS:
• A Business Owner’s View of IRAs and ROTHs
• What is an IRA/ROTH?
• Rules to Follow
• From a Business Owner’s Perspective
• The Tax Triangle
• Why ROTH is Recommended
• IRAs and 401Ks
• The Back-Door ROTH
• Which is Better?

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BIO:
Justin A. Goodbread, CFP®, CEPA®, CVGA®, owner of FinanciallySimple.com, is a nationally recognized financial planner, financial educator, wealth manager, author, speaker, and entrepreneur. He has 20+ years of experience starting, buying, owning, and selling businesses. Winner of the Investopedia Top 100 Advisor award and Exit Planning Institute’s Exit Planner Leader of the Year.

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DISCLAIMER:
Host Justin Goodbread, Certified Financial Planner, Certified Exit Planning Advisor, Certified Value Growth Advisor. He is a serial entrepreneur, author, speaker, educator, Investopedia Top 100 advisor, and business strategist with over 20 years of experience. Justin owns Heritage Investors LLC, a registered investment adviser with the State of Tennessee. Heritage Investors only transacts business in states where it is properly registered or is excluded or exempted from registration requirements. This material is for general information only and is not intended to provide specific advice or recommendations for individuals. To determine what is appropriate for you, please consult a qualified professional. The Financially Simple podcast provides information, guidance, and support to Small Businesses in the United States….(read more)

LEARN MORE ABOUT: IRA Accounts

INVESTING IN A GOLD IRA: Gold IRA Account

INVESTING IN A SILVER IRA: Silver IRA Account

REVEALED: Best Gold Backed IRA

If you’re planning to save for your retirement, you may have come across two popular types of individual retirement accounts (IRAs): traditional and Roth IRAs. While both offer tax-advantaged strategies to save for retirement, they differ in several ways, making it essential to know which one is right for you.

Traditional IRA

A traditional IRA allows you to make tax-deductible contributions to the account, up to a maximum of $6,000 a year, or $7,000 if you’re 50 or older. The contribution limits for traditional IRAs are lower than Roth IRAs as the withdrawals from the traditional IRA can be taxed at the ordinary income tax rate. The maximum taxable income to contribute to a traditional IRA for 2021 is $140,000 for single filers and $208,000 for married couples filing jointly.

With a traditional IRA, you can grow your investment tax-free until you withdraw the money. Generally, traditional IRA contributions and any investment growth are taxed when the funds are withdrawn during retirement. Traditional IRAs are suitable for individuals who expect to be in a lower tax bracket in retirement than they are now.

Roth IRA

Roth IRA allows you to contribute after-tax dollars, which means you don’t get a tax deduction for the contribution. The maximum contribution limit for Roth IRA is the same as traditional IRA. Any investment growth in a Roth IRA is tax-free, and the withdrawals are also entirely tax-free in retirement. One other advantage of a Roth IRA is there are no required minimum distributions (RMDs). The maximum income limit to contribute to a Roth IRA for 2021 is $140,000 for individuals and $208,000 for married couples filing jointly.

Roth IRAs are ideal for individuals who expect to be in a higher tax bracket during retirement than they are currently. Roth IRAs are also suitable for those who want to leave money to their heirs as the account does not have required minimum distributions.

Which one should you pick?

The answer to this question depends on your financial situation and retirement goals. Generally, if you expect to be in a lower tax bracket in retirement, a traditional IRA may be more suitable. On the other hand, if you expect to be in a higher tax bracket, a Roth IRA may be the preferred choice. It would be best to speak to a financial advisor to determine which IRA best meets your financial goals.

In conclusion, Traditional IRA vs. Roth IRA – Which should you pick? It depends on your individual circumstances. However, regardless of which IRA you choose, the important thing is to start saving for retirement as early as possible so that you can take advantage of compound interest over time. Start contributing to your IRA today, and you’ll be one step closer to achieving your retirement goals.