There are a number of Roth and traditional retirement plan options available, but how do you know whether to choose one, the other or a combination?

Will my taxes be higher now or later? That’s often the driving factor when people look at when deciding whether to utilize a Roth or traditional pre-tax retirement plan account or individual retirement account (IRA).

Roth contributions are made with after-tax money and qualified withdrawals are tax-free. On the flip side, contributions to traditional retirement accounts – such as 401(k)s – generally are made with pre-tax money but withdrawals are taxed.

While most people look at their future tax rates as the main factor to help them decide which retirement plan to use, there are a number of other considerations and benefits to holding money in both. There is no way of knowing what future tax rates will be.

Here is a summarized version of those five factors that should be weighed when deciding among retirement savings vehicles:

  1. Your expected income in retirement
  2. Unexpected spikes in expenses
  3. Required minimum distributions (RMDs)
  4. Gifting to heirs: Roth or traditional?
  5. Taxes and penalties

There are a number of factors to weigh when choosing the best retirement plan option for you and your family. 

Speak with your advisors to determine the option or combination of options that may be available and most appropriate for you.


Roth, Traditional or Both: Your Expected Income in Retirement