Which IRA Is Right for Me…Roth or Traditional?

Which type of IRA is better for me, a traditional IRA or a Roth IRA? What are the advantages of each? In this episode of the Stuff About Money podcast, Erik Garcia, CFP® and Xavier Angel, CFP®, ChFC, CLTC, discuss 6 frequently asked questions about IRAs.

Episode Highlights:

  • Erik discusses the variations and differences between a Traditional and a Roth IRA. (4:01)
  • Erik explains when and which IRA to invest in and the difference in benefits. (5:55)
  • Erik shares that as long as you have earned income and have worked to earn money, you are eligible to contribute to an IRA. (7:35)
  • Erik elaborates that you are not investing in an IRA, you are only taking advantage of the rules given by the IRS to save for retirement. (9:52)
  • Xavier explains that a required minimum distribution is the minimum amount annually that you have to take out of your Traditional IRA at a certain age. (12:25)
  • Erik and Xavier share that you can start taking distributions without paying taxes or a penalty at the age of 59 and a half with a Roth IRA and without penalty with a Traditional IRA. (14:35)
  • Erik talks about the deadline for IRA contributions. (16:74)
  • Erik discusses the limitations of being able to contribute to both a 401(k) and an IRA. (20:06)
  • Erik determines how we can invest our IRA dollars in different types of assets. (24:00)
  • Erik reminds the listeners to always consider their risk tolerance and risk capacity when making investment decisions. (25:54)

Key Quotes:

  • “But keep in mind that the IRAs are not specific investments. You’re not investing in an IRA persay. You’re taking advantage of the rules and laws the IRS has given us to be able to save for retirement.” – Erik Garcia, CFP®
  • “The country (government) wants to encourage individual savings. The more individuals save, the less of a burden they are potentially to the state. ” – Erik Garcia, CFP®
  • “As we get closer to retirement time, our risk tolerance and risk capacity may change. That is an important piece to consider” – Xavier Angel, CFP®, ChFC, CLTC

Resources Mentioned:

About Erik Garcia

Hi there, I'm Erik. How you manage your money and other resources impacts practically every aspect of your life. I help individuals and families invest plan for a more secure and predictable financial future. Thanks for taking time on my site!

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