Roth and traditional IRAs have the same objective: both provide an incentive to save and both provide income after retirement. However, there are a few distinctions you should be aware of if you are thinking about contributing or converting to a Roth IRA.
Traditional IRA contributions are tax deductible and grow tax-deferred. Roth Contributions are not deductible but the earnings grow tax-free.
Roth IRA owners are not subject to RMDs at age 70½. Also, you can continue making contributions to a Roth IRA after age 70½ if you have taxable compensation and fall within the MAGI limits.
*Special Note: Roth beneficiaries are required to take RMDs.
Anyone Can Convert to a Roth
Even if you are a high-income earner and cannot directly contribute to a Roth, anyone is permitted to convert to a Roth IRA at any time (income taxes apply to conversions).
Is a Roth IRA right for you? Contact your ATS expert if you have any Roth IRA questions or need assistance converting to a Roth.