Let’s explore some of the differences between a traditional IRA and a Roth IRA.
With a traditional IRA, your contributions may be tax-deductible and can grow tax-deferred. In retirement, traditional IRA distributions are taxable as ordinary income. With a Roth IRA, your contributions are non-deductible, but have the opportunity to grow tax free. At retirement age, distributions from a Roth IRA are tax free.
Here is a list of some of the primary differences:
|
Traditional IRA |
Roth IRA |
| Tax Treatment of Contributions: |
Tax-deductible |
Non-deductible |
| Tax Treatment of Distributions: |
Taxable as ordinary income |
Tax free |
| Mandatory Distributions: |
Mandatory at age 70.5 |
No mandatory distributions |
| Early Withdrawal Penalty: |
10% on entire amount |
10% only on earnings |
Although the above table highlights some of the major differences between a traditional IRA and a Roth IRA, there are a number of other nuances not reflected. Please feel free to contact us to discuss which makes the most sense for your financial situation.
In the last post, we talked about our first core investing belief, that asset allocation is the most important decision in investment management. This post introduces our second core investing belief, that changing financial markets require continuous monitoring and tactical flexibility.
This philosophy is contrary to the typical buy-and-hold approach that investors have been persuaded to embrace. Many people are convinced the proper way to invest is to simply leave their money in the market and hope for a decent return. We believe there is a better way! We feel investors should emulate the large, institutional investors by taking a more sophisticated, tactical approach to investing.
At Willamette Investment Advisors, we maintain a forward-looking investment process that is focused on long-term trends in the financial markets. So, depending on what is taking place in the financial markets, we adjust our clients’ mix of investments to both mitigate risk and take advantage of investment opportunities.
With record low interest rates and extreme stock market volatility, how are your investments positioned for what lies ahead? Give us a call; we’d love to discuss it with you.
We are excited to announce we have moved to a new office location.
Our new office is in a more visible and well-travelled location on the corner of 9th Street and Oak Avenue, just south of Walnut Boulevard in Corvallis. The new address is 520 NW Oak Ave, Suite A, Corvallis, Oregon, 97330.
If you are in search of a financial advisor to discuss your retirement plan or other investments, give us a call or stop by our new office!
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