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Traditional or Roth IRA? 4 Things to Look At

With the 2013 tax-filing deadline looming, it's ideal for investors to fully understand these retirement vehicles before making a rushed, uneducated decision.

It's IRA season, and one of the key decisions facing investors is whether to invest in a Roth or Traditional IRA. Morningstar recently caught up with financial-planning expert Michael Kitces to discuss the topic. Kitces explained why investors need to analyze current and future tax rates, required minimum distributions, and estate plans when weighing options between Traditional and Roth IRAs.

Tax Rates
Question: Michael, you put out a piece on your blog where you were looking at the decision about whether to contribute to a Traditional IRA or to a Roth IRA. It's IRA season, so people are contemplating which is the right contribution type to make. You outlined four key factors that should go into that decision making. The biggest one in your view is current tax rate versus what you expect your tax rate to be in the future.

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