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Investing Specialists

Are Roth or Traditional Contributions Better?

Take the tax break at the time of contribution or save it for later? We discuss the considerations.

My recent article about backdoor Roth IRAs included a lot of nitty-gritty details about this maneuver. Congress could wipe out the backdoor Roth IRA loophole with the strike of a pen. But for now it's alive and well, and worth considering if you're a high-income person shut out of a direct Roth IRA contribution who doesn't have a lot of Traditional IRA assets that have never been taxed.

But several readers homed in on and took issue with one of my assertions, comparing the tax benefits of Roth IRAs with those of traditional IRA contributions. I wrote, "If you knew your tax rate would be the same when you took your money out in retirement as it was when you made the contribution, it wouldn't matter whether you made a Roth or traditional IRA contribution. It's a wash.