It’s time for another edition of Dollar and Cents. This is where I answer one of your questions.
Here’s today’s question:
I am in my early twenties and I am just starting to save for my retirement however I am only contributing to a traditional 401k with my employer although I
have been thinking about opening a Roth IRA soon as well.
My question is since taxes are more likely to increase in the future (I don’t know call me a pessimist), is there a point in owning a traditional IRA/401k besides for tax deferral/deductions?
Right now, I am in the 15% tax bracket so I am not sure if the traditional 401k is a huge advantage to me right now. Your advice is appreciated.
With each Dollars and Cents video we want to provide some follow up links where you can get some additional information on the topic. If you are interested in learning more on opening a Roth IRA, some of the rules behind the Roth IRA, or how to open a Roth IRA here are some good reads:
- Best Places to Open a Roth IRA – I love, love, love the Roth IRA and I want to make it easy for my readers to get an account started with the best brokers around. This list breaks it down from account fees to investment options. A great place to start.
- How Much Does It Take to Open/Start a Roth IRA? – Not sure how much cash you’ll need to invest up front to get a Roth IRA started? Don’t worry, the hurdle is pretty low.
- Dollars and Cents: Can You Have a Roth 401k and a Roth IRA at the Same Time? – I answered another reader question about the Roth version of both the 401k and IRA that you might find useful.
- Roth IRA Rules and Contribution Limits – Everything you could ever want to know about using and funding a Roth IRA. You need to make sure you qualify before you go open an account.