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Traditional IRAs and Roth IRAs: What’s the Difference?

IRA vs ROTH IRAYou can save money for retirement with either a traditional individual retirement account (IRA) or a Roth IRA. Both offer valuable tax advantages, but there are significant differences between them. Tax season is coming up, so we thought it was a good time to look at those differences so that you can determine which type is right for you.



While a traditional IRA may offer the immediate gratification of tax-deductibility (depending on your taxable income), you will have to pay taxes on all withdrawals. With a Roth IRA, on the other hand, you forgo tax deductibility now but pay no taxes later on all qualified withdrawals. While that may make Roth IRAs sound more attractive, there’s a big catch: you can’t contribute to a Roth IRA if your MAGI exceeds the limits. For this reason, high earners often choose standard IRAs and consider converting to a Roth IRA later on.

You may have heard of other types of IRAs such as SIMPLE IRAs, SEP-IRAs, but these involve employer participation. Employers have many more ways to offer retirement benefits, including those special IRAs and 401(k)s, Roth 401(k)s, defined benefit plans, profit-sharing plans, executive compensation plans, and cash-balance plans.

All of us would like to live in comfort when we’re older. We encourage employers to look into offering more retirement benefits to themselves and their employees. It’s not only a good way to attract and retain employees, it’s also a good way to reduce your current-year tax liabilities.

Let us know if you’d like to set up an appointment with us and our pension-planning specialists to explore how your company can save taxes through sophisticated retirement plans.

If you have any questions or concerns, please call (925) 365-1533 or send an e-mail to

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Accretive Wealth