Taking advantage of retirement account types

Which retirement plan is right for you?

Traditional IRAs give you an upfront tax deduction for your contribution, and your money grows tax-deferred.

For a Roth IRA, you contribute already taxed money and the account grows tax-free.

Individual tax cuts that came under the TCJA allows a whole new group of people to take advantage of converting traditional IRAs to Roth IRAs. The tax cuts (which expire at the end of 2025) are a boon for conversions because they not only lowered tax rates but broadened the tax brackets — big-time.

The conversion maneuver pays off best if your tax rate and stock portfolio are higher in the future, when you or your kids spend the money, than at the time you convert.

The big win — and greatest gains — from a conversion come from leaving the money untouched and growing tax-free for decades.

This is where the strategy comes in: If you think you can stomach paying now on taxes to convert to a Roth, you are producing untaxed income for your retirement or for your heirs. All future growth and withdrawals are tax-free.

CLICK HERE to see if you’re a good candidate for conversion — and you may be able to skip your next quarterly tax payment.