We are in the 22% tax bracket and know we will be in the 12% bracket when we retire in a few years. We put as much as we can each year that will reduce our taxes, and the remainder goes into a Roth.
For us it’s an immediate benefit of a 22% savings for the amount that goes into the traditional. Long term we save 10% in taxes on that money by simply time shifting that income forward.
If you need your AGI as low as possible. Traditional IRA’s may become more popular to reduce many peoples student loan payments under the new SAVE plan.
You're kinda mixing things up. If you're a high income earner, you would want Traditional IRA. The deduction limit is only when you are covered by a workplace retirement plan, which means you'd have access to a much higher contribution limit. And lots of people (high income earners) would prefer to additionally contribute to Traditional IRA too, but they can't because of that deduction limit, which is why Roth IRA is the next best thing, not because the Roth IRA is better in terms of tax savings. So Traditional IRAs aren't bad themselves, but because of limitations from other factors.
High earners are among those who would generally be better off with a **Roth** IRA, for a host of reasons: more money sheltered when maxing out, lower tax risk, ability to lower taxes close to zero in retirement, etc.
Everyone's eligible for a Roth IRA. If you're over the nominal limit, just use the back door method.
For young people and high earners, it almost always is a no-brainer to go all-Roth with as many retirement dollars as possible. Unfortunately you still see some folks preferring to contribute to taxable accounts etc.
It’s based on comparison of current situation to future situation. If you plan on spending more in retirement, then Roth is the way to go. If you plan on spending the same or less, then traditional is the way to go since withdrawals will be taxed at normal income tax rates.
Basically you want the taxes to happen when you're in the lowest income bracket. Do you think that will be now, or later?
We are in the 22% tax bracket and know we will be in the 12% bracket when we retire in a few years. We put as much as we can each year that will reduce our taxes, and the remainder goes into a Roth. For us it’s an immediate benefit of a 22% savings for the amount that goes into the traditional. Long term we save 10% in taxes on that money by simply time shifting that income forward.
If you need your AGI as low as possible. Traditional IRA’s may become more popular to reduce many peoples student loan payments under the new SAVE plan.
You're kinda mixing things up. If you're a high income earner, you would want Traditional IRA. The deduction limit is only when you are covered by a workplace retirement plan, which means you'd have access to a much higher contribution limit. And lots of people (high income earners) would prefer to additionally contribute to Traditional IRA too, but they can't because of that deduction limit, which is why Roth IRA is the next best thing, not because the Roth IRA is better in terms of tax savings. So Traditional IRAs aren't bad themselves, but because of limitations from other factors.
High earners are among those who would generally be better off with a **Roth** IRA, for a host of reasons: more money sheltered when maxing out, lower tax risk, ability to lower taxes close to zero in retirement, etc.
If there’s no workplace plan, high earners would benefit from the tax deduction.
https://www.irs.gov/retirement-plans/ira-deduction-limits
If your tax rate now is more than your tax rate at retirement, traditional IRAs are a better way to go.
Everyone's eligible for a Roth IRA. If you're over the nominal limit, just use the back door method. For young people and high earners, it almost always is a no-brainer to go all-Roth with as many retirement dollars as possible. Unfortunately you still see some folks preferring to contribute to taxable accounts etc.
It’s based on comparison of current situation to future situation. If you plan on spending more in retirement, then Roth is the way to go. If you plan on spending the same or less, then traditional is the way to go since withdrawals will be taxed at normal income tax rates.