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Subject:  Re: Roth or regular IRA Date:  3/31/1999  1:55 PM
Author:  Wavelength Number:  9591 of 88831

Well, in that tax bracket, it's likely that you can deduct your IRA contributions, so I'd go with the regular IRA for a while. Then, when you start making more money, convert that to a Roth.
That way, you get tax deductions now, and will convert it later when you make more money.

Funny, but I would give exactly the opposite advice, for the same reasons! The biggest case for the Roth can be made if you expect to be in a higher tax bracket in retirement than you are in currently. You pay lower taxes now (and end up with a higher total net investment) than you would if you withdraw a regular IRA in the future. The same goes for conversion. Why use the deduction now, which saves you only 15%, only to pay more taxes (on the contribution and its earnings) when you convert in the future and are in a higher tax bracket?

BTW, if you're going to put $2000.00 in a retirement account, and this will be your only investment money put away, then I still think it's a no brainer to invest in a Roth. In ALL situations. You'll have exactly the same account balance as a regular IRA when you're ready to retire, only it will all be tax free. The Traditional IRA should only be an option (when the only consideration is maximizing your net withdrawal amount at retirement) if you will be investing the tax savings - in a separate taxable account - you receive as a result of the deduction. If this is true, then there are some senarios where the Traditional IRA will result in a higher net withdrawal amount.

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