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My question is: would it be better to start out with a traditional ira, and then change to a roth when I can make the maximum contribution? Or should I just start out with the Roth and be done? It seems to me that if you can't make the max contribution per year, a tradional ira is better. But if you can contrubute enough to make up for the tax, a roth is better. If so, is it even worth it to try and convert later on? Thanks for any help!!!


The likelihood is probably high that you'll be in a higher tax bracket when you retire than you are now (just starting out), so that leads me to advise you go for the Roth IRA. Since you get years and years of the profits growing with no taxes.

Also, if your new job has a 401k, you can continue to contribute to your Roth IRA AND the 401k, in the same year, if you chose. If your new job has a 401k and you opened a Traditional IRA, you could continue to contribute to the IRA, but you couldn't deduct those contributions on your taxes (even if your employer has the 401k and you aren't putting into it). Also, it might give some headaches later if some of your contributions to the Traditional IRA are deductible and some not.

The Roth IRA also has some other good things going for it. I especially like the fact that after 5 years, you could withdraw the money you put in (not the profits) without penalty -- so you could have this pot of money that is being saved towards your retirement, but it could also act as part of your emergency savings (after the 5 years at least).

If your new job has a 401k, especially with any match, I would advise that you start putting into it as soon as possible (whatever you can afford). Then, increase your contribution every time you get a raise.

Best of Luck,

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