ROTH IRA VS. TRADITIONAL IRA TEAM 6 Vicente C. Gonzaga & Erl Malboeuf

The Pitch  You are a 25-year-old newly-independent with an engineering degree and have landed a position with $60,000 gross annual pay. You estimate that your income will raise 5% every year, and you anticipate saving 10% of your annual salary for input into IRA retirement funds.

The ISSUE  Which option do you choose?  Traditional IRA or  Roth IRA  This, folks, is where good ol’ economic analysis and some planning ahead can make a significant difference.  We will analyze the net benefit of both options based on the given scenario and current/prospective taxation trends.

The lay-down.  ROTH IRA  Pros: Tax-deferred withdrawals  Cons Contribution cap per year Contributions are taxed based on income bracket (not on the size of the contribution itself)

The other lay-down.  Traditional IRA  Pros Contributions are tax deferred Contributions are not capped  Cons Taxed on each withdrawal Withdrawals are taxed based on the withdrawal amount

Look forward to it! d-(^_^)z