Should i contribute more roth or traditional?

A Roth IRA or 401 (k) is the most sensible if you're sure you'll have a higher income when you retire than you do now. If you expect your income (and your tax rate) to be higher today and lower when you retire, a traditional IRA or 401 (k) is probably the best option. Roth IRA conversions require a five-year retention period before earnings can be withdrawn tax-free, and subsequent conversions will require their own five-year retention period. Starting the year you turn 72*, you should start receiving the minimum distributions (RMDs) required from traditional IRAs and 401 (k), including the Roth 401 (k), starting at age 72* or after you retire.

If you think you'll be in a higher tax bracket when you retire, then a Roth IRA makes sense because today you pay taxes at a lower rate. If the participant has an established Roth IRA, the qualification period is calculated from the initial deposit in the IRA and the reinvestment will be entitled to tax-free withdrawals when that five-year period ends (and the age requirement has been met). A traditional IRA is an individual retirement account that allows you to make pre-tax contributions (if your income is below a certain level) and not pay taxes until you withdraw the money. By comparison, contributions to Roth IRAs are not tax-deductible, but those withdrawn in retirement are tax-exempt.

Anyone with earned income (or who has a spouse with earned income) can contribute to a traditional IRA. But eventually you'll have to face that tax burden when you retire, which means that unless you really need that initial tax break, it's hard to go wrong with a Roth IRA. Taking money out of your Roth IRA means you may lose the ability to accumulate retirement earnings. If you're under 59 and a half and have a Roth IRA that withholds income from several conversions, you should keep track of the 5-year retention period for each conversion separately.

You can make tax-free withdrawals as long as you are 59 and a half years old or older and have owned your Roth IRA for at least 5 years. Roth IRAs allow you to withdraw contributions at any time and for any reason without taxes or penalties, but just because you can do so doesn't mean you should, especially if you're quite young. When you work and save for retirement, you can usually choose between traditional retirement accounts and Roth accounts, including IRAs and 401 (k). The IRS considers all profits from traditional IRAs as one when it comes to distributions, including funds from Roth conversions.

However, the amount you can contribute to a Roth IRA could be reduced or even eliminated based on your modified adjusted gross income (MAGI).