So, in a nut shell the biggest difference between a Traditional and Roth account is that a Roth account requires you to pay taxes up front, then no taxes on withdrawals (including any cap gains). Traditional allows you to contribute pre-tax, but you have to pay taxes on everything you withdraw. Please correct me if I have anything wrong with this premise.
If you're relatively young and have a number of decades before you're going to retire, wouldnt the benefits of tax-free compounded growth over all those years pretty much always outweigh the benefits of avoiding tax upfront??
Seems like a no-brainer to always go the Roth route, but that probably means I'm not fully understanding something. Help me understand why a Traditional might be better in some situations! Hopefully this helps answer others' questions too
Edit: if anyone is interested, Nerd Wallet has a decent breakdown of the two types of accounts (I only focused on the tax aspect in this post): https://www.nerdwallet.com/article/roth-or-traditional-ira-account
Edit #2: please see /u/bopandrade post below. He uses numbers to show how if tax rates remain the same, you'll end up with exactly the same value in both types of accounts. Seeing a real example with numbers helped me understand why it really does come down to whether you think tax rights will be higher now or later.
Submitted January 25, 2019 at 11:52AM by Machiavelli127 http://bit.ly/2B6BRRE
