Ok so there is a lot of damn info on IRAs. I have yet to determine what is good for a relatively young family with retirement still ~30 years away.

From Fidelity.com:

Roth IRA
Roth IRA may be one of the best ways for you to save for retirement.
Your tax filing status: single with an Adjusted Gross Income (AGI) up to $95,000 ($110,000 for partial contributions); married filing jointly with an AGI up to $150,000 ($160,000 for partial contributions).
Federal tax-free growth
Contributions to your Roth IRA may be withdrawn at any time without penalty or taxation.
No mandatory distributions
No age limit for getting started*

Traditional IRA
If you don't qualify for a Roth IRA, a Traditional IRA is a terrific retirement savings option.
No income limits
Your assets grow tax-deferred
Contributions may be tax-deductible

Which is better for the long term? Also is there one IRA that Performs better than another IRA? Is this like mutual funds, where you can pick growth, short - long term, etc..

Account Selector

 

Roth, hands down

your ira has a lot of growing to do. that growth is not taxed. also, you can pull the contributions out easier in emergencies.

with a traditional one at $2000, you will get about a $500 tax savings in the current year. Problem is, all withdrawals are taxed. Basically it is a $500 savings now and probably $2500 in taxes later (assuming 5x growth in 30 years...just an EXAMPLE).

With a Roth at $2000, you are contributing AFTER TAX income. Basically, you've effectively paid the $500 above (as the money is after tax). Also, you won't be taxed on what you withdraw.

For someone in their 50s, the traditional makes sense. Younger people should do the ROTH.

The performance will be identical. The variable is the fund or manager you decide to go with.

 

If you can, max out a Roth IRA. The ceiling this year for most people (<$95k income I believe) is $4000. Tax free when you withdraw it.

 

Isn't the point of a traditional IRA, however, that when you retire your income is a lot lower, so when you pay taxes on the withdrawls its at a lower tax rate than when you put the money in?

 

I remember seeing calculations where it basically didn't make a huge difference in the long run, maybe 1% (+) or (-) for either.

I just put mine into a regular IRA on top of my 401K. But, something got me thinking about a worst case scenario where the law changes and they start to tax more upon withdrawl, then it might make sense to go with Roth since that cannot be taxed, period.

 

yes, exactly.

my tax rate right now sucks-- I earn good money, but have very few deductions, if any. so a traditional 401K (or Roth if I needed to) are the way I'm going.

 

401K is always my first choice, in most cases the company you work for will give you free money for using a 401K. Who turns down free money for having someone make you save for retirement?

 

Oh don't get me wrong I participate in the companys 401k plan as they match 50% up to 7%. I actually put 30% this year as the law now allows. But usually when November rolls around the contributions will be taxed ;( but still worth it IMO!

I get an decent annual bonus and that money is what I was thinking into putting into an IRA.

Thanks for the responses, looks like the Roth is looking mighty attractive.