I have 2 separate retirement accounts that need to be consolidated into one IRA. I don't know which I should use: traditional or Roth. With Roth I will have to pay taxes, but traditional IRA I don't. The amounts aren't spectacular or anything, but I was wondering what some of you would do in this case. I'm about 35 years away from retirement.

 

Mingster, in general, the younger you are, the more I would lean towards a Roth IRA.
Also if you open one at a brokerage, instead of a bank, you have a wider range of investments you can access.

 

http://www.turbotax.com/articles/RothorTra...chisBetter.html

 

I would pay the taxes and do the roth. better to pay the taxes now then pay the taxes on the full future amount later!

If you were 50, I'd say traditional. Since you are probably 25 or so, I would go Roth.

 

Thanks guys! I wish I was 25 - I'm 31, and I expect to work well past my 70s what with the cost of college education and housing in CA...

 

ouch. i only plan to work till 52, at which time I should have the equivalent of $1M in 2004 dollars. I'm 29 now. Move to FL, it is soooo much cheaper.

 

think about it like this:

if you take the money out now, it will be taxed at your current bracket, and you'll pay a 10% early withdrawl penalty.

if you just roll it over into another qualified plan, it will continue to compound pre-tax until you take it out.

do you think you'll be in a higher or lower tax bracket at the time you need the money? enough to justify the 10% penalty for withdrawl now?