The time horizon, risk tolerance and the general combination are important factors to consider when trying to project growth. Contributing to a traditional IRA can generate a current tax deduction and, in addition, allows for tax-deferred growth. While long-term savings in a Roth IRA may result in better after-tax returns, a traditional IRA can be an excellent alternative if you qualify for a tax deduction. Use this traditional IRA calculator to see how much you could save with a traditional IRA.
Unlike traditional IRAs, which require minimum distributions (RMDs), Roth IRA owners can leave their savings in their accounts for as long as they want. Without RMD, Roth IRAs are a way to help transfer wealth. When a beneficiary inherits a Roth IRA, they will most likely need to start accepting distributions. For this reason, Roth IRAs can help beneficiaries gain years of tax-free income and growth.
