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Is a Roth IRA or Traditional IRA Better for You?

August 11, 2017 by Eric C. Jansen, ChFC®

The debate is a long-standing one: Is a Roth or a traditional IRA a better tool to save for retirement? The debate doesn’t end the older you get. In fact, as workers approach retirement age, it’s perhaps even more important than any other time that they look closely at the relative benefits and disadvantages of each type of account.

For an older worker with solely a traditional IRA, it might make sense to consider a rollover to a Roth IRA. For someone with just a Roth IRA, there might be situations where it makes sense to open a traditional IRA. For a worker with solely a 401(k) or other workplace account who is considering moving to an IRA, rolling into a traditional IRA makes the most sense, unless he or she is ready and willing to pay income taxes on the money—which would be triggered if assets in a 401(kare moved to a Roth IRA (there are other rules on this last type of conversion, so consult with a financial adviser first).

Let’s start with the basics: With a Roth IRA, you contribute money after taxes, and qualified withdrawals come out in retirement entirely tax-free—even any investment returns you earn in the account. A traditional IRA is more like a 401(k). When contributing to a traditional IRA, you contribute pre-tax and your money grows tax-deferred. You pay taxes when you start withdrawing the money in retirement. While the contribution limit is the same for both traditional and Roth IRAs, one of the big benefits of a traditional IRA is that by contributing before your income is taxed, you are able to invest the same dollar amount with less of an impact on your bottom line.

Both types of accounts are limited to maximum contributions of $5,500 per year in 2017, plus an extra $1,000 for people 50 and older. Both types of accounts have income thresholds, and traditional IRAs limit the ability to deduct contributions based on income. Also, with a traditional IRA, unlike a Roth, if you have a retirement plan at work to which you contribute, there are special rules applying to you and, if you’re married, your spouse. More details on the rules are available on the IRS website

So, which type of account is better for older workers? Unfortunately, the best answer we can give is: It depends on your situation. For example, if you still have 30 years left to save, a Roth IRA may be your best option – maybe.

But there are specific situations where one type of account would make more sense. For example, if you’re planning to work well into retirement, and your family history and health status suggests a long life, consider the fact that you can contribute to a Roth IRA at any age, unlike a traditional IRA, which prohibits contributions after age 70-1/2.

Additionally, a Roth IRA doesn’t have required minimum distributions, whereas a traditional IRA requires distributions starting at age 70-1/2. Thus, a Roth can offer more control over your retirement income each year—and your retirement tax bill. For older workers who have a traditional IRA, it often makes sense to convert small amounts of their traditional IRA to a Roth over several years (there’s no income limit on conversions so anyone can do it), while they’re still working. That keeps the tax bill manageable—and means they avoid paying taxes on that money in retirement, when the income sources to pay bills generally are more limited.

Another area to consider is estate planning: Do you expect to leave this retirement account to a beneficiary? If so, it might be a wonderful gift to leave a Roth, because the beneficiary won’t owe any taxes on distributions. However, if your tax rate is higher than the beneficiary’s, then it might be smarter to bequeath a traditional IRA and let them pay the tax bill.

Retirement accounts are complicated animals—and if you make a mistake, it can be costly. Before you make a retirement-plan move, contact a trusted financial professional.


Eric C. Jansen, ChFC is the founder, president and chief investment officer of Westborough Massachusetts-based Finivi, which provides fee-based retirement income planning and investment management services for successful individuals and families nationwide. Do you need help planning for retirement? You can call (800)530-6635 for a complimentary consultation with a financial planner

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Eric C. Jansen, ChFC

Fun Facts About Me

When he is not researching the next great stock to add to client portfolios, you can find him travelling frequently with his family to Jackson Hole Wyoming.

  • Hometown: Chicago, IL
  • Birth Month & Year: November, 1964
  • Favorite Hobby: Goldmining in Nome, AK
  • Favorite Food: Steak at Charley’s Steakhouse in Orlando FL
  • Can't be interrupted when: Watching the Discovery Channel
  • Hidden Talent: Finish Carpenter
  • Something on bucket list: Obtain Helicopter Pilot License
  • Family Pet: Goldfish
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Steven C. Johnson, ChFC

Fun Facts About Me

Steve would tell you that one of the best parts of the day is spent talking to clients and relationships that result from it. When away from the office, he loves to travel the back roads of New England enjoying all the great sites that can be found off the beaten path.

  • Hometown: Townsend, MA
  • Birth Month & Year: December, 1967
  • Favorite Hobby: Playing Hockey
  • Favorite Food: Chicken Caesar Salad
  • Can't be interrupted when: Watching the Bruins
  • Hidden Talent: Cooking – Makes a great Thanksgiving turkey
  • Something on bucket list: Travel to Italy and Greece
  • Family Pet: Max – our Pomeranian

Frederick M. Lane, ChFC, CASL

Fun Facts About Me

When not managing client portfolios, Fred can be found relaxing with family and friends.

  • Hometown: Nutley, NJ
  • Birth Month & Year: July, 1954
  • Favorite Hobby: Dog Walking
  • Favorite Food: Italian
  • Can't be interrupted when: Listening to Pink Floyd
  • Hidden Talent: Landscaping
  • Something on bucket list: Space Flight - Tourism
  • Family Pet: None

Catherine M. Gareri

Fun Facts About Me

When not caring for her clients Cathy enjoys relaxing in her yard at home.

  • Hometown: Bellingham, MA
  • Birth Month & Year: July, 1957
  • Favorite Hobby: Cooking and Entertaining
  • Favorite Food: Steak at the Capital Grille
  • Can't be interrupted when: It's family time
  • Hidden Talent: Dog Whisperer
  • Something on bucket list: Spending a couple months on the Almalfi Coast
  • Family Pet: In Between Mastiffs now so a little blue fish “Willy”

Katie E. Moore, CLTC

Fun Facts About Me

When Katie is not busy taking care of her clients, she spends her time being a mom to her two little ones, Owen and Isla.

  • Hometown: Modesto, CA
  • Birth Month & Year: September, 1982
  • Favorite Hobby: Swimming
  • Favorite Food: Mexican Food
  • Can't be interrupted when: I'm cooking
  • Hidden Talent: Climbed Yosemite's Half Dome, twice - no fear :)
  • Something on bucket list: See the Northern Lights and Potty Train my 2 year old
  • Family Pet: Caddy and Sierra – our two cats

Hesper Duval

Fun Facts About Me

Loves spending time with 2 daughters and enjoys participating in 5k obstacle races throughout the year.

  • Hometown: Charlton, MA
  • Birth Month & Year: October, 1981
  • Favorite Hobby: Running
  • Favorite Food: Cheesecake
  • Can't be interrupted when: Reading a good book
  • Hidden Talent: Interior Design and furniture restoration
  • Something on bucket list: To travel cross-country in an RV
  • Family Pet: Charlie and Nora, both black labs from the same litter

Donna Fournier

Fun Facts About Me

When not cheering for the Patriots, Donna spends her free time travelling throughout the United States looking for new haunted places to explore. She loves to wear her cowboy hat and boots when travelling out west.

  • Hometown: Swansea, MA
  • Birth Month & Year: February, 1961
  • Favorite Hobby: Exploring haunted locations
  • Favorite Food: Pizza
  • Can't be interrupted when: Eating my pizza
  • Hidden Talent: Rollerblading
  • Something on bucket list: Travel to Australia
  • Family Pet:  Had a pet skunk

Krista Isabelle

In her free time, Krista can be found crafting, cooking, spending time outdoors with her family, or curled up reading next to her beloved pets.

  • Hometown: Hopedale, MA
  • Birth Month & Year: August 1994
  • Favorite Hobby: Cooking & Baking
  • Favorite Food: Baked mac & cheese
  • Can’t be interrupted when: Reading
  • Hidden Talent: Cartoon drawing
  • Something on her Bucket List: Fostering animals

Danielle Drew

When Danielle does not have her head in a book studying to expanding her financial planning knowledge, she enjoys anything active and outdoors, including visits to the beach and hiking.  

  • Hometown: Dennis, MA
  • Birth Month & Year: November, 1985
  • Favorite Hobby: Working out, concerts, and exploring wineries
  • Favorite Food: Lobster pot pie, cheeseburgers, BBQ, the list goes on...
  • Can't be interrupted when: Working out 
  • Hidden Talent: Country line dancing
  • Something on bucket list: To hike the 48, 4000 footers of New Hampshire
  • Family Pet: none, hopefully a big dog someday

Jay Willwerth, ChFC

Fun Facts About Me

Jay’s days are spent helping clients achieve their financial goals, followed by nights and weekends typically watching his daughters play competitive volleyball.

  • Hometown: Melrose, MA
  • Birth Month & Year: September, 1959
  • Favorite Hobby: Golf
  • Favorite Food: Anything at a Patriot’s Tailgate
  • Can't be interrupted when: Watching the Patriot’s Game
  • Hidden Talent: Competitive Volleyball Watcher (Mostly his 2 daughters)
  • Something on bucket list: Play a round of Golf at Pebble Beach
  • Family Pet: Bella, our Shih-poo
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