There are income restrictions to using Roth IRAs. On the other hand, unlike a regular IRA, you can contribute to a Roth IRA even if you work for an employer with a qualified retirement plan. You can shelter earnings in the IRA until your death, at which point the minimum distribution rules for regular IRAs would kick into effect for your heirs. Here are some factors to think about. Your tax rate remains the same.
Tax rates differ between now and retirement.
If you think you will be in a lower tax bracket when you retire, generally you're better off contributing to a deductible IRA because the deductions will be made at the higher rate. Higher income taxpayers. Roth IRAs may be more attractive to higher income taxpayers who expect to be making withdrawals at the same time they're receiving Social Security benefits. That's because taxpayers with high incomes during retirement often must pay taxes on their Social Security benefits. However, the withdrawals will face regular income tax, though you can spread the taxes on the withdrawal out over four years if you convert during 1998.