Advantages of Traditional IRA over Roth IRA

The basic difference betweena a Roth IRA and a Traditional IRA is that in a traditional IRA, you pay taxes after retirement, but not now; in a Roth IRA, you pay taxes today, but not after retirement. The IRS will tax you, there isn't a free lunch with those guys, but you basically have two options. Depending on your income levels today and your expected income levels at retirement, you come out ahead in one, and not so ahead in the other.

(1) Traditional IRA has a much larger contribution limit than theRoth IRA.

(2) You can borrow money from Traditional IRA while from Roth IRA doing the same will result in heavy penalties.

(3) Traditional 401k often comes with matching funds from your employer, hence you are more likely to get as much money as possible through that matching. The matching money goes into your traditional 401k account, so you don't pay any taxes on that either. In a Roth IRA, there is no matching contributions allowed.

Disadvantages of Traditional IRA over Roth IRA

(1) The Money withdrawan during the retirementis taxalble. It can be higher than you think.

(2) Roth IRA is more flexible than traditional IRA. You can invest money in stocks, bonds, mutual funds, real estate through brokers, bank or any other financial institution.

(3) Roth IRA does not have mandatory withdrawals. If you don't need the money, you can leave it there and let it grow tax-free, instead of withdrawing it and being taxed on it

(4) Money you take out of a 401(k) increases your income and can increase the tax you pay on Social Security benefits