Robert Brokamp

Great to be with you, bro.

All right, so let's start with the basics.

With a traditional account, you get a tax break today because contributions are pre-tax in most situations, not all, but most.

The money grows tax-deferred, but the withdrawals are taxed as ordinary income.

With Roth contributions, there are no tax breaks today.

Money goes in after tax.

And when you convert traditional assets to Roth assets, that amount gets added to your taxable income in the year of the conversion.

So by choosing the Roth, you are going to pay higher taxes this year.

But we're going to discuss five reasons why it still might make sense to go with the Roth, starting with the biggest one, withdrawals are tax-free if you follow the rules.

To quote IRA expert Ed Slott, when you have money in a traditional account, you basically have a co-owner of the account, that co-owner being Uncle Sam.

But with the Roth, you own everything, which is a nice benefit.

But there are other benefits, such as number two, no required minimum distributions.

Yeah, and just to give folks a little framework for what RMDs are.

So at age 73, for most people, it's only 3.8% of your account.

But it goes up pretty significantly.

So by age 80, it's 5%.

By age 90, it's 8.2%.

And you have to take that out of the traditional accounts, whether you need it or not, and pay taxes.

So again, another benefit of the Roth.

So let's move on to benefit number three, possibly pay lower taxes on Social Security and lower Medicare premiums.