Financial Planning: Roth IRA vs Traditional IRA vs 401K
Saving for retirement utilizing retirement plans can be confusing. Let’s discuss my philosophy on using a Roth IRA vs Traditional IRA vs 401K. I understand there isn’t a one size fits all for everyone, but I consider myself an average person as it relates to income and retirement. I will review each of these options and then get into the strategy that works best for me. Henceforth, when I discuss income limits I am referring to MAGI (modified adjusted gross income). MAGI is essentially income after exempt income or further deductions. For most people a rough estimate can take your gross income minus the standard deduction. The standard deduction in 2022 is $12,950 for singles, $25,900 for married couples, and $19,400 for head of household.
