One advantage of passing age 59 ½ is that the 10 percent penalty for pre-59 ½ IRA distributions is less of an issue.
Assuming a taxpayer who is still working qualifies for both a regular deductible IRA and a Roth IRA, what factors should influence his or her account choice? I asked several advisors how they approach the question; here are their emailed responses.
Gilbert A. Armour, CFP
SagePoint Financial, Inc.
It really comes down to the individual choice by the client: Do I want the tax break upfront or at the end? Another consideration for those with earned income after age 70 1/2: A traditional IRA contribution is not allowed after age 70 1/2, but a contribution to a Roth IRA is allowed.
Glenn J. Downing, CFP
It really depends upon the purpose of the money. If the client does not anticipate needing distributions down the road, and is simply saving money for the ultimate beneficiaries, then the Roth makes great sense. If income will be needed, then the evaluation spins on the tax bracket when distributions begin. That could be a toss-up.