Hi everyone and welcome back to Money Girls Quick and Dirty Tips for a richer life.

On Laura Adams. My last podcast was an introduction to traditional and Roth IRAs.

This week we'll go beyond the basics and I'll help you figure out something that lots of people get stuck on. Whether you should invest in a

invest in a traditional or a Roth IRA.

First, here's a quick IRA review.

If you have earned income or a spouse with earned income, you can contribute to a traditional IRA, to a Roth IRA, or to both.

You can even max out a workplace retirement plan like a 401k and still contribute to either type of IRA

as long as your total contributions don't exceed your allowable limit.

If you're a high earner and have modified adjusted gross income above 120,000 or 177,000 if you're

married and file a joint tax return, then you cannot contribute to a Roth IRA.

If your income is too high, you can keep an existing Roth or even convert a traditional IRA into a Roth, but you're not allowed to make new contributions to the account or to fund a brand new Roth account.

Okay, so if you're eligible to contribute to either a traditional or a Roth IRA,

which one should you pick?

I'll summarize the advantages of each one so you can see how they might apply to your

situation. I also wrote about the disadvantages of each type but I just put them on the

blog at moneygirl. quick and dirty tips.com so we can keep the show from going to live. on the Number one, you save money on taxes the year you make contributions, unless you are a spouse also

has a retirement plan at work. In that case, the tax deductibility of contributions is reduced

if you reach certain income limits.

Number two, you can defer taxes until a time when you expect to be in a lower tax bracket.

If you believe that you'll learn substantially less money during retirement than you do now,

then you might have a lower tax rate in the future.

So paying less tax on your future withdrawals

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