Permalink Submitted by Alan Spross on Sun, 2010-05-23 03:10
The answer depends on several variables including:
1) The tax rate that will be paid on the distribution including the early withdrawal penalty, if applicable
2) Your estimated marginal tax rate in the future, including RMDs from TIRA balances
3) Your estate plans and estimated tax rate for your beneficiaries
For all IRA balances in the US, the Roth IRAs only represent about 7% of the total. Therefore, I would guess that the answer to your question would be the TIRA in most cases, but individual circumstances should dictate the proper decision. In addition, it does not have to be an either-or decision. They could be drawn down in various combinations, eg taking TIRA distributions until you reach the top of your current tax bracket, and then take additional distributions that year from the Roth in order to avoid entry into the higher bracket.
Permalink Submitted by Alan Spross on Sun, 2010-05-23 03:10
The answer depends on several variables including:
1) The tax rate that will be paid on the distribution including the early withdrawal penalty, if applicable
2) Your estimated marginal tax rate in the future, including RMDs from TIRA balances
3) Your estate plans and estimated tax rate for your beneficiaries
For all IRA balances in the US, the Roth IRAs only represent about 7% of the total. Therefore, I would guess that the answer to your question would be the TIRA in most cases, but individual circumstances should dictate the proper decision. In addition, it does not have to be an either-or decision. They could be drawn down in various combinations, eg taking TIRA distributions until you reach the top of your current tax bracket, and then take additional distributions that year from the Roth in order to avoid entry into the higher bracket.