Craig Wear breaks down Roth vs. Traditional IRAs: Roth contributions are taxed now and grow tax-free, while Traditional contributions defer taxes until you withdraw. For 2025, single filers can contribute directly to a Roth up to $161,000 income, with limits of $7,000 annually under 50 or $8,000 at 50+. He favors Roth for younger savers and backdoor Roth conversions for higher earners to cut future tax bills.
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So the IRS gives you two options, and if you pick the wrong one, you're probably going to pay a lot later. Everyone talks about opening an ira, but the big question is, should you go Roth or traditional? So with a Roth ira, you're going to pay taxes on your money now, but it grows and comes out 100% tax free in retirement or just later in life. With the traditional ira, you skip the taxes now, but you pay later when you withdraw. So if you're a single filer making $161,000 in 2025, you can contribute directly to a Roth IRA. You if you're over that, you're going to have to go with the traditional or use maybe a backdoor Roth strategy. The contribution limits are the same. 7,000 if you're under 50 and 8,000 if you're over 50. If you're just starting out saving, definitely go with the Roth. If you've already accumulated large pre tax savings, I'd really suggest that you look at limiting your contributions and begin using some of that money for conversions. You're going to want a coordinated strategy to maximize your future net worth and minimize your future taxes, and you can do that through conversions. But whatever you do, don't wait. If you have large pre tax savings, it's definitely in your best interest to get that plan for converting your accounts and get it now.
