Suppose that Maria, age 73, has three traditional IRAs
, with RMDs for 2017 of $1,000, $2,000, and $3,000, for a total of $6,000.
may be funded with pre-tax or after-tax dollars and are often funded largely with pre-tax dollars.
For traditional IRAs
, the overwhelming number of people that are taking withdrawals from them are because they have to under the RMD rules, and for the most part the amount of the withdrawal is only the amount they are required to take out," Craig Copeland, EBRI senior research associate and author of the report, said in a statement.
ACCORDING TO THE Investment Company Institute, 59 percent of existing traditional IRAs
are comprised in whole or part of assets rolled over from a corporate retirement plan.
Eighty-five percent of traditional IRAs
initiated in 2015 were opened with rollovers, whereas 71% of new Roth IRAs were opened with contributions.
Outlining the research results, Arielle O'Shea, co-author of "Roths Top Traditional IRAs
by up to Six Figures in Retirement Savings Analysis," says she and her colleagues were intrigued by just how well the Roth approach performed in the comparative analysis.
2) Traditional IRA
-- Traditional IRAs
are designed to allow investors to save for their own retirement outside of employers' plans, and contributions are made on a pre-tax basis.
It also does not apply to amounts rolled over from one IRA to another (assuming you follow the rules for rollovers), to conversions of traditional IRAs
to Roth IRAs, to amounts that the IRS levies from your IRA to cover your tax bill, or to qualified reservist distributions.
While transferring the balance of those accounts to the named beneficiary or beneficiaries will avoid probate of those assets, thereby saving the estate potentially substantial court costs and attorney's fees, traditional IRAs
and qualified retirement accounts do not have the superb estate-planning benefits of the Roth IRA or 529 college savings plans, which we will discuss later.
RMDs are triggered on traditional IRAs
at age 70%, but RMDs do not apply to Roth IRAs.
The IRS had already removed the limits on rollovers from traditional IRAs
back in 2010, and taxpayers took advantage in a big way: Traditional-to-Roth IRA conversions increased to $64.
While traditional IRAs
are tax-deferred, Roth IRAs are designed to be tax-exempt.