Pretax vs. Roth: Navigating the 24% Tax Bracket

How you save for retirement can be just as important as saving at all!

Provided by Daniel Kelley & Kevin Guarino – Our Friends at Clover Leaf Financial, LLC

Hey there!

If you’ve ever found yourself scratching your head over whether to go with a pre-tax retirement account or a Roth, you’re not alone. Especially for those in the 24% tax bracket, this decision can feel like a financial maze. But don’t fret! Let’s break it down together.

  1. The Big Question: Pretax or Roth?

So, you’re in a high tax bracket now and think you might be in a similar spot after you hang up those work boots. The big question is: should you be stashing away your retirement savings in a pre-tax account or a Roth? Both have their perks. With pre-tax, you get immediate tax benefits, but with Roth, you’re setting yourself up for tax-free withdrawals down the road. It’s a bit like choosing between a discount now or a freebie later.

  1. Real-Life Scenarios: Making It Relatable

Imagine you’re at a crossroads. On one side, there’s the pre-tax path, offering immediate tax relief. On the other, the Roth route promises tax-free withdrawals in your golden years. Which path you choose can depend on various factors, like your current financial situation, future tax predictions, and even your retirement dreams. Remember, there’s no one-size-fits-all answer. It’s all about what fits your life best.

  1. Charitable Giving: The Generosity Factor

For the philanthropists among us, retirement accounts can be a tool for good. If charitable giving is close to your heart, consider this: Qualified Charitable Distributions (QCDs) from Traditional IRAs can satisfy your RMDs and offer tax benefits. By directly transferring funds from your IRA to a qualified charity, you can avoid the distribution being counted as taxable income. It’s a win-win, allowing you to support the causes you care about while optimizing your tax situation in retirement.

  1. Life Expectancy: A Delicate Topic, but Essential

It might feel a bit morbid to think about, but considering how long you expect to live can influence your retirement account choice. If you’re blessed with those ‘long-life genes’ and anticipate a lengthy retirement, a Roth might be more appealing because of its tax-free withdrawals.

  1. Thinking of the Next Generation

When it comes to retirement planning, the choices you make today can have lasting implications for your heirs. Traditional IRAs, for instance, come with required minimum distributions (RMDs) once you hit a certain age. This means you’ll have to start withdrawing (and paying taxes on) a set amount each year. On the flip side, Roth IRAs don’t have RMDs during the owner’s lifetime, offering more flexibility in wealth transfer. The key is to strategize in a way that maximizes the benefits for those you leave behind.


Wrapping It Up

Deciding between a pre-tax and Roth retirement account is a personal journey, and there’s a lot to consider. But remember, you don’t have to navigate this journey alone. Our team is here to guide you every step of the way, ensuring your retirement strategy aligns with your unique goals and aspirations.

Curious to dive deeper? Want to chat about your specific situation? Reach out to our firm! We’re all about helping you make informed decisions that set you up for a bright financial future.




The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. 

The professionals at Clover Leaf Financial, LLC. are registered representatives with and securities offered through LPL Financial. Member FINRA/SIPC. 

Investments are:  
· Not FDIC/NCUSIF Insured · No Bank/Credit Union Guarantee · May Lose Value ·Not a deposit  · Not insured by any federal government agency