Always Do Roth | Roth vs Traditional for Military Families #155

The Military Money Manual Podcast

Roth is the way to go for almost all military families. Because of the unusually low taxable income military families have (since allowances like BAH and BAS aren't taxable income), we're going to take a hard stance on this one and show the benefits for Roth:

• You can always access your Roth contributions tax free and penalty free (can help with gap fund, emergencies, first house purchase, etc)
• All of the money you'll have in your Roth IRA or Roth TSP will be non-taxed upon withdrawal at retirement age (no big tax bombs or complicated strategies required)
• No taxable RMDs as you age
• No taxable RMDs for whomever receives the Roth account after your pass, in most cases (big win for your beneficiaries)
• No concern about future tax rate, tax laws, or tax bracket changes

Remember, almost all of the million+ you'll have in retirement accounts as you age will be GROWTH- and that's not taxed.

In a few cases (mil-to-mil senior officers, high income families, complicated tax situations, extreme FI/RE types, etc.) traditional may be better for you. As you get more advanced and learn more about personal finance, you can make the decision. If unsure, go Roth!

*Not financial advice. Do your own research and make your own, informed decisions.

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