No Tax = MORE GROWTH

Traditional IRA growth is stunted by tax The Roth has no RMDs which means it can grow for as long as you and your spouse live. You cannot get the same growth potential in a Traditional IRA where you are mandated to take distributions each year.  Think about it like this. You and your spouse are both 68 years old. What is better to have, a $100,000 tax-deferred account or a $75,000 tax-free account? The answer is the tax-free account. Seems counterintuitive doesn’t it? $75,000 is significantly less money than $100,000 after all. But the entirety of that $75,000 account is yours. And you never have to touch it unless you want.  That $100,000 has a huge lien on it called the IRS. Slowly at first, but in a few short years RMDs will increase until the account is nearly depleted.  One could argue that you could take the RMDs from the tax-deferred account and invest them in a side account. But you still paid tax on the RMDs as ordinary income. Secondly, if your side account has its own distributions you could pay tax there too. Even if you’re in the 10% or 12% brackets and don’t pay tax on capital gains or qualified dividends you still pay ordinary income tax on interest. That interest can also move you into a higher tax bracket, potentially causing your dividends and capital gains to be taxed too.  Because there are no RMD requirements the Roth can pass from one spouse to another without ever being touched. We’re talking potential for decades of tax-free growth.  When non-spouses inherit a Roth, they do have RMDs.  But even those RMDs are tax free. The Roth simply can’t be topped when it comes to generational tax-free growth.