Reasons Not to Go With a Roth IRA
The principal difference between a Roth IRA and a Traditional IRA is that with a Roth all contributions are made to the account on an after-tax basis, and withdrawals are generally tax-free. Besides the fact that contributions to a Roth are not tax-deductible, there are other disadvantages that, for some, might make a Roth an unsuitable retirement savings plan.
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Retirement Tax Bracket
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Individuals who are in a lower tax bracket upon retirement lose the advantages of making Roth IRA contributions on an after-tax basis during their working years.
Contributions Deductibility
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Unlike other qualified defined-contribution retirement accounts, such as a Traditional IRA, a Roth IRA won't allow tax-deductible contributions.
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Effects on AGI
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Contributions to a Roth IRA, unlike contributions to other qualified retirement accounts, do not reduce a taxpayer's adjusted gross income. As a result, the taxpayer enjoys no reduction in his marginal tax rate.
Eligibility Restrictions
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There are income eligibility requirements for establishing a Roth IRA, unlike many other defined-contribution retirement plans.
Tax Advantages
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To realize the special tax advantages of a Roth IRA, upon retirement an individual will have to live until the contributions made to the account are exhausted.
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