Much of what I've read in the decision between Roth Vs Traditional IRA (simplified) comes down to "depends on your tax situation now & at retirement."

So my question is would it be a wise strategy to open both and make contributions to one or the other based on a yearly tax situation?

i.e. Low-income years add to Roth & High-income years add to Traditional.

Or would doubling the maintenance fees and trade fees hurt more than any possible benefits?

  • What do you mean "doubling the maintenance and trade fees"? I wouldn't expect them to be different. – JohnFx Mar 15 '18 at 0:23
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    Do you participate in a 401k plan with your employer? – Chris W. Rea Mar 15 '18 at 0:32
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    @ChrisW.Rea SelfEmployed. JohnFx: Instead of paying 1 maintenance fee, we'd have 2 now. Say we needed to rebalance our portfolio holdings, we would have to make trades twice now. i.e. we have stock XYZ in both, but XYZ is foreseeable going down the drain, so now we have to replace XYZ in both Roth and Traditional. – Dustin Mar 15 '18 at 0:32

Deciding whether to contribute to a Traditional or Roth IRA on an annual basis depending on your income definitely makes sense. However, I wouldn't necessarily open both types of accounts now because it's entirely possible you will never end up using one. If you use a good brokerage (e.g. Vanguard, Fidelity, Schwab, etc.), the maintenance and trading fees (assuming you're investing in no transaction fee funds) should be zero whether you have one or two IRAs.

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  • I don't yet understand investing rules for IRAs. I imagined it would be similar to my regular investment accounts. i.e. I could buy and sell stocks, ETFs, Mutual Funds as I see fit, incurring trade commissions along the way, with a maintenance fee on top yearly. – Dustin Mar 15 '18 at 0:37
  • Yes, trading inside an IRA is much like a taxable investment account. But I would highly recommend you buy and hold low-cost, no transaction fee mutual funds or ETFs. The brokerages I listed also have no annual maintenance fees. – Craig W Mar 15 '18 at 0:42
  • Thank you, is the "buy/hold ETF/mutuals" recommendation due to regular stock commissions eating away, the rarity that an active trader can produce better returns than the market, or a combination of both? – Dustin Mar 15 '18 at 0:49
  • Both, but mostly the latter. If you really want to do active trading, I would suggest you do it in a taxable account, and take a more conservative approach with your retirement accounts. – Craig W Mar 15 '18 at 0:53
  • Last questions. So with the brokers you suggested, if I put it into ETFs and Mutuals I won't pay any commissions even if i actively move it between different ETFs and Mutuals? But if I put it into stocks, I will be paying commissions for every reposition? – Dustin Mar 15 '18 at 0:59

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