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Which is better, Roth or regular? 

If you are under 50, I would favor the Roth, because you have sufficient years for the account to build interest, which can then be withdrawn tax-free.  If you are over 50, you should do the math to compare current vs future taxes. And, in any year the regular IRA contribution would be nondeductible due to income limits, or if the deduction is wasted due to net losses, the Roth is clearly a better choice.

So you choose Roth or regular, and you commit your money based on that choice.

Wait. Suppose, when you are preparing your tax return, you decide you made the wrong choice.  

Current law (2017 and prior) lets you change your mind, and recharacterize that contribution to a regular IRA as a contribution to a Roth, and vice versa.  Even better, you have until the due date of your return (Oct 15 if extended) to make that recharacterization happen. That means you have about 10 months after year end to retroactively increase or decrease your taxable income depending on what works better for you.  Neat, huh?  

No more do-overs

Well, it looks like this is going away under the proposed "tax reform".  Both the House version and the Senate version will eliminate recharacterrizatons after 2017.  If you contributed to a regular IRA or a Roth in 2017, you have until December 31, 2017 to recharacterize. After that, every time you choose regular or Roth, you are stuck with that choice.   


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