An individual is currently in the 24% tax bracket and expects to be in the 12% tax bracket during retirement. They want to minimize their tax burden both now and in retirement. Which retirement plan would best suit this individual?

A traditional IRA generally allows contributions to be deducted from taxable income now, when the individual is in the 24% bracket. Withdrawals in retirement are taxed as ordinary income, and they expect to pay the lower 12% rate then. This means they can receive a tax break at the higher rate now and pay tax at a lower rate later, so the traditional IRA best suits them.

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