Hermit
Thinks s/he gets paid by the post
I'm trying to figure out how to advise DD (age 25) on ACA when she leaves my health plan. Her income is about $29,000. The ACA calculators show tax credit of about $5/year for that level of income. If she contributes $5,500 to a traditional IRA, her tax credit is about $1500/year. By contributing to a traditional IRA instead of a Roth she can capture that $1500 dollars in tax credits essentially reducing her IRA contribution.
Would it make sense to capture this extra money now knowing she will likely pay at a higher tax rate and also pay taxes on gains at retirement or would it make more sense to continue Roth contributions?
Would it make sense to capture this extra money now knowing she will likely pay at a higher tax rate and also pay taxes on gains at retirement or would it make more sense to continue Roth contributions?