BOSTON (CBS) – My standard answer is; it depends. And then I would need to ask questions: Do you think your tax bracket will be lower or higher in retirement?

Next, are you maximizing out your retirement plan at work such as your 401(k)? Money should go there first especially if the company matches your contribution. And they make it easy for you by deducting the money from each paycheck.

If you have extra cash or you don’t have a retirement plan at work consider using an IRA. Now which one depends on age, income and retirement needs. There are distinct differences between the two IRAs.

Traditional IRA: You may be able to use pre-tax dollars and get a deduction on your income tax. The proceeds will be taxed as ordinary income when withdrawn. Mandatory withdrawals must begin at age 70½.

Roth IRA: Contribution is made with after tax dollars, but not taxable when withdrawn. No mandatory withdrawal age. There is an income limit to contribute, $107,000 if you are single or $169,000 if you are married filing jointly. Next year those limits will be bumped up to $110,000 and $173,000.

Sometimes tax free future income is worth more to you than a deduction right now. I found a calculator to help you figure out which is a better deal; a deduction now or tax free future income.

With no mandatory withdrawal age for Roth IRAs this means they could be a wealth transfer tool to your children or grandchildren. Your heirs will have the ability to take income out of the IRA over their lifetime tax free after you die. A really good deal. But if you need the money at any time you have access to it.

As far as the income tax being lower in retirement that is probably not going to be true for most retirees. First of all, tax laws change so who knows what the rates will be in the future. Second, most of us will have our house paid off, no mortgage interest deduction there, no kids, no exemptions there and hopefully you will have as much income in retirement as you have while you are working. No tax break there….

You are limited to $5,000 contribution this year and next to a traditional IRA or Roth. If you are over 50 you can add an additional $1,000 and you must have earned income to contribute. You can get at your Roth contributions any time you need them in the future without the 10% penalty that would be there for a traditional IRA if you are under 59½  and you will not owe taxes on them for you have already paid the taxes.

Either a traditional or a Roth IRA can be used for a Spousal IRA.

The short answer is a Roth only if you are choosing between a traditional and Roth IRA. If you bring a 401(k) into the equation I would opt for that for you can contribute more dollars up $16,500 and your employer may match up to 6%.

Also, a heads up on a new Money Matters newsletter. So many listeners call or e-mail that they have missed a segment and where can they get a copy. Well now every Monday morning you can get the previous week’s segments sent to you. To sign up you will need to go to

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