Traditional vs. Roth IRAs
Both traditional IRAs and Roth IRAs can help you save for retirement. But they have different rules about taxes on contributions and withdrawals, what happens if you need to take money out before retirement, and other things that can affect which account type you might be better off contributing to. We’ve answered some of the top frequently asked questions about the differences between Roth and traditional to help you decide.
Is there a difference in how much I can contribute to a Roth vs. a traditional IRA?
The maximum yearly contribution to traditional and Roth IRAs is $7,000 for 2025 It increases to $7,500 in 2025. Those 50 and older can make an additional catch-up contribution of up to $1,000 to their traditional or Roth IRA in 2025 and 2026, as well. In the case of a Roth, you may not be eligible to contribute that much, however, depending on your modified adjusted gross income (MAGI) or your filing status.
Recent legislative changes have also eliminated age limits for traditional IRA contributions. Additionally, the age at which required minimum distributions must begin was raised to 73. It will climb to age 75 starting in 2033.
Can I contribute to a Roth or traditional IRA no matter how much I earn?
No, at least for Roth IRAs.
- For married couples filing jointly, the ability to contribute to a Roth IRA starts to phase out when modified adjusted gross income (MAGI) reaches $236,000 in 2025. It is eliminated when MAGI reaches $246,000 in 2025.
- For taxpayers who are filing single or head of household, the ability to contribute is eliminated when MAGI reaches $165,000 in 2025. It starts to phase out at a MAGI of $150,000 in 2025.
- For taxpayers who are married but filing separately, the ability to contribute is eliminated when MAGI reaches $10,000 in 2025.
Calculate MAGI by subtracting from adjusted gross income any deductions for traditional IRA contributions, student loan interest, tuition and fees, and certain other, less-common above-the-line deductions (like the foreign earned income exclusion and the foreign housing exclusion that some expatriates take).
If you have a traditional IRA, you can contribute no matter how much you earn, but you may not be able to take a tax deduction for your contribution. If you or your spouse are covered by a workplace retirement plan and your income exceeds $87,000 for single taxpayers or $143,000 for married taxpayers filing jointly, in 2024, you will not be able to claim a deduction. Those limits climb to $89,000 and $146,000, respectively, in 2025. You can still make after-tax contributions, however.
How are my contributions and withdrawals taxed on Roth and traditional IRAs?
With a traditional IRA, you do not pay tax on the money you contribute (in other words, contributions are made with pretax dollars), but you do pay tax on the money you withdraw. With a Roth IRA, you do pay tax on the money before you contribute (after-tax dollars), but you do not pay tax on the money you withdraw. In both types of IRAs, your earnings and gains aren’t taxed while they remain in the account.
Here’s a simplified example to illustrate the difference between the two IRA types.
- Traditional IRA: You contribute $5,000 of pretax money to a traditional IRA in 2024. When you retire in 2038, your money has grown hypothetically to $10,000. Your marginal tax rate is 22 percent. You withdraw all $10,000 and pay a 22 percent tax on it, or $2,200, leaving you with $7,800. But you saved 22 percent of $5,000, or $1,100, when you made your contribution, because your contribution was not taxable. So, you really ended up with $8,900 or more, depending on how you used the $1,100 in up-front tax savings.
- Roth IRA: You contribute $5,000 of after-tax money to a Roth IRA in 2024. Since you are in the 22 percent tax bracket, you had to earn about $6,400 to contribute that $5,000 in the first place. When you retire in 2038, your money has hypothetically grown to $10,000, but at the sacrifice of the $1,400 in up-front taxes you paid, so it’s like you’re only making out with $8,600. However, you get to withdraw all $10,000 tax-free.
Either way, you pay taxes; it’s just a matter of when. And while this example might make it seem like you’ll come out ahead by contributing to a traditional IRA, that’s not always the case. It all depends on your marginal tax rate at the time you contribute and at the time you take withdrawals, which, unfortunately, most people do not know with certainty ahead of time. And, of course, rates of return in various types of IRAs will vary as well.
In this example, we assumed the same 22 percent tax rate both when you contributed and when you withdrew, but in reality, your tax rates will probably be different. Because you can’t know these things ahead of time, it may be strategic to contribute to both types of accounts.
So, I do not have to choose between a Roth IRA and a traditional IRA — can I have both?
Yes, and in fact, retirement planning experts recommend having a combination of post-tax and pretax accounts to draw upon in retirement. This might mean having both a Roth IRA and a 401(k) or both a Roth IRA and a traditional IRA. Since you do not know what your income or tax bracket will look like during any given year of your retirement, having the option to withdraw money from a Roth tax free in years when your income is higher and to withdraw taxable funds from a traditional IRA in years when your income is lower can keep your tax bill down.
Should you always contribute to a Roth IRA and a traditional IRA every year?
Not necessarily. The conventional wisdom says that if you’re in a lower tax bracket when you make contributions than when you take withdrawals, you’ll come out ahead with a Roth. If you’re in a higher tax bracket when you make contributions than when you take withdrawals, you’ll come out ahead with a traditional IRA.
My spouse is taking a few years out of the workforce to raise our young children. Can I contribute to an IRA on my spouse’s behalf?
Yes, but you must file jointly, and your MAGI must be less than $230,000 to receive a deduction. Your total contributions cannot exceed your total compensation. So, if you only make $9,000 for the year, you cannot contribute $5,500 to your IRA and $5,500 to your spouse’s IRA, which would total $11,000. You’d have to reduce your contributions to either or both of your IRAs to a total $9,000 or less.
Note that someone else could contribute to your IRA on your behalf, as long as their contribution (plus your contribution, if any) does not exceed your annual taxable income.
Also, let’s say your 16-year-old son earned $3,000 from a part-time job and you wanted to give him a huge jump start on saving for retirement. You could open an IRA for him and contribute $3,000. Just be aware that your generosity might have implications for college financial aid.
When do I get to take the money out?
Normally, when you’re 59½, you can withdraw both earnings and contributions from either type of IRA without paying any penalties. Roth IRAs do have a rule preventing the earnings portion of the account from being tapped for five years from when you established the account. Once you reach age 73, if you have a traditional IRA, you’re required to withdraw a certain amount from it each year, called a required minimum distribution (RMD). If you do not withdraw your RMD, you may have to pay a hefty 50 percent excise tax on the amount you were required to withdraw. With a Roth IRA, you are not required to take distributions from it. You can pass the entire account on to your heirs and let them worry about RMDs.
I may need the money for something else. Should I still contribute to a Roth IRA and a traditional IRA?
Yes, for several reasons. In a best-case scenario, you won’t need the money for something else and you’ll have made extra contributions to your retirement account that can grow for years. The more you contribute and the younger you are when you contribute, the faster your money will grow from investment returns and the less principal you’ll have to contribute over your lifetime to end up with a nice nest egg.
As long as it has been at least 5 years from when you first established and contributed to a Roth IRA, a Roth IRA allows you to withdraw your contributions (but not your earnings) without paying taxes or penalties.
With a traditional IRA, you can remove money early in exchange for paying a 10 percent penalty on the amount you withdraw. You’ll also pay income tax on your withdrawals, just like you would in retirement. IRAs do not allow loans, but if you have a 401(k), you could consider borrowing from that account if the plan permits. With traditional IRAs, one exception to the 10 percent penalty is the ability to take up to a $10,000 distribution as a first-time homebuyer. You’ll have to pay income tax on that withdrawal, however, which will reduce the amount you can actually put toward your down payment.
Provided by Cross Coastal Advisors, courtesy of Massachusetts Mutual Life Insurance Company (MassMutual). ©2025 Massachusetts Mutual Life Insurance Company (MassMutual®), Springfield, MA 01111-0001. All rights reserved. MM202607-306009
What ‘Social Inflation’ Means for Your Business
What ‘Social Inflation’ Means for Your Business Heading into 2026
You may have heard that liability insurance rates are rising—again. But do you know why? One of the biggest drivers behind these increases is a growing trend called “social inflation.”
Understanding this trend can help you make smarter, more strategic decisions about your commercial insurance before your next renewal.
What Is Social Inflation?
“Social inflation” refers to the rising costs of insurance claims due to changes in society’s attitudes, legal systems, and jury behavior. A few key reasons for this trend include:
- Larger jury verdicts in liability lawsuits
- More aggressive plaintiff attorneys seeking maximum payouts
- Third-party litigation funding from outside investors
- Shifting public sentiment toward holding businesses financially responsible
When claims cost insurers more, those costs are passed along to businesses through higher premiums, stricter underwriting, and more restrictive coverage options.
Lines of Insurance Being Hit Hardest
While social inflation affects all types of liability coverage, some lines are especially impacted:
- • Commercial Auto Liability: Claims involving vehicle accidents—especially with fleets or trucks—are seeing sharp increases in costs and frequency.
- General Liability: Even routine injuries like slip-and-falls can now result in higher-than-expected payouts.
- Umbrella & Excess Liability: These policies are no longer “cheap peace of mind.” Higher rates and stricter underwriting are common.
Even businesses with clean loss histories are experiencing rate hikes due to overall market pressure.
Why It Matters for Your Business
In today’s legal climate, a seemingly minor incident can lead to a lawsuit that exceeds your insurance limits. Without adequate protection, your business could be left financially vulnerable.
Potential consequences of insufficient coverage include:
- • Multi-million-dollar verdicts from seemingly small incidents
- Legal disputes that drag on for years
- Reputational harm, even if the claim is eventually dropped
What You Can Do Now
Here are a few proactive steps to help protect your business and keep your liability insurance working for you:
- Review Your Liability Limits
- Ask yourself: “Would my current policy cover a major claim or lawsuit?” You may need to increase your limits or consider an umbrella policy.
- Improve Risk Management: Invest in employee training, document safety procedures, and regularly inspect your premises to minimize risks.
- Document Your Efforts: Keeping a record of safety protocols, training, and risk mitigation can support your case with insurers—and possibly lower premiums.
- Start Early: Don’t wait until your policy renews. Starting your insurance review early gives you time to make informed decisions and avoid last-minute surprises.
How Our Agency Can Help You
Navigating today’s complex insurance landscape isn’t something you have to do alone. Our agency partners with business owners every day to help them make confident, informed decisions about their insurance coverage—especially as market conditions continue to evolve.
National Wellness Month
National Wellness Month, recognized annually in August, is meant to encourage people to prioritize self-care, build healthy routines, and support their physical, mental, and emotional well-being.
Wellness goes beyond physical health. It encompasses mental clarity, emotional resilience, and a sense of balance in daily life.
When we invest in our well-being, we’re better equipped to handle stress, maintain relationships, and perform at our best—both personally and professionally. This month is an opportunity to slow down and focus on the following key well-being components:
Movement—You don’t need a gym membership to stay active. Stretch in the morning, take the stairs, or go for a walk during lunch. Movement boosts mood and energy.
Nutrition—Fuel your body with whole foods, stay hydrated, and avoid skipping meals. Even small changes, such as swapping soda for water, can make a big difference.
Mindfulness—This skill involves focusing on being present. Try meditation apps, journaling, or simply taking a few deep breaths during stressful moments.
Self-care—It’s important to take time each day to do something just for you. Whether it’s reading, listening to music, or having a cup of tea, self-care helps you recharge.
Stress management—Identify your stress triggers and create healthy coping strategies. These could include setting boundaries, unplugging from screens, or talking to a friend.
You can start taking small steps now to prioritize both your body and mind. Over time, these habits build a foundation for a healthier, more balanced you. If you’re struggling with any aspect of your wellness, seek help from health care professionals, including therapists, counselors, or wellness coaches. They can provide tailored guidance and support for your personal needs.
Understanding Your Cortisol Levels
Cortisol levels continue to trend on social media as people want to understand energy levels, manage stress, and boost their overall well-being. So, what exactly is cortisol? It’s your body’s primary stress hormone, helping regulate various functions, such as metabolism, blood sugar, blood pressure, immune response, and energy. While it’s normal for cortisol to fluctuate throughout the day (usually going up in the morning and slowly down during the day), consistently high or low levels can cause health issues. Ideal cortisol levels fall within a specific range that varies slightly based on the time of day and the type of test used.
To get a better understanding of your cortisol levels, seek the advice of a medical professional who can administer a cortisol test that measures the cortisol in your blood, urine, or saliva. Standard blood panels generally don’t test for cortisol levels. Cortisol testing is usually ordered separately by a physician to learn more about your health conditions.
Understanding how cortisol works can help you stay aware of potential symptoms that could indicate an imbalance. Talk to your doctor to learn more.
Medications That Make It Hard to Handle the Heat
Commonly prescribed medications can impact people more in the heat, causing dehydration or sun sensitivity or limiting the body’s ability to regulate body temperature. As such, these medications have heat intolerance, photosensitivity, or similar documented side effects:
- Antibiotics and nonsteroidal anti-inflammatory drugs like ibuprofen may make you more sensitive to sun exposure, resulting in severe sunburn or rashes.
- Antidepressants can cause excessive sweating, dehydration, and UV light sensitivity. They could also decrease sweat production, preventing the body from cooling down.
- Antihistamines can make your body produce less sweat, making it difficult to regulate body temperature in hot weather.
- Blood pressure medications can increase sweat production and dehydration. Sun exposure can cause a blood pressure dip, too.
- Decongestants like pseudoephedrine can decrease the blood flow to the skin, making it more difficult to sweat and regulate.
- Stimulants can increase your metabolic rate, impairing the body’s ability to cool down.
Keep in mind that the heat can also degrade certain medications like insulin, inhalers, and EpiPens.
The first sign of heat intolerance is feeling hot or uncomfortable. You may also experience headaches, dizziness, cramps, nausea or vomiting, weakness, or flushed skin. If you experience heat-related symptoms, go inside immediately and try to cool down. In addition to monitoring for symptoms, it’s important to stay hydrated, limit your exposure to direct sunlight, and wear protective clothing.
If you have questions about your medications or potential side effects, talk to your doctor. Also, don’t discontinue taking any prescribed medications without talking to them first.
This article is intended for informational purposes only and is not intended to be exhaustive, nor should any discussion or opinions be construed as professional advice. Readers should contact a health professional for appropriate advice. © 2025 Zywave, Inc. All rights reserved.