A great option to consider is an IRA (Individual Retirement Account), an account designed for saving for retirement. While everyone’s situation is different, if you’re looking to boost your retirement savings, choosing between a Roth and Traditional IRA is often a key decision.

They both have benefits that make them advantageous investing accounts; however, it’s important to understand when those advantages kick in. So how do you know which one to choose? Here are a few retirement planning questions you may want to ask yourself to help you make an educated decision:

1. What account types are you eligible to contribute to?

You might not even have a choice between a Roth or Traditional IRA. You cannot contribute to a Roth IRA if your income (and your spouses, if married and filing jointly) is above a certain level. If your income doesn’t exclude you from being able to contribute, you can contribute to a Roth IRA at any age as long as you or your spouse (if married filed jointly) have enough taxable compensation1.

With Traditional IRAs, you are able to contribute if you are younger than age 70½ and you or your spouse (if married filed jointly) have enough taxable compensation1.

Generally, compensation is what you earn from working. If you file a joint return, only one of you needs to have enough compensation for each of you to open and contribute to an IRA. Although, you can’t both participate in the same IRA.

2. Can you deduct your IRA contribution?

Contributions to a Roth IRA are made with after-tax dollars and therefore never deductible.

Contributions to a Traditional IRA are deductible if you and your spouse have enough taxable compensation and are not covered by a retirement plan at work2. This potentially reduces your current income tax liability and defers the taxation on the contribution and any investment growth until you withdraw from the account – typically after you retire.

If you or your spouse are covered by a retirement plan at work2, you still may be able to deduct your contribution. Your income will determine if the contribution can be fully deductible, partially, or not at all. Making non-deductible contributions to a Traditional IRA may still be beneficial to your retirement savings strategy, particularly if your income is too high to contribute to a Roth IRA directly, as you can still benefit from potential tax-deferred investment growth.

3. What might your tax picture look like in 20 or 40 years?

Traditional IRAs are “tax-deferred” – so you don’t pay capital gains or income taxes on your money while it grows in the account. In retirement, withdrawals from a Traditional IRA are typically taxed as ordinary income.

With Roth IRAs, any investment growth is tax-deferred as well, however, your distributions in retirement have an opportunity to be tax-free if certain conditions are met.

Some rules of thumb

Typically, if you are a younger saver and your taxes are at relatively low rates, you may want to consider a Roth IRA.

As you move into higher tax brackets, it may be a good time to think about starting a Traditional IRA and even having a little bit of both to maximize your savings and seek balance in terms of income tax diversification. If you are in your highest tax bracket, it’s probably a good idea to invest in a Traditional IRA and defer taxes to your future.

Broadly, getting to retirement with a healthy mix of Traditional and Roth IRA savings can give you flexibility and more control when managing your tax picture in retirement – because you’ll have more choices to help you meet your spending needs and the taxes you may owe at that time. Speaking with your tax advisor can help you decide what’s right for you.