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DMball OP t1_jeg95n3 wrote

Reply to comment by DeluxeXL in Vanguard Traditional IRA - Interest on Money Market fund? by DMball

Can you expand on why you want the growing to happen in the Roth? Is that more optimal than the high yeild of the money market fund in the traditional?

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DeluxeXL t1_jega925 wrote

Growth in Roth IRA is completely tax-free assuming you only do qualified withdrawals.

Growth in traditional IRA is tax-deferred until you withdraw or convert. Then it's treated as ordinary income when you withdraw or convert.

Also, since you use Vanguard, did you know Roth conversion is as simple as clicking "Convert to Roth IRA" on the traditional IRA? It'll lead you to a page where you select what things to convert to Roth IRA. You can convert money or shares without needing to sell.

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