To Roth or not to Roth your IRA? Atlantic Trust explains the benefits, considerations

A Roth can be a potentially powerful investment and estate planning tool

ATLANTA, April 9, 2014 /CNW/ - Although the idea of a tax-free retirement account - otherwise known as a Roth individual retirement account (IRA) - may sound appealing, especially ahead of the April 15 tax deadline, the experts at Atlantic Trust say there is more to consider.

"Whether a Roth makes sense in a given case will depend on your cash flow, liquidity needs during retirement and assumptions about taxes and investment performance," says H. Arthur Graper, managing director for Atlantic Trust.

In a Roth IRA, taxes are paid when money is put into the account or when a traditional account is converted or rolled over. Atlantic Trust experts say that if an individual considering a Roth IRA can't afford to pay those taxes from assets outside the IRA, or if funding a Roth would reduce what could otherwise be saved for retirement, a traditional account might be a better choice. Likewise, because taxes are essentially "pre-paid" in a Roth, it may be wiser to utilize a traditional account if you expect to be in a lower tax bracket upon retirement.

Roth IRAs are attractive for a number of reasons. Unlike traditional IRAs, funds withdrawn from a Roth account are not subject to taxes (with some caveats) and carry fewer restrictions on how and when those funds can be withdrawn. And, there are no required minimum distributions, depending on how and when the Roth account was set up. A Roth IRA is also an attractive option for those who wish to grow their assets for the benefit of their children because the accounts will not be subject to the same income taxes at the death of the IRA creator that a traditional account would be, says Graper.

As well, if you think you will be in a higher tax bracket when you retire and can recoup the money you have paid in taxes when creating a Roth, you may come out ahead. "If you think your tax rate will be higher, and you expect to make qualified withdrawals (meaning they are not subject to a 10 percent penalty) during your life, the scale would also tip in favor of a Roth," says Graper.

Of course, predicting future tax rates is a wild card, especially for people who have many years until they retire, which is why Roth IRAs are more attractive for individuals in their 20s and 30s with many years of future growth, he says.

Enlisting the help of a qualified wealth management professional to determine which type of IRA will best support a person's retirement goals. To learn more about traditional and Roth IRAs, read "To Roth or Not to Roth?" published by Atlantic Trust and available for download on the Online Resource Center at www.atlantictrust.com.

About Atlantic Trust

Atlantic Trust is one of the nation's leading private wealth management firms, offering integrated wealth management for high net worth individuals, families, foundations and endowments. The firm considers clients' financial, trust, estate planning and philanthropic needs in developing customized asset allocation and investment management strategies. Experienced professionals deliver a broad range of solutions, including proprietary investment offerings and a robust open architecture platform of traditional and alternative managers. Atlantic Trust operates in 12 full-service locations throughout the U.S. with $24.0 billion in assets under management (as of December 31, 2013). For more information, visit www.atlantictrust.com.

About CIBC

CIBC is a leading Canadian-based global financial institution. Through our Retail and Business Banking, Wealth Management and Wholesale Banking businesses, CIBC provides a full range of financial products to individual, small business, commercial, corporate and institutional clients in Canada and around the world.

CIBC Wealth Management provides relationship-based advisory services and an extensive suite of leading investment solutions to meet the needs of personal, institutional and high-net-worth clients through an extensive distribution network,that includes CIBC Private Wealth Management, CIBC Wood Gundy and CIBC Investor's Edge. Our asset management, retail brokerage and private wealth management businesses combine to create an integrated offer, delivered through nearly 1,500 advisors across Canada. In addition, CIBC Asset Management provides global money manager services to institutional and high-net-worth clients and industry-leading retail investment solutions through our two mutual fund families—CIBC and Renaissance—and the CIBC family of managed portfolio solutions.

SOURCE: Atlantic Trust Private Wealth Management

Media inquiries: Caroline Van Hasselt, Director, CIBC External Communications and Media Relations, [phone], [email protected] or Carolyn Donnelly, Atlantic Trust Director of Marketing, [phone], [email protected].